<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 sec. 240.14a-11(c) or sec. 240.14a-12
Kimberly-Clark Corporation
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(Name of Registrant as Specified in its Charter)
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(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)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
March 7, 1997
[KIMBERLY-CLARK CORPORATION LOGO]
WAYNE R. SANDERS
Chairman of the Board and
Chief Executive Officer
TO OUR STOCKHOLDERS:
On behalf of the Board of Directors and management of Kimberly-Clark
Corporation, I cordially invite you to the Annual Meeting of Stockholders to be
held on Thursday, April 17, 1997, at 11:00 a.m. at the Corporation's World
Headquarters, 351 Phelps Drive, Irving, Texas.
At the Annual Meeting, stockholders will be asked to elect four directors
for a three-year term, approve the selection of the Corporation's independent
auditor, approve amendments to the Corporation's 1992 Equity Participation Plan
and approve an amendment to the Corporation's Restated Certificate of
Incorporation to increase the number of authorized shares of common stock from
600 million to 1.2 billion. All these matters are fully described in the
accompanying Notice of Annual Meeting and Proxy Statement.
It is important that your stock be represented at the meeting regardless of
the number of shares you hold. You are encouraged to specify your voting
preferences by so marking and dating the enclosed proxy card. However, if you
wish to vote in accordance with the directors' recommendations, all you need do
is sign and date the card.
Please complete and return the proxy card in the enclosed envelope whether
or not you plan to attend the meeting. If you do attend and wish to vote in
person, you may revoke your proxy at that time.
If you plan to attend the meeting, please check the card in the space
provided. This will assist us with meeting preparations, and will enable us to
expedite your admittance. If your shares are not registered in your own name and
you would like to attend the meeting, please ask the broker, trust, bank or
other nominee which holds the shares to provide you with evidence of your share
ownership, which will enable you to gain admission to the meeting.
Sincerely,
/s/ WAYNE R. SANDERS
Wayne R. Sanders
<PAGE> 3
KIMBERLY-CLARK CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 17, 1997
The Annual Meeting of Stockholders of KIMBERLY-CLARK CORPORATION will be
held at the Corporation's World Headquarters, 351 Phelps Drive, Irving, Texas,
on Thursday, April 17, 1997, at 11:00 a.m. for the following purposes:
1. To elect four directors for a three-year term to expire at the 2000
Annual Meeting of Stockholders;
2. To approve the selection of Deloitte & Touche LLP as independent
auditor;
3. To approve amendments to the Corporation's 1992 Equity Participation
Plan;
4. To approve an amendment to the Corporation's Restated Certificate of
Incorporation to increase the number of authorized shares of common
stock from 600 million to 1.2 billion; and
5. To take action upon any other business which properly may come before
the meeting or any adjournment thereof.
Stockholders of record at the close of business on February 18, 1997 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
It is important that your shares be represented at the meeting. I urge you
to sign, date and promptly return the enclosed proxy card in the enclosed
business reply envelope. No postage is required if mailed in the United States.
The accompanying Proxy Statement also is used to solicit voting
instructions for the shares of the Corporation's common stock which are held by
the trustees of the Corporation's Salaried and Hourly Employees Incentive
Investment Plans and Retirement Contribution Plan and the Kimberly-Clark Tissue
Company Investment Plans for Salaried and Hourly Employees for the benefit of
the participants in the plans. It is important that each participant in any such
plan sign, date and return the voting instruction card which is enclosed with
the Proxy Statement in the business reply envelope provided. No postage is
necessary if mailed in the United States.
By order of the Board of Directors.
/s/ DONALD M. CROOK
Donald M. Crook
Vice President and Secretary
P. O. Box 619100
Dallas, Texas 75261-9100
March 7, 1997
<PAGE> 4
PROXY STATEMENT
KIMBERLY-CLARK CORPORATION
P. O. Box 619100
Dallas, Texas 75261-9100
March 7, 1997
INTRODUCTION
The accompanying proxy is solicited on behalf of the Board of Directors of
Kimberly-Clark Corporation, a Delaware corporation (the "Corporation"), for use
at the Annual Meeting of Stockholders to be held on April 17, 1997 and at any
adjournment thereof. Proxies in the accompanying form, properly signed and
received in time for the meeting, will be voted as instructed. If no
instructions are given, proxies will be voted for the election of directors, the
approval of the selection of the Corporation's independent auditor, the approval
of amendments to the Corporation's 1992 Equity Participation Plan and the
approval of an amendment to the Corporation's Restated Certificate of
Incorporation to increase the number of authorized shares of common stock from
600 million to 1.2 billion (the "Charter Amendment"). Any proxy may be revoked
by the stockholder granting it at any time before it is voted by delivering to
the Secretary of the Corporation another signed proxy card, or a signed document
revoking the earlier proxy.
Each stockholder of record at the close of business on February 18, 1997
will be entitled to one vote for each share registered in such stockholder's
name. As of that date, there were outstanding 280,341,887 shares of common stock
of the Corporation.
The entire cost of the proxy solicitation, including the reasonable
expenses of brokers, fiduciaries and other nominees in forwarding proxy material
to beneficial owners, will be borne by the Corporation. In addition to the use
of the mail, solicitation may be made by telephone or otherwise by regular
employees of the Corporation. If undertaken, the expense of such solicitation
would be nominal. The Corporation has retained W.F. Doring & Co., Inc. to aid in
the solicitation of proxies from its stockholders. The fees of such firm are
estimated to be $10,000, plus reimbursement of out-of-pocket expenses.
Stockholders' proxies are received by the Corporation's independent proxy
processing agent, and the vote is certified by independent inspectors of
election. Proxies and ballots that identify the vote of stockholders will be
kept confidential, except as necessary to meet legal requirements, in cases
where stockholders request disclosure or write comments on their proxy cards, or
in a contested matter involving an opposing proxy solicitation. During the proxy
solicitation period, the Corporation will receive vote tallies from time to time
from the independent proxy processing agent, but such tallies will provide
aggregate data rather than names of stockholders. The agent will notify the
Corporation if a stockholder has failed to vote so that he or she may be
reminded and requested to do so.
The Corporation intends to mail this Proxy Statement and proxy card,
together with the 1996 Annual Report to Stockholders, to the stockholders on
March 7, 1997. If a stockholder is a participant in the Corporation's Automatic
Dividend Reinvestment and Stock Purchase Plan, the proxy card represents the
number of full shares in the stockholder's account in such plan, as well as
shares registered in the stockholder's name.
The Corporation also intends to mail this Proxy Statement, the 1996 Annual
Report to Stockholders and a voting instruction card, which is solicited on
behalf of the Board of Directors of the Corporation, on March 7, 1997 to each
participant in the Corporation's Salaried and Hourly Employees Incentive
Investment Plans and Retirement Contribution Plan and the Investment Plans for
Salaried and Hourly Employees of Kimberly-Clark Tissue Company, a wholly owned
subsidiary of the Corporation ("K-C Tissue"). Both the trustee of the
Corporation's plans, First Trust N.A., and the trustee of K-C Tissue's plans,
The Bank of New York, as the stockholders of record of shares of
<PAGE> 5
the common stock of the Corporation held in the plans, will vote whole shares of
stock attributable to each participant's interest in the plans in accordance
with the directions such participant gives on such voting instruction card, or,
if no directions are given by the participant, in accordance with the directions
of the respective plan committee.
Under Section 216 of the Delaware General Corporation Law and the
Corporation's By-laws, a majority of the shares of the Corporation's common
stock, present in person or represented by proxy, shall constitute a quorum for
purposes of the Annual Meeting. In all matters other than the election of
directors and the Charter Amendment, the affirmative vote of a majority of
shares present in person or represented by proxy at the Annual Meeting and
entitled to vote on the subject matter shall be the act of the stockholders.
Abstentions are treated as votes against a proposal and broker non-votes have no
effect on the vote. Directors shall be elected by a plurality of the votes
present in person or represented by proxy at the Annual Meeting and entitled to
vote on the election of directors. Approval of the Charter Amendment requires
the affirmative vote of a majority of the outstanding shares entitled to vote
thereon.
PROPOSAL 1. ELECTION OF DIRECTORS
The Restated Certificate of Incorporation of the Corporation provides that
the Board of Directors shall consist of not less than 11 nor more than 25
members, as determined from time to time by the affirmative vote of a majority
of the entire Board of Directors, and that the Board shall be divided into three
classes. Directors of one class are elected each year for a term of three years.
As of the date of this Proxy Statement, the Board of Directors consists of 12
members, four of whom have terms which expire at this year's Annual Meeting
(Class of 1997), four of whom have terms which expire at the 1998 Annual Meeting
(Class of 1998), and four of whom have terms which expire at the 1999 Annual
Meeting (Class of 1999).
The four nominees for director set forth on the following pages are
proposed to be elected at the Annual Meeting to serve for a term to expire at
the 2000 Annual Meeting of Stockholders (Class of 2000) and until their
successors are elected and have qualified. Should any such nominee become unable
to serve, proxies may be voted for another person designated by management. All
nominees have advised the Corporation that they will serve if elected. The
remaining eight directors will continue to serve as directors for the terms set
forth on the following pages.
The nominees for director are such that immediately after the election of
such nominees to the Board of Directors, a majority of all directors holding
office shall be "Independent Directors" as that term is defined in By-Law 24 of
the Corporation's By-Laws. Generally, the By-Law provides that individuals are
Independent Directors if they are not employed by the Corporation or its
subsidiaries or equity companies and do not have, and are not affiliated with an
entity that has, business transactions or relationships with the Corporation or
its subsidiaries that are required to be disclosed in the Corporation's proxy
statement. The By-Law provides the Audit Committee of the Board of Directors
with authority to determine that an individual who has a transaction or
relationship disclosed in the proxy statement is nevertheless an Independent
Director if it determines by resolution that such person is independent of
management and free from any relationship that would interfere with such
person's independent judgment as a Board member.
CERTAIN INFORMATION REGARDING DIRECTORS AND NOMINEES
The names of the directors continuing in office and nominees, their ages as
of the date of the Annual Meeting, the year each first became a director, their
principal occupations during at least the past five years, other directorships
held by each as of the date hereof and certain other biographical information
are set forth on the following pages by Class, in the order of the next Class to
stand for election.
2
<PAGE> 6
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
FOR A THREE-YEAR TERM EXPIRING AT THE
2000 ANNUAL MEETING OF STOCKHOLDERS
(CLASS OF 2000)
WILLIAM O. FIFIELD Partner
Sidley & Austin
Mr. Fifield, age 50, has served as a partner in the law
firm of Sidley & Austin since 1977. He is the managing
[Photo] partner in the firm's Dallas office, a member of the
firm's executive committee, and a member of the firm's
accounting and finance and international operations
committees. He has been a director of the Corporation
since 1995.
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WAYNE R. SANDERS Chairman
of the Board and
Chief Executive Officer
Mr. Sanders, age 49, has served as Chief Executive
Officer of the Corporation since 1991 and Chairman of
the Board of the Corporation since 1992. He previously
had been elected President and Chief Operating Officer
in 1990. Employed by the Corporation in 1975, Mr.
Sanders was appointed Vice President of Kimberly-Clark
Canada Inc., a wholly owned subsidiary of the
Corporation, in 1981 and was appointed Director and
[Photo] President in 1984. Mr. Sanders was elected Senior Vice
President of Kimberly-Clark Corporation in 1985 and was
appointed President - Infant Care Sector in 1987,
President - Personal Care Sector in 1988 and President -
World Consumer, Nonwovens and Service and Industrial
Operations in 1990. Mr. Sanders is a director of Adolph
Coors Company, Coors Brewing Company and Texas Commerce
Bank, National Association. He also is a member of the
Marquette University Board of Trustees and is a national
trustee of the Boys and Girls Clubs of America. He has
been a director of the Corporation since 1989.
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WOLFGANG R. SCHMITT Chairman
of the Board and
Chief Executive Officer
Rubbermaid Incorporated
Mr. Schmitt, age 53, has served as Chairman of the Board
of Rubbermaid Incorporated since 1993, and as Chief
Executive Officer since 1992. He previously was elected
President and Chief Operating Officer in 1991, Executive
Vice President in 1987 and President of the Home
[Photo] Products Division in 1984. He joined Rubbermaid
Incorporated in 1966 and has been employed in various
marketing and research and development assignments. Mr.
Schmitt is a director of Rubbermaid Incorporated and
Parker-Hannifin Corporation and serves as a trustee of
Otterbein College. He has been a director of the
Corporation since 1994.
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3
<PAGE> 7
RANDALL L. TOBIAS Chairman of the Board and
Chief Executive Officer
Eli Lilly and Company
Mr. Tobias, age 55, is chairman of the board and chief
executive officer of Eli Lilly and Company. He was named to
that position in June 1993. He had previously been vice
[Photo] chairman of the board of AT&T since 1986, and had been
employed by AT&T since 1964. In addition to Kimberly-Clark
Corporation, Mr. Tobias is a director of Eli Lilly and
Company, Phillips Petroleum, Inc. and Knight-Ridder, Inc. He
is a member of the Business Council and the Business
Roundtable. He is vice chairman of the board of trustees of
Duke University, and a trustee of the Colonial Williamsburg
Foundation. He has been a director of the Corporation since
1994.
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MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING AT THE
1998 ANNUAL MEETING OF STOCKHOLDERS
(CLASS OF 1998)
PASTORA SAN JUAN CAFFERTY Professor
University of Chicago
Mrs. Cafferty, age 56, has served as a Professor since 1985
at the University of Chicago's School of Social Service
[Photo] Administration where she has been a member of the faculty
since 1971. Mrs. Cafferty is a director of the People's
Energy Corporation, WMX Technologies, Inc., The Lyric Opera,
and Rush-Presbyterian-St. Luke's Medical Center in Chicago.
She has been a director of the Corporation since 1976.
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CLAUDIO X. GONZALEZ Chairman of the Board
and Managing Director
Kimberly-Clark
de Mexico, S.A. de C.V.
Mr. Gonzalez, age 62, has served as Chairman of the Board
and Managing Director of Kimberly-Clark de Mexico, S.A. de
C.V., an equity company of the Corporation and a producer of
disposable consumer products, pulp, and writing and other
papers, since 1973. He was employed by the Corporation in
[Photo] 1956 and by Kimberly-Clark de Mexico, S.A., the predecessor
of Kimberly-Clark de Mexico, S.A. de C.V., in 1957. Mr.
Gonzalez was elected Vice President of Operations of
Kimberly-Clark de Mexico, S.A. in 1962 and Executive Vice
President and Managing Director in 1966. He is a director of
Kellogg Company, General Electric Company, The Mexico Fund,
Planet Hollywood International, Banco Nacional de Mexico,
Grupo Industrial ALFA, Grupo Modelo, Grupo Carso and
Telefonos de Mexico, and is a member of the Advisory Council
of the Stanford University Graduate School of Business. He
has been a director of the Corporation since 1976.
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4
<PAGE> 8
LOUIS E. LEVY Retired Partner and Vice Chairman
KPMG Peat Marwick
Mr. Levy, age 64, served as a partner of KPMG Peat Marwick
or its predecessor firms from 1968 until his retirement from
that firm in 1990. He had been a member of the board of
[Photo] directors of KPMG Peat Marwick or its predecessor firms from
1978 until his retirement. In addition, he was Vice Chairman
of KPMG Peat Marwick, responsible for Professional Standards
and Quality Assurance. Mr. Levy is a member of the boards of
directors of Household International, Inc. and the Alex,
Brown/Flag Investors Group of Mutual Funds. He is Chairman
Emeritus of the National Multiple Sclerosis Society. He has
been a director of the Corporation since 1991.
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LINDA JOHNSON RICE President and Chief
Operating Officer
Johnson Publishing Company, Inc.
Mrs. Johnson Rice, age 39, has served as President and Chief
[Photo] Operating Officer of Johnson Publishing Company, Inc., a
multi-media company, since 1987. She joined that company in
1980 and became Vice President in 1985. Mrs. Johnson Rice is
a director of Bausch & Lomb Incorporated and Viad
Corporation. She has been a director of the Corporation
since 1995.
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TERM EXPIRING AT THE
1999 ANNUAL MEETING OF STOCKHOLDERS
(CLASS OF 1999)
JOHN F. BERGSTROM President and Chief
Executive Officer
Bergstrom Corporation
Mr. Bergstrom, age 50, has served as President and Chief
Executive Officer of Bergstrom Corporation, Neenah,
Wisconsin, for more than the past five years. Bergstrom
[Photo] Corporation owns and operates hotels, and automobile sales
and leasing businesses, in Wisconsin. Mr. Bergstrom is a
director of the Wisconsin Energy Corporation, Universal
Foods Corporation, The First National Bank-Fox Valley,
Midwest Express Holdings, Inc., and the Green Bay Packers.
He also is a member of the Board of Trustees of Marquette
University, the Medical College of Wisconsin and the General
Motors Dealer Marketing Council. He has been a director of
the Corporation since 1987.
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5
<PAGE> 9
PAUL J. COLLINS Vice Chairman
Citicorp and Citibank, N.A.
Mr. Collins, age 60, has served as Vice Chairman of Citicorp
and its principal subsidiary, Citibank, N.A., New York, New
York, since 1988. He previously was elected Senior Corporate
[Photo] Officer and Chief Planning Officer of those companies in
1985, and Group Executive of those companies in 1984. He
joined Citicorp in 1961 and served as Executive Vice
President prior to becoming Group Executive. Mr. Collins
also is a director of Citicorp and Citibank, N.A., and a
trustee of Carnegie Hall Corporation and the Central Park
Conservancy. He has been a director of the Corporation since
1983.
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ROBERT W. DECHERD Chairman of the Board, President,
and Chief Executive Officer,
A.H. Belo Corporation
Mr. Decherd, age 46, has served as Chairman of the Board and
Chief Executive Officer of A.H. Belo Corporation, a
[Photo] broadcasting and publishing company, since January 1987. Mr.
Decherd became President of that company in January 1994,
and previously served as President from January 1985 through
December 1986. From January 1984 through December 1986, he
served as Chief Operating Officer. He has been a director of
that company since 1976. Mr. Decherd is a director of CCBG
Corporation and the Tomas Rivera Policy Institute. He has
been a director of the Corporation since February 1996.
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FRANK A. MCPHERSON Retired Chairman of the Board
and Chief Executive Officer
Kerr-McGee Corporation
Mr. McPherson, age 63, served as Chairman of the Board and
Chief Executive Officer of Kerr-McGee Corporation, a natural
resources company, from 1983 until his retirement from such
offices on February 1, 1997. Previously, he served as
[Photo] President of that company from 1980 to 1983, and Vice
Chairman from 1978 to 1980. He joined Kerr-McGee Corporation
in 1957 and held various assignments in oil, natural gas and
coal operations and chemical manufacturing. Mr. McPherson is
a director of Kerr-McGee Corporation, Tri-Continental
Corporation, Seligman Quality Fund, Inc., Seligman Select
Municipal Fund, Inc., Seligman Group of Mutual Funds, and
Bank of Oklahoma Financial Corporation. He has been a
director of the Corporation since 1990.
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<PAGE> 10
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of December 31, 1996
regarding the number of shares of the common stock of the Corporation
beneficially owned by all directors and nominees, by each of the executive
officers named in "Executive Compensation" below, and by all directors, nominees
and executive officers as a group. The share amounts below do not reflect
adjustment for the stock dividend to be paid April 2, 1997 to stockholders of
record on March 7, 1997 in order to effect a two-for-one stock split of the
Corporation's common stock (the "Stock Split").
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL OR AMOUNT AND NATURE OF
IDENTITY OF GROUP BENEFICIAL OWNERSHIP(1)(2)(3)
--------------------- -----------------------------
<S> <C>
John F. Bergstrom........................................... 4,300
Pastora San Juan Cafferty................................... 1,870(4)
Paul J. Collins............................................. 4,300(4)
Robert W. Decherd........................................... 4,900(5)
O. George Everbach.......................................... 90,041(6)
Thomas J. Falk.............................................. 95,033(6)
William O. Fifield.......................................... 1,300(4)
Claudio X. Gonzalez......................................... 52,000
Louis E. Levy............................................... 2,000(4)
James T. McCauley........................................... 188,181(6)
Frank A. McPherson.......................................... 3,400(7)
Linda Johnson Rice.......................................... 1,300
Wayne R. Sanders............................................ 412,511(6)(8)
Wolfgang R. Schmitt......................................... 800(4)
Kathi P. Seifert............................................ 71,630(6)
Randall L. Tobias........................................... 1,300(4)
All directors, nominees and executive officers as a group... 1,164,444(6)(9)
</TABLE>
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(1) Except as otherwise noted, the directors, nominees and named executive
officers, and the directors, nominees and executive officers as a group,
have sole voting and investment power with respect to the shares listed.
(2) Each director, nominee and named executive officer, and all directors,
nominees and executive officers as a group, own less than one percent of the
outstanding shares of the Corporation's common stock.
(3) For each director who is not an officer or employee of the Corporation or
any of its subsidiaries or equity companies, share amounts include shares
issued pursuant to the Outside Directors' Stock Compensation Plan. See
"Executive Compensation - Compensation of Directors."
(4) In addition to the shares listed in the table which are beneficially owned,
the following directors have stock credits allocated to their deferred
compensation accounts as of December 31, 1996 under the Corporation's
deferred compensation plan for directors: Mrs. Cafferty, 10,327 credits; Mr.
Collins, 20,473 credits; Mr. Fifield, 945 credits; Mr. Levy, 2,606 credits;
Mr. Schmitt, 1,641 credits; and Mr. Tobias, 2,263 credits. The accounts
reflect the election of the directors to defer into stock credits
compensation previously earned by them as directors of the Corporation.
Although such directors are fully at risk as to the price of the
Corporation's common stock represented by stock credits, such stock credits
are not shares of stock and the directors do not have any rights as holders
of common stock with respect to such stock credits. See "Executive
Compensation-Compensation of Directors" for additional information
concerning such deferred stock accounts.
(5) Includes 1,000 shares held by a trust for which Mr. Decherd serves as
trustee and with respect to which Mr. Decherd disclaims beneficial
ownership.
(6) Includes the following shares which could be acquired within 60 days of
December 31, 1996 by: Mr. Everbach, 59,904 shares; Mr. Falk, 83,550 shares;
Mr. McCauley, 114,301 shares; Mr. Sanders, 343,282 shares; Ms. Seifert,
64,836 shares; and all directors, nominees and executive officers as a
group, 826,627, shares. Also, shares of common stock held by the trustee of
the Corporation's Salaried Employees Incentive Investment Plan for the
benefit of, and which are attributable to the accounts in the plan of, the
respective directors, nominees and executive officers above are included in
this table.
(7) Mr. McPherson shares voting and investment power with respect to 3,100
shares.
(8) Excludes 10,880 shares held in trust for the benefit of Mr. Sanders'
children with respect to which Mr. Sanders disclaims beneficial ownership.
(9) Voting and investment power with respect to 3,100 of such shares is shared.
7
<PAGE> 11
CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS
In 1996, the Corporation and certain of its subsidiaries retained the legal
services of Sidley & Austin, Chicago, Illinois. Total fees paid in 1996 to
Sidley & Austin for services rendered to the Corporation and such subsidiaries
were $3,052,128. William O. Fifield, a director of the Corporation, is a partner
in that firm. Management believes that the cost of services so rendered by
Sidley & Austin during 1996 was reasonable compared with the cost of obtaining
similar services from an unaffiliated third party. The Corporation and certain
of its subsidiaries expect to retain Sidley & Austin in 1997.
The Corporation paid $847,000 to Bergstrom Corporation in 1996 for hotel,
lodging, and automobile rental and purchasing costs. John F. Bergstrom and
Richard A. Bergstrom, his brother, own 75 percent and 25 percent, respectively,
of Bergstrom Corporation. In addition, the Corporation leases office space in
Neenah and Menasha, Wisconsin from Neenah Downtown Redevelopment Associates
Limited Partnership and Downtown Menasha Associates Limited Partnership,
respectively, two partnerships engaged in the redevelopment of downtown real
estate in such cities. John F. Bergstrom owns a 15 percent limited partner
interest in each such partnership. During 1996, rental payments made by the
Corporation to such partnerships totaled $631,000 and $118,000, respectively.
During 1996, K-C Aviation Inc., a wholly owned subsidiary of the
Corporation, serviced and managed a corporate aircraft owned by Bergstrom
Pioneer Auto and Truck Leasing ("Bergstrom Leasing"), a wholly owned subsidiary
of Bergstrom Corporation. In addition, during 1996, the Corporation provided
certain pilot services to Bergstrom Corporation with respect to such aircraft.
The total fees paid in 1996 to K-C Aviation Inc. and the Corporation by
Bergstrom Leasing and Bergstrom Corporation for such services rendered were
$397,000.
Management believes that the amounts charged and paid in connection with
the foregoing arrangements were reasonable compared with the amounts which would
be charged and paid for similar services or products from an unaffiliated third
party. The Corporation and K-C Aviation Inc. expect to engage in similar
transactions with Bergstrom Corporation, Bergstrom Leasing and the two
partnerships in 1997.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors met seven times in 1996. All of the incumbent
Directors attended at least 75% of the total number of meetings of the Board and
committees of the Board on which they served, and the average attendance for
each such Director at such meetings was 97%.
The standing committees of the Board include, among others, the Audit
Committee, the Compensation Committee and the Nominating Committee.
The Audit Committee, currently composed of Mr. Collins, Chairman, Mr.
Bergstrom, Mr. Decherd, Mrs. Johnson Rice and Mr. Schmitt, met three times
during 1996. The Committee selects, subject to stockholder approval, and engages
independent auditors to audit the books, records and accounts of the
Corporation, determines the scope of such audits, and establishes policy in
connection with internal audit programs of the Corporation.
The Compensation Committee, currently composed of Mr. Levy, Chairman, Mrs.
Cafferty and Mr. Tobias, met three times during 1996. The nature and scope of
the Committee's responsibilities are set forth below under "Executive
Compensation - Board Compensation Committee Report on Executive Compensation."
The Nominating Committee, currently composed of Mr. McPherson, Chairman,
Mr. Fifield and Mr. Gonzalez, met twice during 1996. The Committee proposes and
considers suggestions for candidates for membership on the Board, and recommends
candidates to the Board to fill Board vacancies. It also proposes to the Board a
slate of directors for submission to the stockholders at the Annual Meeting.
8
<PAGE> 12
STOCKHOLDER NOMINATIONS FOR DIRECTORS
The Nominating Committee of the Board of Directors considers nominees
recommended by stockholders as candidates for election to the Board of Directors
at the Annual Meeting of Stockholders. A stockholder wishing to nominate a
candidate for election to the Board at the Annual Meeting is required to give
written notice to the Secretary of the Corporation of his or her intention to
make such a nomination. The notice of nomination must be received by the
Corporation not less than 50 days nor more than 75 days prior to the
stockholders' meeting, or if the Corporation gives less than 60 days' notice of
the meeting date, the notice of nomination must be received within 10 days after
the meeting date is announced. The notice of nomination is required to contain
certain information about both the nominee and the stockholder making the
nomination. The Corporation may require that the proposed nominee furnish other
information to determine that person's eligibility to serve as a director. A
nomination which does not comply with the above procedure will be disregarded.
EXECUTIVE COMPENSATION
The table which follows sets forth information concerning compensation for
each of 1994, 1995 and 1996 awarded to, earned by, or paid to the chief
executive officer and the four most highly compensated executive officers of the
Corporation other than the chief executive officer whose total annual salary and
bonus exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------- ----------------------
AWARDS
---------- PAYOUTS
OTHER SECURITIES ---------
ANNUAL UNDERLYING LTIP ALL OTHER
COMPENSATION OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(2) (#)(3) ($) ($)(4)
- --------------------------- ---- --------- -------- ------------ ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Wayne R. Sanders 1996 800,000 895,488(1) 1,415 105,000 1,233,089 4,500
Chairman of the Board 1995 800,000 844,800(1) 4,160 248,159 0 4,500
and Chief Executive Officer 1994 750,000 384,384(1) 8,824 0 476,437 4,500
O. George Everbach 1996 362,500 296,800 400 40,000 493,235 4,500
Senior Vice President - Law 1995 340,000 243,200 0 20,679 0 4,500
and Government Affairs 1994 330,000 121,722 0 0 21,990 4,500
Thomas J. Falk 1996 350,000 390,080 4,672 40,000 164,411 4,500
Group President - 1995 300,000 296,667 912 62,039 0 4,500
Tissue, Pulp and Paper 1994 266,667 210,210 2,284 0 0 4,500
James T. McCauley 1996 375,000 339,200 0 30,000 575,441 4,500
Executive Vice President 1995 350,000 320,000 1,534 31,019 0 4,500
1994 330,000 145,600 0 0 179,580 4,500
Kathi P. Seifert 1996 300,000 339,200 830 30,000 79,061 4,500
Group President - 1995 265,000 296,667 0 62,039 0 4,500
North American Personal 1994 185,000 132,396(1) 0 0 14,660 4,500
Care Products
</TABLE>
- ---------------
(1) Includes amounts voluntarily deferred by the executive officer under the
Corporation's Deferred Compensation Plan. The Deferred Compensation Plan
allows executive officers to defer portions of current base salary and bonus
compensation otherwise payable during the year. See "Board Compensation
Committee Report on Executive Compensation-Tax Deduction for Executive
Compensation" below for a more complete description of the plan.
(2) Amounts shown consist entirely of amounts reimbursed for federal and state
income taxes on certain personal and spousal travel required for company
purposes. The value of such travel did not, for any of the executive
officers named above, exceed, in the aggregate, $50,000 in 1994, 1995 or
1996.
(3) Options are shown on a pre-Stock Split basis. The number of options granted
in 1995 reflect adjustments made by the Compensation Committee in December
1995 to preserve the benefit to participants in connection with, and give
effect to, the spin-off by the Corporation on November 30, 1995 of the stock
of Schweitzer-Mauduit International, Inc.
(4) Amounts shown consist solely of the Corporation's matching contributions
under the Corporation's Salaried Employees Incentive Investment Plan.
9
<PAGE> 13
The policies and practices of the Corporation pursuant to which the
compensation set forth in the Summary Compensation Table was paid or awarded is
described under "Board Compensation Committee Report on Executive Compensation"
below.
The table which follows sets forth information (on a pre-Stock Split basis)
concerning grants of stock options during 1996 to each of the executive officers
who is named in the Summary Compensation Table and the potential realizable
value of such options at assumed annual rates of stock price appreciation for
the option term.
OPTION GRANTS IN 1996(1)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
NUMBER OF POTENTIAL REALIZABLE VALUE AT
SECURITIES % OF TOTAL ASSUMED ANNUAL RATES OF STOCK
UNDERLYING OPTIONS PRICE APPRECIATION FOR OPTION
OPTIONS GRANTED TO EXERCISE OR TERM(2)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ------------------------------
NAME (#) FISCAL YEAR ($/SH) DATE 0%($) 5%($) 10%($)
---- ---------- ------------ ----------- ---------- ----- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Wayne R. Sanders.......... 105,000 7.3 79.875 2/12/06 0 5,274,461 13,366,519
O. George Everbach........ 40,000 2.8 79.875 2/12/06 0 2,009,318 5,092,007
Thomas J. Falk............ 40,000 2.8 79.875 2/12/06 0 2,009,318 5,092,007
James T. McCauley......... 30,000 2.1 79.875 2/12/06 0 1,506,989 3,819,005
Kathi P. Seifert.......... 30,000 2.1 79.875 2/12/06 0 1,506,989 3,819,005
</TABLE>
- ---------------
(1) The plans governing stock option grants provide that the option price per
share shall be no less than 100 percent of the market value per share of the
Corporation's common stock at the date of grant. The term of any option is
no more than 10 years from the date of grant. Options granted in 1996 become
exercisable 30 percent after the first year following the grant thereof, an
additional 30 percent after the second year and the remaining 40 percent
after the third year; provided however, that all such options become
exercisable upon the death, total and permanent disability, or retirement of
the officer and options granted in 1996 under certain foreign regulations
become 100 percent exercisable after three years.
(2) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by, and the 0% rate permitted by, Securities and
Exchange Commission rules and are not intended to forecast possible future
appreciation, if any, in the Corporation's stock price.
The table which follows sets forth information (on a pre-Stock Split basis)
concerning exercises of stock options during 1996 by each of the executive
officers who is named in the Summary Compensation Table and the value of each
such officer's unexercised options as of December 31, 1996 based on a closing
stock price of $95.25 per share of the Corporation's common stock on such date:
AGGREGATED OPTION EXERCISES IN 1996
AND OPTION VALUES AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT
OPTIONS AT DECEMBER 31,
DECEMBER 31, 1996 ($)
SHARES ACQUIRED VALUE 1996 (#)
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- ---------------- --------- -------------- --------------
<S> <C> <C> <C> <C>
Wayne R. Sanders........................ 80,104 4,763,700 237,334 10,669,233
278,711 9,594,658
O. George Everbach...................... 10,000 435,650 41,700 1,955,894
54,475 1,279,982
Thomas J. Falk.......................... 6,000 256,890 52,938 2,299,532
83,427 2,610,036
James T. McCauley....................... 1,520 66,979 62,588 3,061,154
51,713 1,458,745
Kathi P. Seifert........................ 3,722 134,867 37,224 1,647,162
73,427 2,456,286
</TABLE>
10
<PAGE> 14
The table which follows sets forth information (on a pre-Stock Split basis)
concerning grants of participation share awards during 1996 to each of the
executive officers who is named in the Summary Compensation Table and the
estimated future payouts with respect thereto:
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1996(1)
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF OR OTHER NON-STOCK PRICE-BASED PLANS
SHARES, UNITS PERIOD UNTIL -------------------------------
OR OTHER MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS(#) OR PAYOUT ($) ($)(2) ($)
---- ------------- ------------ --------- --------- -------
<S> <C> <C> <C> <C> <C>
Wayne R. Sanders.................... 35,000 5 years N/A 2,018,100 N/A
O. George Everbach.................. 20,000 5 years N/A 1,153,200 N/A
Thomas J. Falk...................... 20,000 5 years N/A 1,153,200 N/A
James T. McCauley................... 15,000 5 years N/A 864,900 N/A
Kathi P. Seifert.................... 15,000 5 years N/A 864,900 N/A
</TABLE>
- ---------------
(1) Pursuant to the plans governing participation shares, each participation
share is assigned a base value equal to the book value of one share of the
Corporation's common stock as of the close of the fiscal year immediately
prior to the award. Each share in a participant's account is assigned a
dividend rate equal to the rate declared on the Corporation's common stock.
At the end of each fiscal quarter the amount of such dividends is determined
by multiplying the total cash dividend declared per share of the
Corporation's common stock during such quarter by the total of the
participation shares and dividend shares in the participant's account. Such
amount, when divided by the book value of one share of the Corporation's
common stock at the close of such fiscal quarter, is the number of dividend
shares credited to a participant's account for such quarter.
However, the plans provide that no dividend shares will be credited to a
participant's account in any quarter in which the total cash dividends per
share of common stock (on a pre-Stock Split basis) are (i) less than $.31 in
the case of the 1986 Equity Participation Plan (the "1986 Plan") and $.41 in
the case of the 1992 Equity Participation Plan (the "1992 Plan") or (ii)
less than the total cash dividends per share of common stock for the same
quarter of the immediately preceding year. In addition, in any quarter in
which the dividend is less than the dividend for the same quarter of the
preceding year, the book value of the participation shares will be reduced
by the difference in the dividend amounts between the two quarters.
The normal maturity date of a participation share award will be the close of
the fiscal year in which the fifth or seventh anniversary of the date of the
award occurs. Within 90 days after such maturity date, the participant is
entitled to receive a cash payment equal to the sum of (i) the increase (if
any) in book value of the participation shares on the maturity date of the
award over the base value of such shares, and (ii) the book value of the
dividend shares on the maturity date (equal to the book value of an
equivalent number of shares of the Corporation's common stock).
Under the 1986 Plan, the Compensation Committee may adjust the definition of
book value for purposes of the plan to preserve the benefits to the
participants and the Corporation contemplated thereby in the event of
certain unusual or extraordinary transactions or events that materially
affect the Corporation's net income, book value, shares of common stock
outstanding or stockholders' equity. The book value for purposes of awards
made pursuant to the 1992 Plan shall be adjusted to exclude the effect of
stock repurchases and changes in the Corporation's accounting policies. In
addition, the 1992 Plan provides that up to 50 percent of the payment of
matured participation share awards may be made in the form of Corporation
common stock as determined by the Compensation Committee when the award is
granted.
(2) Under the 1992 Plan, there is no threshold or maximum payout. Based on the
Corporation's 1996 performance, the target amounts assume a 22.4% annual
increase in the book value of the Corporation's common stock (as determined
in accordance with the 1992 Plan) during the term of the award, and a $.02
per share annual increase in the quarterly dividend rate. These assumptions
are not intended to be a forecast of future performance by the Corporation.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Corporation is
composed entirely of directors who are not, and have never been, officers or
employees of the Corporation. The Board designates the members and the
Chairperson of such committee. The Compensation Committee also constitutes the
stock option committee for the stock option plans of the Corporation with
respect to which information regarding stock option grants and exercise
transactions is disclosed in this Proxy Statement. In addition, the Compensation
Committee is responsible for establishing and administering the policies which
govern annual compensation and long-term incentive awards. The Compensation
Committee periodically evaluates the Corporation's compensation programs, and
compares them with those of other companies, both within the Corporation's peer
industry group and other large industrial companies.
11
<PAGE> 15
The companies which the Compensation Committee uses for making base salary
comparisons include some, but not all, of the companies appearing in the indexes
of the performance graph below. The first group used for comparison is composed
of 22 companies which have significant consumer businesses (the "Consumer
Company Group"), of which the Corporation is about median in terms of annual
sales and with which the Corporation competes in its businesses and/or for
executive talent. The second group used for comparison is composed of 159
industrial companies with annual sales exceeding $1 billion (the "Industrial
Company Group"), of which the Corporation is in about the 84th percentile in
terms thereof. Written salary information concerning the compensation practices
of these two groups of companies was provided to the Corporation by two
independent consultants.
In determining the compensation to be paid to executive officers in 1996,
the Compensation Committee employed compensation policies designed to align such
compensation with the Corporation's overall business strategy, values and
management initiatives. Such policies are intended to (i) reward executives for
long-term strategic management and the enhancement of stockholder value through
stock option and long-term incentive awards, (ii) support a performance-oriented
environment that rewards achievement of internal company goals and recognizes
company performance compared to the performance of similarly situated companies
and of other large industrial companies through the annual payment of cash
bonuses, and (iii) attract and retain executives whose abilities are considered
essential to the long-term success and competitiveness of the Corporation
through the Corporation's salary administration program.
Salaries for 1996
In determining base salaries of executive officers, the Compensation
Committee compares the executive officers' salaries to those for similar
positions in the two groups of companies referred to above, with primary
emphasis placed upon the Consumer Company Group so that the Committee may
compare data on specific salary levels for comparable positions. The
Compensation Committee's policy is to set executive officers' salaries at or
near the median salary level of such companies, with the salary of the Chief
Executive Officer set at or near the median salary level for chief executive
officers of the Consumer Company Group. In implementing such policy, the
Compensation Committee also considers the individual performance of the officer,
the performance of the unit over which the officer has responsibility (primarily
based upon the operating profit of such unit), the performance of the
Corporation (primarily based upon earnings per share and return on average
stockholders' equity), and the officer's tenure. No specific weight is assigned
to any individual factor. Salary actions taken by the Compensation Committee
with respect to the executive officers in 1996 were consistent with the policies
and practices described above.
Cash Bonus Awards for 1996
The cash bonus awards for 1996 set forth in the Summary Compensation Table
were based on the Corporation's Management Achievement Award Program. The
Compensation Committee's policy is to provide opportunities to an executive
officer for cash bonuses under such program which, together with his or her base
salary, are within the third quartile (that quartile between the 50th and 75th
percentile) of compensation for the Industrial Company Group if such officer's
goals have been fully met during the year. In determining such target cash bonus
awards, the Compensation Committee places primary emphasis on data for the
Industrial Company Group, as opposed to the Consumer Company Group, because such
data represents the performance based compensation practices of a broadly based
group of companies.
Actual annual cash bonus awards are determined by measuring performance
against specific goals established at the beginning of each year. The goals take
into account, depending on the responsibility of the individual, one or more of
the following: the individual's performance; the performance of the functional
group or unit with which the individual is associated (primarily based upon the
operating profit of such unit); and the overall performance of the Corporation
(primarily
12
<PAGE> 16
based upon earnings per share and return on average stockholders' equity). An
executive officer's goals are designed to reflect the relationship of his or her
responsibilities to the Corporation's long-term goal of maintaining a
sustainable annual return on average stockholders' equity of 20 percent (the
"Return on Equity Goal"). Such goals may or may not be equally weighted and will
vary from one executive officer to another. The opportunities for cash bonus
awards for the executive officers in 1996 were consistent with the policies and
practices described above. Certain performance objectives were exceeded for 1996
(primarily the earnings per share goal); therefore, bonus awards for certain
officers, and all of the executive officers named in the Summary Compensation
Table, exceeded target levels in 1996.
Based upon comparison of the most recent data provided by the independent
consultants described above, the cash bonuses paid to the named executive
officers, taken together with base salaries, were within the third quartile of
such compensation for comparable officers in the Industrial Company Group.
Cash bonuses for 1996 were based entirely on corporate performance for the
executive officers named in the Summary Compensation Table, although on a
subjective basis, individual performance also was a factor.
Participation Shares and Stock Options
The Corporation maintains the 1986 Equity Participation Plan and the 1992
Equity Participation Plan (collectively, the "Equity Plans"), pursuant to which
stock option grants and long-term incentive awards have been made to executive
officers. The Equity Plans are intended to provide a means of encouraging the
acquisition of an ownership interest in the Corporation by those employees,
including executive officers, who contribute materially by managerial,
scientific or other innovative means to the success of the Corporation, thereby
increasing their motivation for and interest in the Corporation's long-term
success.
The 1986 Equity Participation Plan has expired, and no additional awards
can be made under such plan. However, all awards outstanding on the expiration
date of such Equity Plan remain in full force and effect in accordance with its
terms.
The number of long-term incentive or stock option awards granted to an
executive officer is based principally on such officer's position and the
compensation practices of the Consumer Company Group. The Compensation
Committee's policy is for the value of such awards, on an annualized basis, to
be within the third quartile with respect to similar awards made by the
companies comprising such group. In implementing such policy, the Compensation
Committee also considers the individual performance of the officer. The
Committee does not determine the size of such grants by reference to the amount
and value of awards currently held by an executive officer. However, the
Compensation Committee takes into account the timing and size of prior grants to
an executive officer. The payout resulting from any long-term incentive or stock
option award is based on the growth in the book value and market value,
respectively, of the Corporation's common stock subsequent to the grant of such
awards.
The Equity Plans employ book value through the use of participation shares
and dividend shares, each of which, when awarded, is credited to a participant's
memorandum account. For a description of the material terms of participation
share awards pursuant to the Equity Plans, see note 1 to the table above
entitled "Long-Term Incentive Plans - Awards in 1996."
The Equity Plans also employ market value as a basis for rewarding
performance through the use of tax-qualified and nonqualified stock options. For
a description of the material terms of stock option grants pursuant to the
Equity Plans, see note 1 to the table above entitled "Option Grants in 1996."
1996 Compensation of the Chief Executive Officer
The Compensation Committee reviews and adjusts the Chief Executive
Officer's salary every two years. The Committee based the 1996 compensation of
the Chief Executive Officer on the
13
<PAGE> 17
policies and practices described above. Based upon comparison of the data
provided by the independent consultants described above, Mr. Sanders' salary in
1996 was within the second quartile of salary levels of the chief executive
officers of the Consumer Company Group.
The cash bonus which was paid to Mr. Sanders for 1996 was primarily in
recognition of the progress, as determined by the members of the Board of
Directors who are not officers or employees of the Corporation or any of its
subsidiaries or equity companies, made by the Corporation during the year toward
attaining the Corporation's earnings per share goal, Return on Equity Goal and
long-term strategic goals, including the successful integration of Scott Paper
Company. Because certain performance objectives were exceeded during 1996, the
bonus award to Mr. Sanders for 1996 exceeded target levels. Based upon
comparison of the most recent data provided by the independent consultants
described above, such bonus taken together with Mr. Sanders' base salary, was
within the third quartile of such compensation paid to chief executive officers
of the Industrial Company Group.
The Compensation Committee believes that executive compensation for 1996
adequately reflects its policy to align such compensation with overall business
strategy, values and management initiatives, and to ensure that the
Corporation's goals and performance are consistent with the interests of its
stockholders.
Tax Deduction for Executive Compensation
The Committee has determined that it is not in the stockholders' interests
to modify the Corporation's Management Achievement Award Program plan to enable
the Corporation to meet the requirements of the federal tax code provisions
which limit to $1 million the deductibility of annual cash compensation paid to
any executive officer named in the Summary Compensation Table for corporate
income tax purposes. The Committee believes that it is in the stockholders'
interests for the Committee to retain discretion in the awarding of cash bonuses
to such officers to better ensure that the bonus which is paid to each such
officer reflects the officer's contribution to the achievement of the
Corporation's Return on Equity Goal and long-term strategic goals.
However, the Corporation has adopted a deferred compensation plan in
response to such limitations on executive compensation deductibility which
allows each executive officer to defer all salary in excess of $1 million for
any fiscal year. In addition, the deferred compensation plan allows each
executive officer to defer all or a portion of his or her bonus for any fiscal
year. Such plan permits such officers to limit their annual cash compensation to
the $1 million limitation which may be deducted by the Corporation for federal
income tax purposes. Such deferral will result in the possible deduction by the
Corporation of such compensation when paid; however, there is no obligation on
any executive officer to defer any such amounts during any fiscal year. The
Corporation has determined that the impact to the Corporation of being unable to
deduct that portion of the cash bonus paid to such officers which, together with
their annual salary, exceeds $1 million will be minimal. In 1996, the Chief
Executive Officer elected to defer all amounts of his salary and bonus in excess
of $1 million.
Furthermore, in order to maximize the deductibility of the compensation
paid to the Corporation's executive officers, the Corporation's 1992 Equity
Participation Plan, as amended, ensures that compensation resulting from the
exercise of stock options and payments made in connection with participation
share awards will be fully deductible.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Louis E. Levy, Chairman
Pastora San Juan Cafferty
Randall L. Tobias
14
<PAGE> 18
PERFORMANCE GRAPH
Comparison of
Five Year Cumulative Total Return Among
Kimberly-Clark, S&P 500, and Peer Group*
The stock price performance shown on the graph below is not necessarily
indicative of future price performance.
The graph treats as a special dividend the distribution on November 30,
1995 of one share of common stock of Schweitzer-Mauduit International, Inc. for
every 10 shares of the Corporation's common stock held of record on November 13,
1995.
<TABLE>
<CAPTION>
Measurement Period Kimberly-
(Fiscal Year Covered) Clark S&P 500 Peer Group
<S> <C> <C> <C>
1991 100 100 100
1992 119.81 107.62 103.05
1993 108.99 118.46 107.71
1994 109.32 120.03 121.06
1995 189.59 165.13 163.79
1996 223.12 203.05 204.29
</TABLE>
* The companies included in the Peer Group are The Clorox Co., Colgate-Palmolive
Company, James River Corp, Johnson & Johnson, Paragon Trade Brands, Inc., Pope
& Talbot, Inc., The Procter & Gamble Company, Tambrands Inc., The Unilever
Group, Champion International, International Paper Company and Mead Corp.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, the following Directors served, and currently are serving, as
members of the Compensation Committee of the Board of Directors of the
Corporation: Louis E. Levy, Chairman; Pastora San Juan Cafferty; and Randall L.
Tobias. Mrs. Cafferty served as Chairperson of the Committee from January 1,
1996 until April 18, 1996.
Wayne R. Sanders, Chairman of the Board and Chief Executive Officer of the
Corporation, serves as a member of the compensation committee of the board of
directors of Kimberly-Clark de Mexico, S.A. de C.V. Claudio X. Gonzalez,
Chairman of the Board and Managing Director of Kimberly-Clark de Mexico, S.A. de
C.V., serves as a member of the Board of Directors of the Corporation.
Kathi P. Seifert, Group President - North American Personal Care Products
of the Corporation, serves as a member of the board of directors of Eli Lilly
and Company. Randall L. Tobias, Chairman of the Board and Chief Executive
Officer of Eli Lilly and Company, serves as a member of the Compensation
Committee of the Board of Directors of the Corporation.
15
<PAGE> 19
DEFINED BENEFIT RETIREMENT PLAN
The table below illustrates the estimated annual standard pension benefit
payable upon retirement in 1996 at specified compensation levels and years of
service classifications.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF BENEFIT SERVICE
--------------------------------------------------------------------------------
15 20 25 30 35 40 45
REMUNERATION YEARS YEARS YEARS YEARS YEARS YEARS YEARS
------------ -------- -------- -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 200,000............................ $ 45,000 $ 60,000 $ 75,000 $ 90,000 $ 105,000 $ 120,000 $ 135,000
400,000............................ 90,000 120,000 150,000 180,000 210,000 240,000 270,000
600,000............................ 135,000 180,000 225,000 270,000 315,000 360,000 405,000
800,000............................ 180,000 240,000 300,000 360,000 420,000 480,000 540,000
1,000,000........................... 225,000 300,000 375,000 450,000 525,000 600,000 675,000
1,200,000........................... 270,000 360,000 450,000 540,000 630,000 720,000 810,000
1,400,000........................... 315,000 420,000 525,000 630,000 735,000 840,000 945,000
1,600,000........................... 360,000 480,000 600,000 720,000 840,000 960,000 1,080,000
1,800,000........................... 405,000 540,000 675,000 810,000 945,000 1,080,000 1,215,000
2,000,000........................... 450,000 600,000 750,000 900,000 1,050,000 1,200,000 1,350,000
2,200,000........................... 495,000 660,000 825,000 990,000 1,155,000 1,320,000 1,485,000
</TABLE>
The compensation covered by the Corporation's defined benefit plan for
which the above table is provided includes the salary and bonus information set
forth in the Summary Compensation Table. The estimated years of benefit service,
as of normal retirement at age 65, for the executive officers named in the
Summary Compensation Table are: O. George Everbach, 19.7 years; Thomas J. Falk,
40.0 years; James T. McCauley, 34.7 years; Wayne R. Sanders, 37.1 years; and
Kathi P. Seifert, 36.2 years. Under the plan, an employee is entitled to receive
an annual standard benefit based on years of benefit service and subject, in
some cases, to deduction for social security benefits. Benefits under the plan
will be limited to the extent required by the Internal Revenue Code of 1986, as
amended, with excess benefits over such limitation being paid pursuant to
supplemental plans. While such supplemental plans remain unfunded, in 1994 the
Board of Directors approved the establishment of a trust and authorized the
Corporation to make contributions to such trust in order to provide a source of
funds to assist the Corporation in meeting its liabilities under the plans. Each
of the executive officers named in the Summary Compensation Table is a
participant in such supplemental plans.
Retirement benefits for participants who have at least five years of
vesting service may begin on a reduced basis at age 55, or on an unreduced basis
at normal retirement age. Unreduced benefits also are available for participants
with 10 years of vesting service at age 62 or as early as age 60 with 30 years
of vesting service. The normal form of benefit is a single-life annuity payable
monthly. Benefits will be actuarially adjusted if the employee receives one of
the available forms of joint and survivor or other optional forms of benefit. In
addition, each participant in the supplemental plans has the option of receiving
an actuarially determined lump sum payment upon retirement after age 55 in lieu
of the monthly payments which otherwise would be payable to such participant
under such plans. Further, in the event of a change of control of the
Corporation or a reduction in the Corporation's long-term credit rating below
investment grade, each such participant would have the option of receiving the
present value of his or her accrued benefits in such plans at such time in a
lump sum, reduced by 10% and 5% for active and former employees, respectively.
EXECUTIVE SEVERANCE PLAN
The Corporation's Executive Severance Plan provides that in the event of
termination of a participant's employment with the Corporation for any reason
(other than death or disability) within two years after a change of control of
the Corporation, as defined in the plan, the participant will receive a cash
payment in an amount equal to the sum of (i) three times base salary and the
16
<PAGE> 20
maximum management achievement award, and (ii) the value of unmatured or
unexercised awards or grants and nonvested benefits under the Corporation's
Equity Participation Plans and the Salaried Employees Incentive Investment Plan
and successor plans. The plan also provides for monthly supplemental retirement
benefits equal to those that would have accrued had employment continued for an
additional three years, for certain relocation costs, and for the continuation
of certain other benefits for varying periods of up to three years. The Board
has determined the eligibility criteria for participation in the plan. A
participant ceases to be a participant in the plan when notified by the Board
that it has determined that such participant has ceased to be a key executive
for purposes of the plan. The Corporation has agreements under the plan with
each executive officer who is named in the Summary Compensation Table.
COMPENSATION OF DIRECTORS
Directors who are not officers or employees of the Corporation or any of
its subsidiaries, affiliates or equity companies receive an annual cash retainer
of $25,000 payable pro rata quarterly in advance, and a daily attendance fee of
$1,200 per meeting for each day or fraction thereof spent in attendance at a
meeting of the Board or any committee thereof, subject to a maximum of $3,600
for any day on which more than one such meeting is held. Pursuant to the Outside
Directors' Stock Compensation Plan, such directors also receive 300 shares of
common stock of the Corporation (on a pre-Stock Split basis) on December 31 of
each year, and cash dividends and accrued interest thereon are credited to an
account maintained by the Corporation. All of the shares granted to any such
director under such plan, together with all cash dividends and accrued interest
thereon, are restricted and nontransferable until, and will be delivered to such
director free of restrictions upon, his or her termination of service as a
member of the Board. In addition, the Corporation reimburses such directors for
expenses incurred as a result of attending Board or committee meetings. A
director who is an officer or an employee of the Corporation or any of its
subsidiaries, affiliates or equity companies does not receive any fees for
services as a member of the Board or any committee thereof, but is reimbursed
for expenses incurred as a result of such service.
Under the deferred compensation plan for directors of the Corporation,
directors who are not officers or employees of the Corporation or any of its
subsidiaries, affiliates or equity companies may make an irrevocable election to
defer receipt of all or a portion of their annual cash retainer and meeting fees
for any year. Compensation of a director that is deferred under the plan is
credited either to a cash account or a stock account of such director, as
provided in such election. Amounts allocated to a cash account are converted
into cash credits and will earn additional cash credits quarterly at a rate of
one-fourth of the per annum rate of either six percent or of that equivalent to
the rate paid from time to time on six-month U.S. Treasury Bills, whichever is
higher. Amounts allocated to a stock account are converted into stock credits
equal to the number of shares of common stock of the Corporation which could
have been purchased with such amounts. A participant's stock account also is
credited with additional stock credits based on the amount of any dividends that
are paid on the Corporation's common stock. Cash credits and stock credits are
converted to and paid in cash at the time of distribution on the date elected by
a participant, and with respect to stock credits, based on the price of a share
of common stock of the Corporation. Stock credits are not shares of stock, no
shares of the Corporation's common stock are ever distributed to a participant
under the plan, and no participant acquires any rights as a holder of common
stock under the plan. All accounts are distributed in one to 20 annual
installments, as elected by the participant, or upon death.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF
THE FOUR NOMINEES FOR DIRECTOR.
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<PAGE> 21
PROPOSAL 2. APPROVAL OF AUDITOR
The Audit Committee of the Board of Directors has selected, and the Board
of Directors has approved, Deloitte & Touche LLP as the principal independent
auditor to audit the financial statements of the Corporation for 1996, subject
to ratification by the stockholders. If the stockholders do not approve the
selection of Deloitte & Touche LLP, the selection of another independent auditor
will be considered by the Audit Committee. Deloitte & Touche LLP has been the
independent auditor for the Corporation since its incorporation in 1928.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting with the opportunity to make a statement if they desire to do so,
and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THIS
SELECTION.
PROPOSAL 3. APPROVAL OF AMENDMENTS TO THE 1992 EQUITY PARTICIPATION PLAN
The Corporation's 1992 Equity Participation Plan (the "Plan") was approved
by the stockholders at the 1992 Annual Meeting of Stockholders and certain
amendments to the Plan were approved by the stockholders at the 1995 Annual
Meeting of Stockholders. The Board of Directors has approved and recommends to
stockholders for their approval certain additional amendments to the Plan. The
primary purpose of such amendments is to increase the number of shares of the
Corporation's common stock available under the Plan for participation share and
stock option awards.
The principal features of the Plan, as proposed to be amended, and the
relevant proposed amendments are summarized below. The full text of the Plan, as
amended and restated, is set forth as Exhibit A to this Proxy Statement, which
you are urged to read carefully.
THE PLAN
The Plan is administered by the Compensation Committee of the Board of
Directors. The Committee will from time to time select participants, determine
the extent of participation and make all other necessary decisions and
interpretations under the Plan.
The Plan employs long-term incentive compensation based on the growth in
the book value of the Corporation's common stock through the use of
participation shares. The Plan also employs market value as a basis for
rewarding performance through the use of tax-qualified and non-qualified stock
options. For a description of such participation shares and stock options, see
"Proposal 1. Election of Directors - Executive Compensation - Board Compensation
Committee Report on Executive Compensation - Participation Shares and Stock
Options."
The Plan currently makes available the equivalent of 10,000,000 shares
(which shall be adjusted for stock dividends, stock splits or other corporate
changes, and will increase to 20,000,000 shares following the Stock Split) of
the Corporation's common stock for participation share and stock option awards.
At February 21, 1997, approximately 246,000 of such shares remained available
for future grants. Participation shares which are retired through forfeiture or
maturity and shares subject to options which become ineligible for purchase will
be available for awards under the Plan to the extent permitted by Section 16 of
the Securities Exchange Act of 1934, as amended (or the rules and regulations
promulgated thereunder), and to the extent determined to be appropriate by the
Committee.
Eligibility to participate in the Plan is limited to employees (including
officers and directors who are also employees) of the Corporation and any
company in which the Corporation owns at least 20% of the equity interest. In
order to be eligible, an employee must be determined by the Compensation
Committee either to be in a position to contribute materially to the success of
the Corporation or its affiliates or to have in the past so contributed. The
current eligible group consists
18
<PAGE> 22
of approximately 700 persons, including all of those named in the Summary
Compensation Table. It is impossible to determine the exact number of persons
who will be eligible under the Plan during its term because the selection of
participants is a discretionary decision of the Compensation Committee.
The Committee may amend the Plan to the extent permitted by law, Section 16
of the Securities Exchange Act of 1934, as amended (including the rules and
regulations promulgated thereunder), section 162(m) of the Internal Revenue Code
and the rules of any stock exchange on which the Corporation's common stock is
listed. To the extent that the foregoing requires stockholder approval of any
such amendment, the Committee may amend the Plan subject to stockholder
approval.
Under the Internal Revenue Code, optionees will realize no taxable income
as a result of the grant of options. While exercise of an incentive stock option
which meets the requirements of the Internal Revenue Code will not result in
taxable income (except that the alternative minimum tax may apply), exercise of
a nonqualified stock option will result in taxable income to the extent of the
difference between the fair market value of the stock at the time of exercise
and the exercise price. The Corporation will be entitled to a tax deduction upon
the exercise of a nonqualified option in the amount equal to the optionee's
taxable income. If the optionee sells the shares acquired on exercise of
incentive stock options more than two years after the grant date and more than
one year after exercise, the entire gain, if any, realized upon the sale will be
taxable to the optionee as long-term capital gain. If the optionee does not
satisfy the holding period requirements, the optionee will realize ordinary
income, in most cases equal to the difference between the exercise price of the
shares and the lesser of the fair market value of the shares on the exercise
date or the amount realized on a sale or exchange of the shares, and the
Corporation will be entitled to a corresponding tax deduction.
THE PROPOSED AMENDMENTS
The primary amendment, to increase the number of shares available under the
Plan for participation share and stock option awards, is proposed to ensure that
there are shares available for future awards. The amendment would increase the
number of shares available under the Plan from 10,000,000 shares to 20,000,000
shares on a pre-Stock Split basis (40,000,000 shares on a post-Stock Split
basis). The amendment is required in order to make future participation share
and stock option awards, as there is currently an insufficient number of shares
available for future awards.
The principal reason that additional shares are required under the Plan for
future awards is due to the increased number of employees eligible for awards.
Prior to the merger with Scott Paper Company, there were approximately 500
persons eligible for awards under the Plan. Due to the merger and the resultant
growth of the Corporation, there are currently more than 700 eligible employees.
In addition, the Corporation has attempted to increase the equity component of
the compensation provided to members of management in order to better align
their interests with those of the stockholders. Therefore, a greater number of
stock options and participation shares has been awarded than was contemplated
when the Plan was initially adopted.
Non-material technical amendments, including certain changes to provisions
of the Plan to take into account recent changes to the rules promulgated under
Section 16 of the Securities Exchange Act of 1934, as amended, are not
summarized herein.
In addition to the amendments discussed above, the Compensation Committee
has approved certain other amendments to the Plan to make appropriate
adjustments for the Stock Split. Such amendments, which are effective April 2,
1997, do not require stockholder approval and are not reflected in the Plan set
forth as Exhibit A.
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<PAGE> 23
NEW PLAN BENEFITS
On February 20, 1997, stock options were granted and participation shares
were awarded under the Plan. The following table sets forth the option grants
and participation share awards (on a pre-Stock Split basis) made to the
individuals and groups referred to below.
1997 EQUITY PARTICIPATION PLAN AWARDS
<TABLE>
<CAPTION>
PARTICIPATION
SHARES(2)
--------------------
NUMBER OF NUMBER OF PERIOD
OPTIONS SHARES UNTIL
NAME AND POSITION GRANTED(1) AWARDED PAYOUT
----------------- ---------- --------- -------
<S> <C> <C> <C>
Wayne R. Sanders............................................ 90,000 30,000 5 years
Chairman of the Board and
Chief Executive Officer
O. George Everbach.......................................... 24,000 12,000 5 years
Senior Vice President -
Law and Government Affairs
Thomas J. Falk.............................................. 30,000 15,000 5 years
Group President -
Tissue, Pulp and Paper
James T. McCauley........................................... 0 0 --
Executive Vice President
Kathi P. Seifert............................................ 24,000 12,000 5 years
Group President - North American
Personal Care Products
Executive Group............................................. 254,000 112,000 5 years
Non-Executive Director Group................................ 0 0 --
Non-Executive Officer Employee Group........................ 1,185,700 884,900 5 years
</TABLE>
- ---------------
(1) Stock options, which generally vest over a three-year period and expire on
February 19, 2007, were granted at $100.00 per share (the fair market value
of the Corporation's common stock on February 20, 1997). The dollar value of
the options granted depends upon the future market price of the
Corporation's common stock and therefore is not presently determinable. No
non-officer nominee for election as a director and no associate of any
director, executive officer or nominee received any options pursuant to the
above grant. In addition, no other person received or is to receive five
percent or more of such options.
(2) The Compensation Committee has determined that the participation shares
awarded will be paid 50 percent in cash and 50 percent in shares of the
Corporation's common stock. As described in "Executive Compensation - Board
Compensation Committee Report on Executive Compensation - Participation
Shares and Stock Options," the dollar amount of such payout is dependent
upon the growth in the book value of the Corporation's common stock. Such
amount therefore is not presently determinable. The book value per share of
the Corporation's common stock at December 31, 1996, which is the base value
for purposes of the above awards, was $15.91.
GENERAL/VOTE REQUIRED
The closing quotation of the common stock of the Corporation on February
20, 1997, as reported in the Wall Street Journal Listing of Composite
Transactions, was $100.00 per share.
A favorable vote by the holders of a majority of the Company's common stock
present, or represented, and voting at the Annual Meeting is required to approve
the foregoing amendments to the Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENTS TO THE 1992 EQUITY PARTICIPATION PLAN.
20
<PAGE> 24
PROPOSAL 4. APPROVAL OF AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
In connection with the declaration of the Stock Split, the Board also
proposed and declared advisable an amendment to the Corporation's Restated
Certificate of Incorporation to increase the number of authorized shares of
common stock from 600,000,000 to 1,200,000,000 (the "Charter Amendment").
At the close of business on February 18, 1997, there were 280,341,887
shares of common stock of the Corporation outstanding and no shares of common
stock reserved for future issuance. It is expected that after the Stock Split,
there will be approximately 560,000,000 shares of common stock outstanding, and
only approximately 40,000,000 authorized shares of common stock available for
future issuance. If the Charter Amendment is approved by the stockholders, the
number of shares available for issuance will increase to 640,000,000. Although
there are no present plans or commitments for their use, such shares would be
available for issuance without further action by stockholders except as required
by law or applicable stock exchange requirements. The current Rules of the New
York Stock Exchange would require stockholder approval if the number of shares
of common stock to be issued would equal or exceed 20% of the number of shares
of common stock outstanding immediately prior to such issuance.
The Board of Directors believes it is desirable to authorize additional
shares of common stock so that there will be sufficient shares available for
issuance for purposes that the Board may hereafter determine to be in the best
interests of the Corporation and its stockholders. Such purposes could include
the offer of shares for cash, the declaration of stock splits and stock
dividends, mergers and acquisitions and other general corporate purposes. In
many situations, prompt action may be required which would not permit seeking
stockholder approval to authorize additional shares for the specific transaction
on a timely basis. The Board of Directors believes it should have the
flexibility to act promptly in the best interests of stockholders. The terms of
any future issuance of shares of common stock will be dependent largely on
market and financial conditions and other factors existing at the time of
issuance.
Although the Board of Directors has no current intention of issuing any
additional shares of common stock of the Corporation as an anti-takeover
defense, the issuance of additional shares could be used to create impediments
to or otherwise discourage persons attempting to gain control of the
Corporation. For example, the issuance of additional shares could be used to
dilute the voting power of shares then outstanding. Shares of common stock could
also be issued to persons or entities who would support the Board in opposing a
takeover bid which the Board determines to be not in the best interests of the
Corporation and its stockholders. In the case of a hostile tender offer, the
ability of the Board to issue additional shares of common stock could be viewed
as beneficial to management by stockholders who want to participate in such
tender offer. Neither management nor the Board of Directors has any present
intention to propose any anti-takeover measures in future proxy solicitations.
If the Charter Amendment is approved, Article IV of the Restated
Certificate of Incorporation of the Corporation would read in its entirety as
follows:
"The total number of shares of all classes of capital stock which the
Corporation shall have the authority to issue is one billion, two hundred
and twenty million (1,220,000,000) shares which shall be divided into two
classes as follows:
(a) Twenty million (20,000,000) shares of Preferred Stock without par
value; and
(b) One billion, two hundred million (1,200,000,000) shares of Common
Stock of the par value of One Dollar and Twenty-five Cents ($1.25)
per share."
Approval of the Charter Amendment will require the affirmative vote of a
majority of the outstanding shares of common stock of the Corporation entitled
to vote thereon.
21
<PAGE> 25
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
CHARTER AMENDMENT.
1998 STOCKHOLDER PROPOSALS
Proposals by stockholders for inclusion in the Corporation's 1998 Proxy
Statement and form of proxy for the Annual Meeting of Stockholders to be held in
1998 should be addressed to the Secretary, Kimberly-Clark Corporation, P.O. Box
619100, Dallas, Texas 75261-9100, and must be received at such address no later
than November 7, 1997. Upon receipt of any such proposal, the Corporation will
determine whether or not to include such proposal in the Proxy Statement and
proxy in accordance with applicable law. It is suggested that such proposals be
forwarded by certified mail - return receipt requested.
ANNUAL MEETING ADVANCE NOTICE REQUIREMENTS
The Corporation's By-Laws require advance notice for any business to be
brought before a meeting of stockholders. In general, for business to properly
be brought before an annual meeting by a stockholder (other than in connection
with the election of directors; see "Proposal 1. Election of
Directors - Stockholder Nominations for Directors"), written notice of the
stockholder proposal must be received by the Secretary of the Corporation not
less than 75 days nor more than 100 days prior to the first anniversary of the
preceding year's annual meeting. Certain other notice periods are provided if
the date of the annual meeting is advanced by more than 30 days or delayed by
more than 60 days from such anniversary date. The stockholder's notice to the
Secretary must contain a brief description of the business to be brought before
the meeting and the reasons for conducting such business at the meeting, as well
as certain other information. Additional information concerning the advance
notice requirement and a copy of the Corporation's By-Laws may be obtained from
the Secretary of the Corporation at the address provided below.
OTHER MATTERS
The management of the Corporation knows of no other matters to be presented
at the meeting. Should any other matter requiring a vote of the stockholders
arise at the meeting, the persons named in the proxy will vote the proxies in
accordance with their best judgment.
By order of the Board of Directors.
/s/ DONALD M. CROOK
Donald M. Crook
Vice President and Secretary
KIMBERLY-CLARK CORPORATION
P. O. Box 619100
Dallas, Texas 75261-9100
Telephone (972) 281-1200
March 7, 1997
22
<PAGE> 26
EXHIBIT A
KIMBERLY-CLARK CORPORATION
1992 EQUITY PARTICIPATION PLAN
(AS AMENDED AND RESTATED EFFECTIVE NOVEMBER 1, 1996)
1. PURPOSE
This 1992 Equity Participation Plan (the "Plan") of Kimberly-Clark
Corporation (the "Corporation") is intended to aid in attracting and retaining
highly qualified personnel and to encourage those employees who materially
contribute, by managerial, scientific or other innovative means, to the success
of the Corporation or of an Affiliate, to acquire an ownership interest in the
Corporation, thereby increasing their motivation for and interest in the
Corporation's or Affiliate's long-term success.
2. EFFECTIVE DATE
The Plan was originally adopted effective as of April 24, 1992, upon
approval by the stockholders of the Corporation at the 1992 Annual Meeting. The
Plan as hereby amended and restated is adopted effective as of November 1, 1996,
upon approval by the stockholders of the Corporation at the 1997 Annual Meeting.
3. DEFINITIONS
"Account" has the meaning set forth in subsection 7(a) of this Plan.
"Affiliate" means any company in which the Corporation owns 20% or more of
the equity interest (collectively, the "Affiliates").
"Award" has the meaning set forth in section 6 of this Plan.
"Award Agreement" means an agreement entered into between the Corporation
and a Participant setting forth the terms and conditions applicable to the Award
granted to the Participant.
"Base Value" has the meaning set forth in subsection 7(a) of this Plan.
"Board" means the Board of Directors of the Corporation.
"Book Value" has the meaning set forth in subsection 7(a) of this Plan.
"Code" means the Internal Revenue Code of 1986 and the regulations
thereunder, as amended from time to time.
"Committee" means the Compensation Committee of the Board, provided that if
the requisite number of members of the Compensation Committee are not
Disinterested Persons, the Plan shall be administered by a committee, all of
whom are Disinterested Persons, appointed by the Board and consisting of two or
more directors with full authority to act in the matter. The term "Committee"
shall mean the Compensation Committee or the committee appointed by the Board,
as the case may be.
"Committee Rules" means the interpretative guidelines approved by the
Committee providing the foundation for administration of this Plan.
"Common Stock" means the common stock, par value $1.25 per share, of the
Corporation and shall include both treasury shares and authorized but unissued
shares and shall also include any security of the Corporation issued in
substitution, in exchange for, or in lieu of the Common Stock.
"Disinterested Person" means a person who is a "Non-Employee Director" for
purposes of rule 16b-3 under the Exchange Act, or any successor provision, and
who is also an "outside director" for purposes of section 162(m) of the Code or
any successor section.
A-1
<PAGE> 27
"Dividend Shares" has the meaning set forth in subsection 7(c) of this
Plan.
"Dividend Share Value" means Dividend Share Value as defined in subsection
7(c) of this Plan.
"Exchange Act" means the Securities Exchange Act of 1934 and the rules and
regulations thereunder, as amended from time to time.
"Fair Market Value" means the reported closing price of the Common Stock,
on the relevant date as reported on the composite list used by The Wall Street
Journal for reporting stock prices, or if no such sale shall have been made on
that day, on the last preceding day on which there was such a sale.
"Incentive Stock Option" means an Option which is so defined for purposes
of section 422 of the Code or any successor section.
"Insider" has the meaning set forth in subsection 15(k) of this Plan.
"Maturity Date" has the meaning set forth in subsection 7(b) of this Plan.
"Maturity Value" has the meaning set forth in subsection 7(c) of this Plan.
"Nonqualified Stock Option" means any Option which is not an Incentive
Stock Option.
"Option" means a right to purchase a specified number of shares of Common
Stock at a fixed option price equal to no less than 100% of the Fair Market
Value of the Common Stock on the date the Award is granted.
"Option Price" has the meaning set forth in subsection 8(b) of this Plan.
"Participant" means an employee who the Committee selects to participate in
and receive Awards under the Plan (collectively, the "Participants").
"Participation Shares" means the right, as described in section 7, to
receive an amount equal to the increase in Book Value on a specified number of
shares of Common Stock.
"Retirement" and "Retires" means the termination of employment on or after
the date the Participant is entitled to receive immediate payments under a
qualified retirement plan of the Corporation or an Affiliate; provided, however,
if the Participant is not eligible to participate under a qualified retirement
plan of the Corporation or its Affiliates then such Participant shall be deemed
to have retired if his termination of employment is on or after the date such
Participant has attained age 55.
"Severe Financial Hardship" means a severe financial hardship as defined in
subsection 15(h) of this Plan.
"Stock Appreciation Right (SAR)" has the meaning set forth in subsection
8(j)(i) of this Plan.
"Total and Permanent Disability" means Totally and Permanently Disabled as
defined in the Kimberly-Clark Corporation Salaried Employees' Retirement Plan.
4. ADMINISTRATION
The Plan and all Awards granted pursuant thereto shall be administered by
the Committee. The Committee, in its absolute discretion, shall have the power
to interpret and construe the Plan and any Award Agreements; provided, however,
that no such action or determination may increase the amount of compensation
payable that would otherwise be due in a manner that would result in the
disallowance of a deduction to the Corporation under section 162(m) of the Code
or any successor section. Any interpretation or construction of any provisions
of this Plan or the Award Agreements by the Committee shall be final and
conclusive upon all persons. No member of the Board or the Committee shall be
liable for any action or determination made in good faith.
A-2
<PAGE> 28
Within 60 days following the close of each calendar year that the Plan is
in operation, the Committee shall make a report to the Board. The report shall
specify the employees who received Awards under the Plan during the prior year,
the form and size of the Awards to the individual employees, and the status of
prior Awards.
The Committee shall have the power to promulgate Committee Rules and other
guidelines in connection with the performance of its obligations, powers and
duties under the Plan, including its duty to administer and construe the Plan
and the Award Agreements.
The Committee may authorize persons other than its members to carry out its
policies and directives subject to the limitations and guidelines set by the
Committee, except that: (a) the authority to grant Awards, the selection of
officers and directors for participation and decisions concerning the timing,
pricing and amount of a grant or Award shall not be delegated by the Committee;
(b) the authority to administer Awards with respect to persons who are subject
to section 16 of the Exchange Act shall not be delegated by the Committee; (c)
any delegation shall satisfy all applicable requirements of rule 16b-3 of the
Exchange Act, or any successor provision; and (d) no such delegation shall
result in the disallowance of a deduction to the Corporation under section
162(m) of the Code or any successor section. Any person to whom such authority
is granted shall continue to be eligible to receive Awards under the Plan.
5. ELIGIBILITY
The Committee shall from time to time select the Plan Participants from
those employees whom the Committee determines either to be in a position to
contribute materially to the success of the Corporation or Affiliate or to have
in the past so contributed. Only employees (including officers and directors who
are employees) of the Corporation and its Affiliates are eligible to participate
in the Plan.
6. FORMS OF AWARDS
All Awards under the Plan shall be made in the form of Participation Shares
or Options. The Committee may make Awards solely in Options or Participation
Shares, or in any combination of the two. Notwithstanding anything in this Plan
to the contrary, any Awards shall contain the restriction on assignability in
subsection 15(f) of this Plan to the extent required under rule 16b-3 of the
Exchange Act.
7. PARTICIPATION SHARES
The Committee shall from time to time designate those Participants who
shall receive Participation Share awards. The Committee shall advise such
Participants of their Participation Share awards by a letter indicating the
number of Participation Shares awarded and the following terms and conditions of
the award.
(a) Base Value of Participation Shares. The number of Participation
Shares awarded to a Participant shall be entered in such Participant's
memorandum account (the "Account") established for this purpose as of the
date of the award. Each Participation Share shall be assigned a base value
equal to the book value of one share of Common Stock as of the close of the
fiscal year of the Corporation preceding the date of the award (the "Base
Value"). Book value per share shall be defined for purposes of the Plan as
common stockholders' equity, as reported in the year-end audited
consolidated financial statements, or in the quarter-end unaudited
consolidated financial statements, of the Corporation (as the case may be),
divided by the number of shares of Common Stock outstanding as of the date
of such financial statements, as adjusted pursuant to the provisions of the
Plan (the "Book Value"). The term "book value", when used without initial
capital letters, shall be defined as in the preceding sentence without the
adjustments.
A-3
<PAGE> 29
(b) Maturation of Participation Shares. An Award of Participation
Shares shall reach maturity at the close of the fiscal year (i) in which
either the fifth or seventh anniversary, as determined by the Committee
when the Award is granted, of the date the Award occurs, (ii) the
Participant who holds such Award dies, Retires, or becomes Totally and
Permanently Disabled, or (iii) the events described in subsection 9(a)
occur, whichever is earlier (the "Maturity Date"). The Book Value at the
Maturity Date shall be the Book Value as of the close of the fiscal year of
the Corporation in which such Maturity Date occurs.
(c) Participation Share Payments. Each Participant shall be entitled
to receive a payment equal to the sum of the Maturity Value and the
Dividend Share Value for his or her Participation Share award, payable as
provided in subsection 7(g). Such payment shall be payable either in cash,
or partly in cash and up to 50% in Common Stock, as determined by the
Committee when the Award is granted. Such payment in Common Stock shall be
payable in the number of shares of Common Stock that could have been
purchased with the amount equal to the sum of the Maturity Value and the
Dividend Share Value for that portion of his or her Participation Share
award which is payable in Common Stock, at the average of the Fair Market
Value of shares of Common Stock on each business day during the month
immediately preceding the month of such payment. A Participation Share
award shall only be paid in Common Stock as provided above to the extent
shares of Common Stock are available under section 10 hereof, with the
remainder settled in cash. To the extent shares of Common Stock are not
fully available under section 10 hereof to fully pay such portion of the
Award in shares of Common Stock then the available shares of Common Stock
shall be paid on a pro rata basis, with the remainder settled in cash.
The "Maturity Value" of an Award of Participation Shares shall be
equal to the Book Value of the Participation Shares subject to such Award
at the Maturity Date less the Base Value of such Participation Shares.
Participants are not entitled to receive current dividends on their
Participation Shares, but in lieu thereof their Accounts shall be credited
with dividend shares (the "Dividend Shares"). The "Dividend Share Value" of
an award shall be equal to the product of (A) the number of Dividend Shares
credited to a Participant's Account and (B) the Book Value per share of the
Common Stock at the Maturity Date. The amount available for the acquisition
of Dividend Shares for a Participant's Account at the end of each fiscal
quarter of the Corporation shall be determined by multiplying the total
cash dividend declared per share of Common Stock during such quarter (but
subsequent to the date of the award in the case of Participation Shares and
subsequent to the date of crediting in the case of Dividend Shares) by the
total of the Participation Shares and Dividend Shares in the Participant's
Account. The amount so determined shall be divided by the Book Value of one
share of Common Stock as of the close of such fiscal quarter, and the
quotient shall represent the number of full and fractional Dividend Shares
credited to the Participant's Account for that quarter.
(d) Dividend Maintenance. No Dividend Shares shall be credited to a
Participant's Account in any quarter (i) in which the total cash dividends
declared per share of Common Stock are less than $.41 or (ii) in which the
total cash dividends declared per share of Common Stock are less than the
total cash dividends declared per share of Common Stock in the same quarter
of the immediately preceding year, except that the determination of whether
the total cash dividends per share of Common Stock are less than in the
immediately preceding year shall be made after adjustment for the
two-for-one stock split which occurred in 1992 in accordance with generally
accepted accounting principles. When total cash dividends declared per
share of Common Stock are less than total cash dividends declared per share
of Common Stock in the same quarter of the immediately preceding year as
described above, the book value of each Participation Share held by a
Participant shall be reduced by an amount equal to the difference between
the cash dividend declared in such immediately preceding quarter less the
cash dividend declared in the quarter the cash dividend is reduced.
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(e) Adjustments. To preserve the benefit to the Participant and the
Corporation contemplated hereby, stock repurchases (other than Common Stock
transferred to the Corporation upon the exercise of an Option pursuant to
subsection 8(f)) or changes in the Corporation's accounting policies during
any fiscal year shall be automatically excluded for purposes of determining
Book Value for purposes of this Plan for such fiscal year and for all
future years with respect to any outstanding Participation Share Awards;
provided, however, that the Committee shall have the discretion to waive
any such exclusion that would have the effect of increasing Book Value (to
the extent that such discretion does not result in the disallowance of a
deduction to the Corporation under section 162(m) of the Code or any
successor section). To further preserve the benefit to the Participant and
the Corporation contemplated hereby, if a cash dividend is declared in any
quarter and the payment date for such cash dividend is later than the
immediately subsequent quarter, then such cash dividend will be deemed to
be declared in the quarter immediately preceding the payment date for all
purposes of this Plan, as of the first date the Board meets in such
quarter, or if the Board does not meet in such quarter, on the first
business day of such quarter, including, but not limited to, the
determination of (i) Book Value in subsection 7(a), (ii) Dividend Shares in
subsection 7(c) and (iii) whether the total cash dividends declared per
share of Common Stock in a quarter is less than $.41 or whether the total
cash dividends declared per share of Common Stock are less than the total
cash dividends declared per share of Common Stock in the same quarter of
the immediately preceding year in subsection 7(d).
(f) Absence of Rights as a Stockholder. A Participant shall not be
entitled, on the basis of a Participation Share award, to any of the rights
of a stockholder of the Corporation, including the right to vote and
receive dividends on Common Stock.
(g) Date of Payment. Except as provided in subsection 15(h), the
payment provided for in subsection 7(c) shall be payable within 90 days
following the Maturity Date.
(h) Termination of Employment. Except as provided in subsection 9(a),
any Participation Shares or Dividend Shares credited to a Participant's
Account shall be forfeited if the Participant is dismissed or leaves the
service of the Corporation or Affiliate prior to the Maturity Date of the
award for any reason other than death, Retirement or Total and Permanent
Disability.
(i) Termination of Award. After the Corporation makes the cash payment
provided for in subsection 7(c), any rights of the Participant (or the
Participant's estate or beneficiaries) in the Participation Share award
shall end.
8. STOCK OPTIONS
The Committee shall determine and designate from time to time those
Participants to whom Options are to be granted and the number of shares of
Common Stock to be optioned to each. Such Options may be in the form of
Incentive Stock Options or in the form of Nonqualified Stock Options. After
granting an Option to a Participant, the Committee shall cause to be delivered
to the Participant an Award Agreement evidencing the granting of the Option. The
Award Agreement shall be in such form as the Committee shall from time to time
approve. The terms and conditions of all Options granted under the Plan need not
be the same, but all Options must meet the applicable terms and conditions
specified in subsections 8(a) through 8(h).
(a) Period of Option. The Period of each Option shall be no more than
10 years from the date it is granted.
(b) Option Price. The Option price shall be determined by the
Committee, but shall not in any instance be less than the Fair Market Value
of the Common Stock at the time that the Option is granted (the "Option
Price").
(c) Limitations on Exercise. The Option shall not be exercisable until
at least one year has expired after the granting of the Option, during
which time the Participant shall have been in the continuous employ of the
Corporation or an Affiliate. At any time during the period of the Option
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after the end of the first year, the Participant may purchase up to 30
percent of the shares covered by the Option; after the end of the second
year, an additional 30 percent; and after the end of the third year, the
remaining 40 percent of the total number of shares covered by the Option;
provided, however, that if the Participant's employment is terminated for
any reason other than death, Retirement or Total and Permanent Disability,
the Option shall be exercisable only for three months following such
termination and only for the number of shares of Common Stock which were
exercisable on the date of such termination. In no event, however, may an
Option be exercised more than 10 years after the date of its grant.
(d) Exercise after Death, Retirement, or Disability. If a Participant
dies or becomes Totally and Permanently Disabled, without having exercised
the Option in full, the remaining portion of such Option may be exercised,
without regard to the limitations in subsection 8(c), within (i) three
years from the date of any such event or (ii) the remaining period of the
Option, whichever is earlier. Upon a Participant's death, the Option may be
exercised by the person or persons to whom such Participant's rights under
the Option shall pass by will or by applicable law or, if no such person
has such rights, by his executor or administrator. If a Participant Retires
without having exercised the Option in full, the remaining portion of such
Option may be exercised, without regard to the limitations in subsection
8(c), within the remaining period of the Option.
(e) Non-transferability. During the Participant's lifetime, Options
shall be exercisable only by such Participant. Options shall not be
transferable other than by will or the laws of descent and distribution
upon the Participant's death. Notwithstanding anything in this subsection
8(e) to the contrary, at the same time as Nonqualified Stock Options are
granted the Committee may also grant to designated Participants the right
to transfer such Options, to the extent allowed under rule 16b-3 of the
Exchange Act, subject to the terms and conditions of the Committee Rules on
the date of grant.
(f) Exercise; Notice Thereof. Options shall be exercised by delivering
to the Corporation, at the office of the Treasurer at the World
Headquarters, written notice of the number of shares with respect to which
Option rights are being exercised and by paying in full the Option Price of
the shares at the time being acquired. Payment may be made in cash, a check
payable to the Corporation or in shares of Common Stock transferable to the
Corporation and having a Fair Market Value on the transfer date equal to
the amount payable to the Corporation. The date of exercise shall be deemed
to be the date the Corporation receives the written notice and payment for
the shares being purchased. A Participant shall have none of the rights of
a stockholder with respect to shares covered by such Option until the
Participant becomes the record holder of such shares.
(g) Purchase for Investment. It is contemplated that the Corporation
will register shares sold to Participants pursuant to the Plan under the
Securities Act of 1933. In the absence of an effective registration,
however, a Participant exercising an Option hereunder may be required to
give a representation that he/she is acquiring such shares as an investment
and not with a view to distribution thereof.
(h) Limitations on Incentive Stock Option Grants.
(i) An Incentive Stock Option shall be granted only to an
individual who, at the time the Option is granted, does not own stock
possessing more than 10 percent of the total combined voting power of
all classes of stock of the Corporation or Affiliates.
(ii) The aggregate Fair Market Value of all shares with
respect to which Incentive Stock Options are exercisable by a
Participant for the first time during any year shall not exceed
$100,000. The aggregate Fair Market Value of such shares shall be
determined at the time the Option is granted.
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(i) Options for Nonresident Aliens. In the case of any Option awarded
to a Participant who is not a resident of the United States or who is
employed by an Affiliate other than an Affiliate that is incorporated, or
whose place of business is, in a State of the United States, the Committee
may (i) waive or alter the conditions set forth in subsections 8(a) through
8(h) to the extent that such action is necessary to conform such Option to
applicable foreign law, or (ii) take any action, either before or after the
award of such Option, which it deems advisable to obtain approval of such
Option by an appropriate governmental entity; provided, however, that no
action may be taken hereunder if such action would (1) increase any
benefits accruing to any Participants under the Plan, (2) increase the
number of securities which may be issued under the Plan, (3) modify the
requirements for eligibility to participate in the Plan, (4) result in a
failure to comply with applicable provisions of the Securities Act of 1933,
the Exchange Act or the Code or (5) result in the disallowance of a
deduction to the Corporation under section 162(m) of the Code or any
successor section.
(j) Election to Receive Cash Rather than Stock.
(i) At the same time as Nonqualified Stock Options are granted the
Committee may also grant to designated Participants the right to convert
a specified number of shares of Common Stock covered by such
Nonqualified Stock Options to cash, subject to the terms and conditions
of this subsection 8(j). For each such Option so converted, the
Participant shall be entitled to receive cash equal to the difference
between the Participant's Option Price and the Fair Market Value of the
Common Stock on the date of conversion. Such a right shall be referred
to herein as a Stock Appreciation Right ("SAR"). Participants to which
an SAR has been granted shall be notified of such grant and of the
Options to which such SAR pertains. An SAR may be revoked by the
Committee, in its sole discretion, at any time, provided, however, that
no such revocation may be taken hereunder if such action would result in
the disallowance of a deduction to the Corporation under section 162(m)
of the Code or any successor section.
(ii) A person who has been granted an SAR may exercise such SAR
during such periods as provided for in the rules promulgated under
section 16 of the Exchange Act. The SAR shall expire when the period of
the subject Option expires.
(iii) At the time a Participant converts one or more shares of
Common Stock covered by an Option to cash pursuant to an SAR, such
Participant must exercise one or more Nonqualified Stock Options, which
were granted at the same time as the Option subject to such SAR, for an
equal number of shares of Common Stock. In the event that the number of
shares and the Option Price per share of all shares of Common Stock
subject to outstanding Options is adjusted as provided in the Plan, the
above SARs shall automatically be adjusted in the same ratio which
reflects the adjustment to the number of shares and the Option Price per
share of all shares of Common Stock subject to outstanding Options.
9. GOVERNMENT SERVICE, LEAVES OF ABSENCE AND OTHER TERMINATIONS
(a) A Participation Share award shall be considered to reach maturity as of
the close of the fiscal year in which (i) a Participant's employment terminates
because such Participant enters governmental or military service or (ii) the
Participant's employment with the Corporation or an Affiliate is terminated by
reason of a shutdown or divestiture of all or a portion of the Corporation's or
its Affiliate's business.
(b) An authorized leave of absence shall not be deemed to be a termination
of employment for purposes of the Plan. A termination of employment with the
Corporation or an Affiliate to accept immediate reemployment with the
Corporation or an Affiliate likewise shall not be deemed to be a termination of
employment for purposes of the Plan.
10. SHARES SUBJECT TO THE PLAN
The number of shares of Common Stock available with respect to all Awards
granted under this Plan shall not exceed 20,000,000 in the aggregate, of which
not more than 20,000,000 shall be
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available for option and sale, subject to the adjustment provision set forth in
section 12 hereof. The shares of Common Stock subject to the Plan may consist in
whole or in part of authorized but unissued shares or of treasury shares, as the
Board may from time to time determine. Participation Shares which are retired
through forfeiture or maturity, other than those Participation Shares which are
retired through the payment of Common Stock, and shares subject to Options which
become ineligible for purchase will be available for Awards under the Plan to
the extent permitted by section 16 of the Exchange Act (or the rules and
regulations promulgated thereunder) and to the extent determined to be
appropriate by the Committee. Shares of Common Stock which are distributed
through the payment of Participation Share Awards pursuant to subsection 7(c)
will not be available for Awards under the Plan.
11. INDIVIDUAL LIMITS
The maximum number of Participation Shares or shares of Common Stock
covered by Options which may be granted to any Participant within any 2
consecutive calendar year period shall not exceed 500,000 in the aggregate. If
an Option which had been granted to a Participant is canceled, the shares of
Common Stock which had been subject to such canceled Option shall continue to be
counted against the maximum number of shares for which Options may be granted to
the Participant. In the event that the number of Participation Shares which may
be awarded or Options which may be granted is adjusted as provided in the Plan,
the above limits shall automatically be adjusted in the same ratio which
reflects the adjustment to the number of Participation Shares or Options
available under the Plan.
12. CHANGES IN CAPITALIZATION
In the event there are any changes in the Common Stock or the
capitalization of the Corporation through a corporate transaction, such as any
merger, any acquisition through the issuance of capital stock of the
Corporation, any consolidation, any separation of the Corporation (including a
spin-off or other distribution of stock of the Corporation), any reorganization
of the Corporation (whether or not such reorganization comes within the
definition of such term in section 368 of the Code), or any partial or complete
liquidation by the Corporation, recapitalization, stock dividend, stock split or
other change in the corporate structure, appropriate adjustments and changes
shall be made by the Committee, to the extent necessary to preserve the benefit
to the Participant contemplated hereby, to reflect such changes in (a) the
aggregate number of shares subject to the Plan, (b) the maximum number of shares
for which Options or Participation Shares may be granted or awarded to any
Participant, (c) the number of shares and the Option Price per share of all
shares of Common Stock subject to outstanding Options, (d) the number of
Participation Shares, the Base Value per Participation Share awarded to
Participants, and the number of Dividend Shares credited to Participants'
Accounts, and (e) such other provisions of the Plan as may be necessary and
equitable to carry out the foregoing purposes, provided, however that no such
adjustment or change may be made to the extent that such adjustment or change
will result in the disallowance of a deduction to the Corporation under section
162(m) of the Code or any successor section.
13. EFFECT ON OTHER PLANS
All payments and benefits under the Plan shall constitute special
compensation and shall not affect the level of benefits provided to or received
by any Participant (or the Participant's estate or beneficiaries) as part of any
employee benefit plan of the Corporation or an Affiliate. The Plan shall not be
construed to affect in any way a Participant's rights and obligations under any
other plan maintained by the Corporation or an Affiliate on behalf of employees.
14. TERM OF THE PLAN
The term of the Plan shall be ten years, beginning April 24, 1992, and
ending April 23, 2002, unless the Plan is terminated prior thereto by the
Committee. No Option may be granted or Participation Share awarded after the
termination date of the Plan, but Options and Participation Shares theretofore
granted or awarded shall continue in force beyond that date pursuant to their
terms.
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15. GENERAL PROVISIONS
(a) Designated Beneficiary. Each Participant who shall be granted a
Participation Share award under the Plan may designate a beneficiary or
beneficiaries with the Committee on a form to be prescribed by it; provided that
no such designation shall be effective unless so filed prior to the death of
such Participant.
(b) No Right of Continued Employment. Neither the establishment of the Plan
nor the payment of any benefits hereunder nor any action of the Corporation, its
Affiliates, the Board of Directors of the Corporation or its Affiliates, or the
Committee shall be held or construed to confer upon any person any legal right
to be continued in the employ of the Corporation or its Affiliates, and the
Corporation and its Affiliates expressly reserve the right to discharge any
Participant without liability to the Corporation, its Affiliates, the Board of
Directors of the Corporation or its Affiliates or the Committee, except as to
any rights which may be expressly conferred upon a Participant under the Plan.
(c) Binding Effect. Any decision made or action taken by the Corporation,
the Board or by the Committee arising out of or in connection with the
construction, administration, interpretation and effect of the Plan shall be
conclusive and binding upon all persons.
(d) Modification of Awards.
(1) The Committee may in its sole and absolute discretion, by written
notice to a Participant, (i) limit or eliminate the ability of the
Participant's Participation and Dividend Shares to generate additional
Dividend Shares, and/or (ii) fix the Book Value of all or any portion of
the Participant's existing Participation and existing or future Dividend
Shares for the purposes of any payments that might be made under subsection
7(c) at their Book Value as of the end of the fiscal year of the
Corporation in which such notice is dated so that no further appreciation
occurs in such Book Value, and/or (iii) limit the period in which an Option
may be exercised to a period ending at least three months following the
date of such notice, and/or (iv) limit or eliminate the number of shares
subject to Option after a period ending at least three months following the
date of such notice. Notwithstanding anything in this subsection 15(d) to
the contrary, the Committee may not take any action to the extent that such
action would result in the disallowance of a deduction to the Corporation
under section 162(m) of the Code or any successor section.
(2) A Participant's Participation Share or Dividend Share which has
had its ability to generate additional Dividend Shares limited or
eliminated and for which the Book Value is fixed pursuant to subsection
15(d)(1)(i) of the Plan shall be credited with interest equal to the
product of (i) the number of Interest Credits (determined pursuant to
subsection 15(d)(3) below) credited to such Participant's Account as of the
Maturity Date and (ii) the Book Value at which such Participation Share or
Dividend Share has been fixed.
(3) The number of Interest Credits to be credited to a Participant's
Account for each fiscal quarter of the Corporation ending after the date as
of which the Book Value of such Participant's Participation Shares or
Dividend Shares is fixed shall be determined as follows. The total cash
dividend declared per share of Common Stock during such quarter (but
subsequent to the date of the award in the case of Participation Shares and
subsequent to the date of crediting in the case of Dividend Shares) shall
be multiplied by the total of the Participation Shares, Dividend Shares and
Interest Credits in the Participant's Account. The amount so determined
shall be divided by the Book Value of one share of Common Stock as of the
close of such fiscal quarter. The quotient shall represent the number of
full and fractional Interest Credits credited to such Participant's Account
for that quarter.
(e) No Segregation of Cash or Stock. The Accounts established for
Participants are merely a bookkeeping convenience and neither the Corporation
nor its Affiliates shall be required to segregate any cash or stock which may at
any time be represented by Awards. Nor shall anything provided herein be
construed as providing for such segregation. Neither the Corporation, its
Affiliates, the Board nor the Committee shall, by any provisions of the Plan, be
deemed to be a
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<PAGE> 35
trustee of any property, and the liability of the Corporation or its Affiliates
to any Participant pursuant to the Plan shall be those of a debtor pursuant to
such contract obligations as are created by the Plan, and no such obligation of
the Corporation or its Affiliates shall be deemed to be secured by any pledge or
other encumbrance on any property of the Corporation or its Affiliates.
(f) Inalienability of Benefits and Interest. Except as provided in
subsections 8(e) and 15(a), no benefit payable under or interest in the Plan
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any such attempted action shall
be void and no such benefit or interest shall be in any manner liable for or
subject to debts, contracts, liabilities, engagements, or torts of any
Participant or beneficiary.
(g) Delaware Law to Govern. All questions pertaining to the construction,
interpretation, regulation, validity and effect of the provisions of the Plan
shall be determined in accordance with the laws of the State of Delaware.
(h) Election to Defer Receipt.
(1) A Participant may, with the consent of the Committee, elect to
defer the receipt of all or any portion of amounts which may otherwise
become payable under subsection 7(c). A Participant's receipt of any
portion of the amount payable with respect to one or more outstanding
Participation Share awards shall be deferred if, prior to the Maturity Date
of any such award, such Participant elects such deferral by written notice
to the Committee signed by the Participant and delivered to the Committee,
and the Committee consents to such deferral. Such notice must clearly
specify the manner of distribution described in paragraph (2) below which
shall apply with respect to such deferred amounts. After adjustment for any
resulting interest, the deferred amount shall be paid at the date or dates
specified in the Participant's letter, and such adjusted amount shall not
be subject to forfeiture as otherwise provided in subsection 7(h).
(2) Amounts deferred pursuant to this subsection 15(h) shall be
distributed in accordance with clause (i), (ii), or (iii), below, as
elected by the Participant: (i) up to 15 annual installments commencing in
the year after the termination of employment by reason of retirement; or
(ii) up to five annual installments, commencing 13 months after the
Participant's repatriation to his home country following a foreign
assignment; or (iii) up to five annual installments, commencing as of a
date requested by the Participant; provided, however, that such date shall
not be more than 20 years after the Maturity Date. The amount of each
installment under clause (i), (ii) or (iii) above shall be equal to the
product of the amount which has not been distributed immediately prior to
such installment and a fraction, the numerator of which is one and the
denominator of which is the number of installments yet to be paid.
(3) (i) Notwithstanding any other provision of this Plan to the
contrary, deferred amounts shall be paid in one lump sum as soon as
practicable after the death of the Participant or the termination of
employment of the Participant with the Corporation for reasons other than
Retirement or Total and Permanent Disability; however, if a Participant is
or has been on foreign assignment in the 12 months immediately prior to the
date of his termination of employment, and if the termination of employment
is for any reason other than Retirement or Total and Permanent Disability,
any remaining amounts shall be paid in one lump sum 13 months following the
earlier of (A) the date of the Participant's repatriation to his home
country following the foreign assignment or (B) the date of such
termination of employment.
(ii) Upon written application by a Participant or his legal
representative stating that severe financial hardship will result from
continued deferral, the Committee in its sole discretion may authorize
payment of such Participant's deferred amounts prior to the date specified
in the written notice described in subparagraph (h)(1) above. For purposes
of this Plan, a "severe financial hardship" is an unanticipated emergency
that is caused by an event beyond the control of the Participant and that
would result in severe financial hardship to the individual if the
emergency distribution were not permitted. Cash needs arising from
foreseeable events, such
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<PAGE> 36
as the purchase of a residence or education expenses for children shall not
be considered the result of a severe financial hardship. For purposes of
this Plan, a "severe financial hardship" is limited to an event described
in Treasury Regulation section 1.401(k)-1(d)(2)(iv)(A)(1) or (4). For
purposes of this Plan, a distribution is in "the amount necessary to
satisfy the emergency" only if the requirements of Treasury Regulation
section 1.401(k)-1(d)(2)(iv)(B) are satisfied. A Participant must provide
the Committee with substantiation of any such claim of severe financial
hardship.
(4) Amounts deferred hereunder shall be credited with interest,
compounded quarterly, from the date such amount otherwise would have been
paid at a rate yielding interest equivalent to the per annum market
discount rate for six-month U.S. Treasury Bills as published by the Federal
Reserve Board for the seven calendar days prior to January 1 (for interest
to be credited for the subsequent fiscal quarters ending March 31 and June
30) and prior to July 1 (for interest to be credited for the subsequent
fiscal quarters ending on September 30 and December 31).
(i) Purchase of Common Stock. The Corporation and its Affiliates may
purchase from time to time shares of Common Stock in such amounts as they may
determine for purposes of the Plan. The Corporation and its Affiliates shall
have no obligation to retain, and shall have the unlimited right to sell or
otherwise deal with for their own account, any shares of Common Stock purchased
pursuant to this paragraph.
(j) Use of Proceeds. The proceeds received by the Corporation from the sale
of Common Stock pursuant to the exercise of Options shall be used for general
corporate purposes.
(k) Withholding. The Committee shall require the withholding of all taxes
as required by law. In the case of payments of Awards in shares of Common Stock
or other securities, withholding shall be as required by law and in the
Committee Rules. A Participant may elect to have any portion of the federal,
state or local income tax withholding required with respect to an exercise of a
Nonqualified Stock Option satisfied by tendering to the Corporation shares of
Common Stock, which, in the absence of such an election, would have been issued
to such Participant in connection with such exercise. In the event that the
value of the shares of Common Stock tendered to satisfy the withholding tax
required with respect to an exercise exceeds the amount of such tax, the excess
of such market value over the amount of such tax shall be returned to the
Participant, to the extent possible, in whole shares of Common Stock, and the
remainder in cash. The value of a share of Common Stock tendered pursuant to
this subsection 15(k) shall be the Fair Market Value of the Common Stock on the
date on which such shares are tendered to the Corporation. An election pursuant
to this subsection 15(k) shall be made in writing and signed by the Participant.
An election pursuant to this subsection 15(k) is irrevocable. A Participant who
exercises an option and who is required to report to the Securities and Exchange
Commission under section 16(a) of the Exchange Act (an "Insider") may satisfy
the income tax withholding due in respect of such exercise pursuant to this
subsection 15(k) only if the Insider also satisfies an exemption under section
16(a) of the Exchange Act (or the rules or regulations promulgated thereunder)
for such withholding.
(l) Amendments. The Committee may at any time amend, suspend, or
discontinue the Plan or alter or amend any or all Awards and Award Agreements
under the Plan to the extent (1) permitted by law, (2) permitted by the rules of
any stock exchange on which the Common Stock or any other security of the
Corporation is listed, (3) permitted under applicable provisions of the
Securities Act of 1933, as amended, the Exchange Act (including rule 16b-3
thereof) and (4) that such action would not result in the disallowance of a
deduction to the Corporation under section 162(m) of the Code or any successor
section (including the rules and regulations promulgated thereunder); provided,
however, that if any of the foregoing requires the approval by stockholders of
any such amendment, suspension or discontinuance, then the Committee may take
such action subject to the approval of the stockholders. Except as provided in
subsections 8(i) and 15(d) no such amendment, suspension, or termination of the
Plan shall, without the consent of the Participant, adversely alter or change
any of the rights or obligations under any Awards or other rights previously
granted the Participant under the Plan.
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[KIMBERLY CLARK CORPORATION LOGO]
Invitation to Stockholders
Notice of 1997 Annual Meeting
Proxy Statement
[GRAPHIC]
<PAGE> 38
DETACH HERE KIM 2
[KIMBERLY-CLARK LOGO] [KIMBERLY-CLARK LETTERHEAD]
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS - APRIL 17, 1997
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PROXY
Wayne R. Sanders, O. George Everbach and Donald M. Crook, or any of
them, with full power of substitution to each, hereby are appointed proxies and
are authorized to vote, as specified below, all shares of common stock that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of
Kimberly-Clark Corporation, to be held at the Corporation's World
Headquarters, 351 Phelps Drive, Irving, Texas on April 17, 1997 at 11:00 a.m.
and at any adjournment thereof. In their discretion, the proxies are authorized
to vote on such other business as may properly come before the meeting.
Please date, sign and return this proxy promptly. If you plan to attend
the meeting, please so indicate in the space provided on the reverse side.
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3, AND
4. IF YOU PREFER TO VOTE SEPARATELY ON INDIVIDUAL ISSUES YOU MAY DO SO BY
MARKING THE APPROPRIATE BOXES ON THE REVERSE SIDE.
IMPORTANT: TO BE SIGNED AND DATED ON THE REVERSE SIDE
PLEASE RETURN THIS CARD IN THE SELF-ADDRESSED ENVELOPE PROVIDED.
<PAGE> 39
[KIMBERLY-CLARK LOGO]
DETACH HERE KIM 4
[ X ] PLEASE MARK YOUR VOTES AS IN THE EXAMPLE.
IT IS NOT NECESSARY TO COMPLETE THE INFORMATION UNDER PROPOSALS 1, 2, 3, AND 4
BELOW UNLESS YOU CHOOSE TO CAUSE YOUR SHARES TO BE VOTED SEPARATELY ON EACH
MATTER TO BE BROUGHT BEFORE THE ANNUAL MEETING OF STOCKHOLDERS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3, AND 4.
1. Election of Directors
NOMINEES: WILLIAM O. FIFIELD, WAYNE R. SANDERS,
WOLFGANG R. SCHMITT AND RANDALL L. TOBIAS
(terms to expire at 2000 Annual Meeting of Stockholders)
[ ] FOR ALL [ ] WITHHOLD AUTHORITY
NOMINEES TO VOTE FOR ALL NOMINEES
[ ]
FOR all nominees, except vote withheld for those named above.
FOR AGAINST ABSTAIN
2. Selection of Auditor [ ] [ ] [ ]
3. Approval of Amendments to 1992
Equity Participation Plan [ ] [ ] [ ]
4. Approval of Charter Amendment
to Increase Authorized Shares [ ] [ ] [ ]
MARK HERE FOR [ ] MARK HERE [ ]
ADDRESS CHANGE IF YOU PLAN
AND NOTE AT TO ATTEND
LOWER LEFT THE MEETING
I will be accompanied by .
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Please sign below exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If signing in the name of a corporation or
partnership, please sign full corporate or partnership name and indicate title
of authorized signatory.
Signature: Date:
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Signature: Date:
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