<PAGE>
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ x ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11 (c) or Section
240.14a-12
MCCORMICK & COMPANY, INCORPORATED
------------------------------------------------
(Name of Registrant as specified in its Charter)
The Board of Directors of McCormick & Company, Incorporated
-----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
---------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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[ ] 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 of Schedule and the date
of its filing.
1) Amount Previously Paid:
---------------------------------------------------------------
2) Form, Schedule of Registration Statement No.:
---------------------------------------------------------------
<PAGE>
3) Filing Party:
---------------------------------------------------------------
4) Date Filed:
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<PAGE>
MCCORMICK & COMPANY, INCORPORATED
18 LOVETON CIRCLE
SPARKS, MARYLAND 21152
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MARCH 18, 1998
The Annual Meeting of the Stockholders of McCormick & Company, Incorporated
will be held at the Hunt Valley Inn, Hunt Valley, Maryland at 10:00 a.m., March
18, 1998, for the purpose of considering and acting upon:
(a) the election of directors to act until the next Annual Meeting of
Stockholders or until their respective successors are duly elected and
qualified;
(b) the approval of the Mid-Term Incentive Program, which has been adopted
by the Board of Directors subject to the approval of the stockholders;
(c) the ratification of the appointment of Ernst & Young LLP as independent
auditors of the Company to serve for the 1998 fiscal year; and
(d) any other matters that may properly come before such meeting or any
adjournments thereof.
The Board of Directors has fixed the close of business on December 31, 1997
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the Meeting or any adjournments thereof. Only holders of Common
Stock shall be entitled to vote. Holders of Common Stock Non-Voting are welcome
to attend and participate in this meeting.
- --------------------------------------------------------------------------------
IF YOU ARE A HOLDER OF COMMON STOCK, A PROXY CARD IS ENCLOSED. PLEASE SIGN THE
PROXY CARD PROMPTLY AND RETURN IT IN THE ENCLOSED SELF-ADDRESSED ENVELOPE IN
ORDER THAT YOUR STOCK MAY BE VOTED AT THIS MEETING. THE PROXY MAY BE REVOKED BY
YOU AT ANY TIME BEFORE IT IS VOTED.
- --------------------------------------------------------------------------------
February 18, 1998 Robert W. Skelton
Secretary
<PAGE>
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished on or about February 18, 1998 to the
holders of Common Stock in connection with the solicitation by the Board of
Directors of the Company of proxies to be voted at the Annual Meeting of
Stockholders or any adjournments thereof. Any proxy given may be revoked at any
time insofar as it has not been exercised. Such right of revocation is not
limited or subject to compliance with any formal procedure. The shares
represented by all proxies received will be voted in accordance with the
instructions contained in the respective proxies. The cost of the solicitation
of proxies will be borne by the Company. In addition to the solicitation of
proxies by use of the mails, officers and regular employees of the Company may
solicit proxies by telephone, telegraph, or personal interview. The Company also
may request brokers and other custodians, nominees, and fiduciaries to forward
proxy soliciting material to the beneficial owners of shares held of record by
such persons, and the Company may reimburse them for their expenses in so doing.
At the close of business on December 31, 1997, there were outstanding
10,203,697 shares of Common Stock which represent all of the outstanding voting
securities of the Company. Except for certain voting limitations imposed by the
Company's Charter on beneficial owners of ten percent or more of the outstanding
Common Stock, each of said shares of Common Stock is entitled to one vote. Only
holders of record of Common Stock at the close of business on December 31, 1997
will be entitled to vote at the meeting or any adjournments thereof.
PRINCIPAL STOCKHOLDERS
On December 31, 1997, the assets of The McCormick Profit Sharing Plan and
PAYSOP (the "Plan") included 2,545,946 shares of the Company's Common Stock,
which represented 24.95% of the outstanding shares of Common Stock. The address
for the Plan is 18 Loveton Circle, Sparks, Maryland 21152. The Plan is not the
beneficial owner of the Common Stock for purposes of the voting limitations
described in the Company's Charter. Each Plan participant has the right to vote
all shares of Common Stock allocated to such participant's Plan account. The
Plan's Investment Committee possesses investment discretion over the shares,
except that, in the event of a tender offer, each participant of the Plan is
entitled to instruct the Investment Committee as to whether to tender Common
Stock allocated to such participant's account. Membership on the Investment
Committee consists of three directors, Robert G. Davey, Carroll D. Nordhoff, and
Karen D. Weatherholtz, and the Company's Vice President & Controller, J. Allan
Anderson, the Company's Vice President & Treasurer, Christopher J. Kurtzman and
the Company's Vice President, General Counsel & Secretary, Robert W. Skelton.
Mary D. McCormick, whose address is 830 West 40th Street, Baltimore, Maryland
21211, held 609,012 shares of Common Stock as of December 31, 1997, representing
5.97% of the outstanding shares of Common Stock. Harry K. Wells and his wife
Lois L.Wells, whose address is P. O. Box 409, Riderwood, Maryland 21139, held in
two trusts 586,623 shares of Common Stock as of December 31, 1997, representing
5.75% of the outstanding shares of Common Stock.
2
<PAGE>
ELECTION OF DIRECTORS
On June 1, 1997, Richard W. Single, Sr. retired as a member of the Board of
Directors and as Vice President--Government Affairs & Secretary/Counsel to the
Board of Directors. On January 1, 1998, Dr. James J. Albrecht retired as a
member of the Board of Directors and as Vice President--Science & Technology.
The Company is grateful to Mr. Single and Dr. Albrecht for their contributions
during their many years of service.
The persons listed in the following table have been nominated for election
as directors to serve until the next Annual Meeting of Stockholders or until
their respective successors are duly elected and qualified. Management has no
reason to believe that any of the nominees will be unavailable for election. In
the event a vacancy should occur, the proxy holders reserve the right to reduce
the total number of nominations for election. There is no family relationship
between any of the nominees. No nominee has a substantial interest in any matter
to be acted upon at the Annual Meeting.
The following table shows, as of December 31, 1997, the names and ages of
all nominees, the principal occupation and business experience of each nominee
during the last five years, the year in which each nominee was first elected to
the Board of Directors, the amount of securities beneficially owned by each
nominee, and directors and executive officers as a group, and the nature of such
ownership. Except as otherwise noted, no nominee owns more than one percent of
either class of the Company's common stock.
REQUIRED VOTE OF STOCKHOLDERS. The favorable vote of at least a majority of
the shares of Common Stock of the Company present in person or by proxy at a
meeting at which a quorum is present is required for the election of each
nominee.
3
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR EACH OF THE
NOMINEES LISTED BELOW.
<TABLE>
<CAPTION>
AMOUNT AND NATURE* OF
BENEFICIAL OWNERSHIP
-----------------------
YEAR FIRST COMMON
PRINCIPAL OCCUPATION & ELECTED NON-
NAME AGE BUSINESS EXPERIENCE DIRECTOR COMMON VOTING
- ------------------------------ --- ---------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
James S. Cook................. 69 Former Executive in Residence, 1982 1,833 3,675
Northeastern University (1986 to 1997)
Robert G. Davey............... 48 Executive Vice President & Chief 1994 27,057 4,799
Financial Officer (1996 to Present);
Vice President & Chief Financial Officer
(1994 to 1996); President, McCormick
Canada, Inc., a subsidiary of the
Company (1991 to 1994)
Freeman A. Hrabowski, III..... 47 President, University of Maryland 1997 83 0
Baltimore County (1992 to Present)
Robert J. Lawless............. 51 President (1996 to Present), Chief 1994 30,498 24,991
Executive Officer (1997 to Present) &
Chief Operating Officer (1995 to
Present), Executive Vice President (1995
to 1996); Senior Vice President--The
Americas (1994 to 1995); Group Vice
President--Europe (1993 to 1994); Vice
President & Deputy Managing Director,
International Group (1991 to 1993)
Charles P. McCormick, Jr...... 69 Chairman of the Board (1994 to Present), 1955 264,986** 16,917
Chief Executive Officer (1996 to 1997); (2.6%)
Chairman Emeritus (1993 to 1994);
Chairman of the Board (1988 to 1993),
Chief Executive Officer (1987 to 1992)
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE* OF
BENEFICIAL OWNERSHIP
-----------------------
YEAR FIRST COMMON
PRINCIPAL OCCUPATION & ELECTED NON-
NAME AGE BUSINESS EXPERIENCE DIRECTOR COMMON VOTING
- ------------------------------ --- ---------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
George V. McGowan............. 69 Chairman of the Executive Committee, 1983 2,349 2,808
Baltimore Gas and Electric Company (1993
to Present); Chairman of the Board &
Chief Executive Officer, Baltimore Gas
and Electric Company (1988 to 1992)
Carroll D. Nordhoff........... 52 Executive Vice President (1994 to 1991 55,096 17,663
Present); Executive Vice President -The
Americas (1993 to 1994); Executive Vice
President--Corporate Operations Staff
(1992 to 1993)
Robert W. Schroeder........... 52 Vice President & General Manager, 1996 13,347 8,425
McCormick/Schilling Division (1995 -
Present); Vice President-- Sales &
Marketing, McCormick/Schilling Division
(1994 - 1995); Vice President -Packaging
Group (1991 - 1994)
William E. Stevens............ 55 Executive Vice President, Mills & 1988 2,833 7,950
Partners, (1996 to Present); President
and Chief Executive Officer, United
Industries Corp. (1989 to 1996)
Karen D. Weatherholtz......... 47 Vice President--Human Relations 1992 21,885 7,667
(1988 to Present)
</TABLE>
<TABLE>
<S> <C> <C>
Directors and Executive Officers as a Group
(14 persons)........................................ 528,716 136,379
(5.2%)
</TABLE>
Footnotes continued on next page
5
<PAGE>
* Includes shares of Common Stock and Common Stock Non-Voting known to be
beneficially owned by directors and executive officers alone or jointly with
spouses, minor children and relatives (if any) who have the same home as the
director or executive officer. Also includes the following numbers of shares
which could be acquired within 60 days of December 31, 1997 pursuant to the
exercise of stock options: Mr. Cook--1,750 shares of Common Stock, 1,750
shares of Common Stock Non-Voting; Mr. Davey--11,397 shares of Common Stock,
4,799 shares of Common Stock Non-Voting; Mr. Hrabowski--0 shares of Common
Stock, 0 shares of Common Stock Non-Voting; Mr. Lawless--14,798 shares of
Common Stock, 5,932 shares of Common Stock Non-Voting; Mr. McCormick--14,875
shares of Common Stock, 6,125 shares of Common Stock Non-Voting; Mr. McGowan
- 1,750 shares of Common Stock, 1,750 shares of Common Stock Non-Voting; Mr.
Nordhoff--20,145 shares of Common Stock, 9,382 of Common Stock Non-Voting;
Mr. Schroeder--10,013 shares of Common Stock, 4,338 of Common Stock
Non-Voting; Mr. Stevens--1,750 shares of Common Stock, 1,750 shares of
Common Stock Non-Voting; Ms. Weatherholtz--6,750 shares of Common Stock,
2,250 shares of Common Stock Non-Voting; and directors and executive
officers as a group -109,550 shares of Common Stock, 49,151 shares of Common
Stock Non-Voting. Also includes shares of Common Stock which are
beneficially owned by certain directors and officers by virtue of their
participation in the McCormick Profit Sharing Plan and PAYSOP: Mr.
Davey--2,119 shares; Mr. Lawless--1,542 shares; Mr. Nordhoff--7,659 shares;
Ms. Weatherholtz--8,534 shares; and directors and executive officers as a
group--40,502 shares.
** Includes 2,768 shares of Common Stock owned by Mr. McCormick's wife. Mr.
McCormick disclaims beneficial ownership of said shares.
BOARD COMMITTEES
The Board of Directors has established the following committees to perform
certain specific functions. There is no Nominating Committee of the Board of
Directors. Board Committee membership as of February 18, 1998 is listed below.
AUDIT COMMITTEE. This Committee reviews the plan for and the results of the
independent audit and internal audit, reviews the Company's financial
information and internal accounting and management controls, and performs other
related duties. The following directors are currently members of the Committee
and serve at the pleasure of the Board of Directors: Messrs. Cook, Hrabowski and
Stevens. The Audit Committee held five meetings during the last fiscal year.
COMPENSATION COMMITTEE. This Committee establishes and oversees executive
compensation policy; makes decisions about base pay, incentive pay and any
supplemental benefits for the Chief Executive Officer, other members of the
Executive Committee, and any other executives listed in the proxy statement as
one of the five highest paid executives; and approves the grant of stock
options, the timing of the grants, the price at which the options are to be
offered, and the amount of the options to be granted to employee directors and
officers. The following directors are members of the Committee
6
<PAGE>
and serve at the pleasure of the Board of Directors: Messrs. Cook, McGowan and
Stevens. None of the Committee members are employees of the Company or are
eligible to participate in the Company's stock option programs which are
administered by the Committee. The Compensation Committee held six meetings
during the last fiscal year.
EXECUTIVE COMMITTEE. This Committee possesses authority to exercise all of
the powers of the Board of Directors in the management and direction of the
affairs of the Company between meetings of the Board of Directors, subject to
specific limitations and directions of the Board of Directors and subject to
limitations of Maryland law. This Committee also reviews and approves all
benefits and salaries of a limited group of senior executives and reviews and
approves individual awards under approved stock option plans for all persons
except directors and officers (see Compensation Committee). The following
directors are currently members of the Committee and serve at the pleasure of
the Board of Directors: Messrs. Davey, Lawless, McCormick, and Nordhoff. The
Executive Committee held 18 meetings during the last fiscal year.
ATTENDANCE AT MEETINGS
During the last fiscal year, there were 9 meetings of the Board of
Directors. All of the Directors were able to attend at least 75% of the total
number of meetings of the Board and the Board Committees on which they served.
OTHER DIRECTORSHIPS
Certain individuals nominated for election to the Board of Directors hold
directorships in other companies. Dr. Hrabowski is a director of Baltimore Gas
and Electric Company, the Baltimore Equitable Society, Mercantile Shareholders
Corporation and UNC, Incorporated. Mr. Lawless is a director of Carpenter
Technology Corporation. Mr. McGowan is a director of Baltimore Gas and Electric
Company, Baltimore Life Insurance Company, GTS Duratek Inc., Life of Maryland,
Inc., NationsBank, N.A., Organization Resources Counselors, Inc., Scientech,
Inc., and UNC, Incorporated. Mr. Stevens is a director of The Earthgrains
Company.
REPORT ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Company has at the core of its compensation philosophy to attract,
motivate and retain top quality executives who will think and act like owners
and who will make decisions in the best interests of our shareholders. This is
accomplished by offering a total compensation package that reflects the stated
financial goals of the Company, provides support and direction for our corporate
strategy, and compensates competitively for each executive's responsibilities
and performance. Through a mix of base salary, an annual incentive program, a
proposed mid-term incentive program, and a long-term
7
<PAGE>
incentive program, the Company is able to achieve focus on individual, operating
unit, and corporate success.
To assist the Company in determining the relevance and competitiveness of
its executive compensation, periodic special studies are conducted by
independent compensation consultants. During 1997, the Compensation Committee
engaged Towers Perrin to review the Company's compensation policies and
practices. The independent consultant reported the following findings:
- The Company's annual incentive plan design provides strong linkage between
an executive's pay and the achievement of objective performance targets.
- The annual incentive measures of profit growth, economic value added, and
earnings per share growth reflect the Company's stated objectives.
- Use of peer company comparison to set performance targets provides an
objective basis for measuring corporate success.
- The Company's use of stock options as its long-term incentive program
aligns the interests of senior executives with shareholder performance.
- Shareholdings of the majority of the Company's executives exceed typical
guidelines as a multiple of annual salary.
- Base salaries are consistent overall with median levels paid to senior
executives having similar roles and responsibilities at food and manufacturing
companies of comparable size.
- Annual incentive target awards and long-term incentive target awards are
below market competitive levels.
The consultant also made the following recommendations, which were approved
by the Compensation Committee and the Board of Directors:
- Raise annual incentive targets to a level that is comparable to annual
targets for other peer companies. This action not only provides a level of
annual incentive target that is competitive, but also increases the portion of
executive pay that is at risk based on company performance.
- Under the Company's long-term incentive plan, grant ten (10) year options
starting in 1998, rather than five (5) year options granted in recent years.
This action will, for most executives, result in competitive levels of long-term
incentives relative to peer companies. For a few of the most senior executives,
an increase in the number of shares granted is necessary to provide a
competitive total compensation package. This was recommended by the consultant
to provide maximum alignment of executive compensation with shareholder
interests.
8
<PAGE>
- Introduce a Mid-Term Incentive Program for a limited group of key senior
executives in order to support key strategies of the Company.
BASE SALARIES
Salary levels of the Company's senior executives are reviewed annually and,
where appropriate, are adjusted to reflect individual responsibilities and
performance as well as the Company's competitive position within the food
industry. The Compensation Committee sets base salaries by targeting midpoints
of the marketplace median and adjusting each executive officer's salary to
reflect individual performance, experience, and contribution. The Compensation
Committee considers salaries paid to senior executives at companies which are
comparable to the Company (based on line of business or sales volume) in
establishing base salaries for senior executives of the Company. Those companies
included most of the fifteen companies in the S&P Food Products Index and other
manufacturing companies which are not included in that index but which had
similar sales volumes.
ANNUAL INCENTIVE PROGRAM
The following methodology was used to determine bonus payouts for fiscal
year 1997:
ACTIONS AT THE START OF THE FISCAL YEAR:
- A target bonus was set for each participating executive based upon a
percentage of the midpoint of the salary range for the executive's job and was
calculated to provide median compensation for growth that is comparable to peer
companies in the food industry.
- The Compensation Committee approved the level of payment to be made for
superior performance relative to peer companies. In no case does the maximum
payment to an individual exceed two times the target bonus. No bonus is paid to
a participating executive if there is no growth in earnings per share.
- The amount of target bonus payable to operating unit executives was based
on a formula, weighted two-thirds on achievement of the operating profit and
economic value added objectives of the executive's operating unit and one-third
on growth in the Company's earnings per share.
ACTIONS AT FISCAL YEAR END:
- Financial statements were prepared for the Company and each operating
unit.
- Calculations were made according to the formula for each operating unit
and for the Company. Extraordinary events such as major restructuring were
excluded.
9
<PAGE>
MID-TERM INCENTIVE PROGRAM
Subject to shareholder approval, the Compensation Committee and the Board of
Directors have approved a Mid-Term Incentive Program for the three year period
beginning December 1, 1997 and ending November 30, 2000. The Program is
described in detail on page 19.
The Compensation Committee believes that this new Program will play an
important role in aligning the compensation of top executives with the key
strategic needs of the Company during the next three years. The Committee
recommends implementation of this Program for the following reasons:
1) It facilitates clear focus on the strategic objectives that will drive the
Company's success; specifically, sales growth and total shareholder return.
2) The Program is targeted to executives who are in positions which have a
significant impact on the achievement of objectives of the Company as a whole,
and who must provide strategic focus to a time horizon that extends beyond any
one fiscal year.
3) The Program is designed such that award amounts are tightly linked to the
level of achievement of the Program's objectives, and the rewards are highly
leveraged, so that superior payouts are made only for superior performance.
4) It enhances our overall incentive program when combined with stock options to
achieve McCormick's longer term strategies.
5) The Program provides a means to motivate and retain top talent at the most
senior levels.
LONG-TERM INCENTIVE PROGRAM
Under the Long-Term Incentive Program, stock options are granted by the
Compensation Committee to key management employees of the Company, including
executive officers. The purpose of stock option grants is to aid the Company in
securing and retaining capable employees by offering them an incentive, in the
form of a proprietary interest in the Company, to join or continue in the
service of the Company and to maximize their efforts to promote its economic
performance. This incentive is created by granting options that have an exercise
price of not less than 100% of the fair market value of the underlying stock on
the date of grant, so that the employee may not profit from the option unless
the Company's stock price increases. Options granted are designed to help the
Company retain employees in that they are not fully exercisable in the early
years and "vest" only if the employee remains with the Company. Accordingly, an
employee must remain with the Company for a period of years in order to enjoy
the full economic benefit of the option. The number of options granted is a
function of the recipient's salary grade level.
10
<PAGE>
McCormick has not found it necessary to establish share ownership guidelines
for its executives, since the majority of executives EXCEED the typical
ownership guidelines.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Lawless served as the Company's chief executive officer for 11 months of
fiscal year 1997, succeeding Mr. McCormick who served as CEO for the first month
of the fiscal year.
As a non-employee CEO, Mr. McCormick received a monthly consulting fee for
services rendered to the Company. His fee for December 1996, while he was CEO,
was $47,583.33. In January 1997, Mr. McCormick relinquished the title of CEO,
while retaining the title of Chairman of the Board. His monthly fee for the
remainder of fiscal year 1997 was $13,725.
In March 1997, Mr. McCormick was awarded a stock option in the amount of
12,000 shares. Mr. McCormick's annual incentive award for fiscal 1997 was
$124,500, and was determined by the criteria and calculations applied to other
executives and described on page 9.
Mr. Lawless' base compensation in the salary column of the Summary
Compensation Table on page 13 consists of $443,334 for the period he has been
CEO and $30,833 for the one month prior to his promotion to CEO. Mr. Lawless'
salary changes during 1997 include a promotional increase when he assumed the
position and responsibilities of CEO, a merit increase determined according to
the same criteria as other executives, and a competitive pay adjustment as a
result of the compensation review conducted by the independent consultant.
In March 1997, Mr. Lawless was awarded a stock option in the amount of
53,000 shares. Mr. Lawless' annual incentive award for fiscal year 1997 was
$385,000, and was determined by the criteria and calculations applied to other
executives and described on page 9.
1997 COMPENSATION ACTIONS--OTHER EXECUTIVE OFFICERS
Salary increases, annual incentive awards and long-term incentive grants for
executive officers were granted in a manner consistent with those granted to
other Company managers.
Submitted By:
<TABLE>
<CAPTION>
COMPENSATION COMMITTEE EXECUTIVE COMMITTEE
- -------------------------------- ----------------------------
<S> <C>
George V. McGowan, Chairman Robert J. Lawless, Chairman
James S. Cook Robert G. Davey
George W. Koch (retired 3/97) Charles P. McCormick, Jr.
William E. Stevens Carroll D. Nordhoff
</TABLE>
11
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
After the retirement of Mr. Koch in March 1997, during fiscal year 1997 the
Compensation Committee was comprised of three independent outside directors.
Members are James S. Cook, George V. McGowan (Chairman) and William E. Stevens.
No member of the Committee has any interlocking or insider relationship with the
Company which is required to be reported under the applicable rules and
regulations of the Securities and Exchange Commission.
At the close of fiscal year 1997, members of the Executive Committee were
Robert G. Davey, Robert J. Lawless (Chairman), Charles P. McCormick, Jr. and
Carroll D. Nordhoff. All except Mr. McCormick are employees and executive
officers of the Company. Mr. McCormick is a retired employee of the Company. The
table beginning on page 4 of this Proxy Statement sets forth the business
experience of each of the members.
12
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid by the Company and its
subsidiaries for services rendered during each of the fiscal years ended
November 30, 1997, 1996 and 1995 to the two individuals who served as Chief
Executive Officer of the Company during the 1997 fiscal year and each of the
four most highly compensated executive officers who were executive officers on
the last day of the 1997 fiscal year, determined by reference to total annual
salary and bonus for the 1997 fiscal year.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
---------------------
ANNUAL COMPENSATION AWARDS
- -------------------------------------------------------------------------------------------- --------------------- ALL OTHER
FISCAL (1) OTHER ANNUAL SECURITIES UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) OPTIONS/SARS (#) ($) (2)
- ---------------------------------------- ------ ---------- --------- ---------------- --------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
CHARLES P. MCCORMICK, JR.(3)............ 1997 -- 124,500 226,858(4) 12,000 0
Chairman of the Board 1996 -- 195,300 600,000(4) 26,000 0
& Chief Executive Officer 1995 -- 6,690 226,800(4) 6,000 0
ROBERT J. LAWLESS(3).................... 1997 479,567 385,000 (4) 53,000 5,217
President & Chief 1996 359,567 123,540 25,000 4,005
Executive Officer 1995 239,567 40,031 12,250 2,736
ROBERT G. DAVEY......................... 1997 284,567 195,240 (4) 28,600 4,091
Executive Vice President & 1996 227,483 66,500 17,800 3,389
Chief Financial Officer 1995 194,350 6,825 11,500 2,735
CARROLL D. NORDHOFF..................... 1997 267,400 170,160 (4) 28,600 4,345
Executive Vice President 1996 255,594 63,300 21,000 3,722
1995 242,629 8,447 13,250 3,026
ROBERT W. SCHROEDER..................... 1997 250,400 142,000 (4) 22,100 4,008
Vice President & General Manager - 1996 219,167 47,000 14,800 3,475
McCormick/Schilling Divsion 1995 185,892 25,080 4,800 2,736
JAMES J. ALBRECHT....................... 1997 266,775 111,480 (4) 18,700 4,247
Vice President - 1996 259,103 34,000 13,200 3,651
Science & Technology 1995 246,171 30,968 7,750 2,880
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------
(1) Includes Corporate Board of Directors fees and service awards.
(2) Amounts paid or accrued under the Company's Profit Sharing Plan for the
accounts of such individuals. Figures for 1997 are estimates. The stated
figure includes payments persons would have received under the Company's
Profit Sharing Plan but for certain limits imposed by the Internal Revenue
Code: (i) for 1997 for Dr. Albrecht and Messrs. Davey, Lawless, Nordhoff and
Schroeder in the amounts of $881, $725, $1,858, $979 and $642, respectively;
(ii) for 1996 for
13
<PAGE>
Dr. Albrecht and Messrs. Davey, Lawless, Nordhoff and Schroeder payments in
the amounts of $581, $319, $935, $652 and $405, respectively; (iii) for 1995
for Dr. Albrecht and Mr. Nordhoff in the amounts of $144 and $290,
respectively.
(3) Mr. McCormick served as Chief Executive Officer from January 1, 1996 to
January 1, 1997; Mr. Lawless became Chief Executive Officer on January 1,
1997.
(4) Mr. McCormick is paid a consulting fee for services rendered to the Company.
There is no amount of other annual compensation that is required to be
reported.
COMPENSATION OF DIRECTORS
Corporate Board of Directors fees were paid at the rate of $5,400 per year
for each director who was an employee of the Company during the fiscal year
ended November 30, 1997. Fees paid to each director who was not an employee of
the Company consist of an annual retainer fee of $20,000 in cash, $2,000 in
Common Stock of the Company, and $1,100 for each Board meeting attended.
Non-employee directors serving on Board Committees receive $1,000 for each
Committee meeting attended, with Committee chairs receiving an additional $250
for each Committee meeting attended.
On July 18, 1994, Mr. McCormick was elected as Chairman of the Board. Mr.
McCormick's services in such capacity are consultative in nature. His
compensation arrangements are discussed at page 11.
PENSION PLAN TABLE
The following table shows the estimated annual benefits (on a single-life
basis), including supplemental benefits, payable upon retirement (assuming
retirement at age 65) to participants in the designated average compensation and
years of service classifications:
<TABLE>
<CAPTION>
YEARS OF SERVICE
AVERAGE ----------------------------------------------------------------------------
COMPENSATION 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ------------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ 300,000 51,997 77,997 103,996 129,995 155,994 181,994
350,000 60,697 91,047 121,396 151,745 182,094 212,444
400,000 69,397 104,097 138,796 173,495 208,194 242,894
450,000 78,097 117,147 156,196 195,245 234,294 273,344
500,000 86,797 130,197 173,596 216,995 260,394 303,794
550,000 95,497 143,247 190,996 238,745 286,494 334,244
600,000 104,197 156,297 208,396 260,495 312,594 364,694
- ------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
The Company's Pension Plan is non-contributory. A majority of the employees
of the Company and participating subsidiaries are eligible to participate in the
Plan upon completing one year of service and attaining age 21. The Plan provides
benefits (which are reduced by an amount equal to 50% of the participant's
Social Security benefit) based on an average of the participant's highest
consecutive 60 months of compensation, excluding any cash bonuses, and length of
service. In 1979, the Company adopted a supplement to its Pension Plan to
provide a limited group of its senior executives with an inducement to retire
before age 65. That group of senior executives will receive credit for
additional service for employment after age 55. In 1983, the supplement was
expanded to include a significant portion of the senior executives' bonuses in
the calculation of pension benefits. The supplement was amended in 1996 to
provide that if a senior executive with Company service outside the U.S. retires
after serving at least his or her last three years in the U.S., all of the
executive's years of Company service, including years of service with foreign
subsidiaries of the Company, will be counted in calculating pension benefits.
The group of senior executives includes those listed in the table on page 13.
For purposes of calculating the pension benefit, the average of the highest
consecutive 60 months of compensation for Dr. Albrecht and Messrs. Davey,
Lawless, Nordhoff and Schroeder as of November 30, 1997 was $343,831, $315,490,
$475,989, $349,987 and $289,110, respectively. The years of credited service for
Dr. Albrecht and Messrs. Davey, Lawless, Nordhoff and Schroeder as of the same
date were 15, 4, 7, 27 and 12 years, respectively.
Mr. Lawless and Mr. Davey are also entitled to receive pension benefits
under the registered pension plan ("RPP") offered to employees of McCormick
Canada, Inc. Benefits under the RPP are based on the average of the
participant's highest three consecutive years of earnings. Upon retirement the
Company has agreed to pay Mr. Lawless and Mr. Davey a supplemental benefit equal
to the excess, if any, of the benefit calculated under the RPP (assuming all
their service at McCormick Canada and the Company had been under the RPP) over
(i) the pension benefit accrued under RPP (based on years of service with
McCormick Canada) plus (ii) the benefit accrued under the Company's Pension Plan
(based on years of service with the Company).
15
<PAGE>
STOCK OPTIONS
During the last fiscal year, the Company has granted stock options to
certain employees, including executive officers, pursuant to stock option plans
approved by the Company's stockholders.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS* AT ASSUMED
- ------------------------------------------------------------------------------------------------ ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR BASE OPTION TERM ($)**
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME GRANTED (#) FISCAL YEAR ($/SHARES) DATE 0% 5% 10%
- ----------------------------------- ------------ ------------ ---------------- ---------- --- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles P. McCormick, Jr........... 12,000 1.3% $24.25 03/18/02 $0 $ 80,400 $177,600
Robert J. Lawless.................. 53,000 5.7% $24.25 03/18/02 $0 $355,100 $784,400
Robert G. Davey.................... 28,600 3.1% $24.25 03/18/02 $0 $191,620 $423,280
Carroll D. Nordhoff................ 28,600 3.1% $24.25 03/18/02 $0 $191,620 $423,280
Robert W. Schroeder................ 22,100 2.4% $24.25 03/18/02 $0 $148,070 $327,080
James J. Albrecht.................. 18,700 2.0% $24.25 03/18/02 $0 $125,290 $276,760
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------
* In general, the stock options are exercisable cumulatively as follows: none
of the shares granted during the first year of the option; not more than 50%
of the shares granted during the second year of the option; and 100% of the
shares granted, less any portion of such option previously exercised, at any
time during the period between the end of the second year of the option and
the expiration date. Approximately 385 employees of the Company were granted
options under the Company's option plans during the last fiscal year.
** The dollar amounts under these columns are the result of calculations at 0%,
and at the 5% and 10% compounded annual rates set by the Securities and
Exchange Commission, and therefore are not intended to forecast future
appreciation, if any, in the price of the Company's Common Stock. The
potential realizable values illustrated at 5% and 10% compound annual
appreciation assume that the price of the Company's Common Stock increases
$6.70 and $14.80 per share, respectively, over the 5-year term of the
options. If the named executives realize these values, the Company's
stockholders will realize aggregate appreciation in the price of the
approximately 74 million shares of the Company's Common Stock
16
<PAGE>
outstanding as of December 31, 1997 of approximately $494 million and $1.09
billion, over the same period.
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SHARES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS/SARS
SHARES ACQUIRED VALUE OPTIONS/SARS AT FY-END (#) AT FY-END($)
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISALE/UNEXERCISABLE
- ---------------------------------------- --------------- ------------ -------------------------- -------------------------
<S> <C> <C> <C> <C>
Charles P. McCormick, Jr................ 0 $0 21,000/25,000 $ 88,000/$80,625
Robert J. Lawless....................... 0 $0 20,730/77,320 $ 84,229/$221,696
Robert G. Davey......................... 0 $0 16,196/48,704 $ 66,183/$148,967
Carroll D. Nordhoff..................... 0 $0 29,527/54,573 $120,216/$167,759
Robert W. Schroeder..................... 0 $0 14,351/35,149 $ 57,248/$103,552
James J. Albrecht....................... 0 $0 12,483/39,917 $ 47,636/$130,265
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
Set forth below is a line graph comparing the yearly percent change in the
Company's cumulative total shareholder return (stock price appreciation plus
reinvestment of dividends) on the Company's Common Stock with (i) the cumulative
total return of the Standard & Poor's 500 Stock Index, assuming reinvestment of
dividends, and (ii) the cumulative total return of the Standard & Poor's Food
Products Index, assuming reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG MCCORMICK & COMPANY, INCORPORATED,
S&P 500 STOCK INDEX & S&P FOOD PRODUCTS INDEX**
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
11/92 11/93 11/94 11/95 11/96 11/97
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
McCormick 100 83 69 88 95 104
& Company,
Inc.
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
S&P 500 100 110 111 152 195 250
Index:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
S&P Foods 100 92 97 125 158 213
Index:
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Assumes $100 invested on December 1, 1992 in McCormick & Company Common Stock,
S&P 500 Stock Index and S&P Food Products Index
* Total Return Assumes Reinvestment of Dividends
** Fiscal Year ending November 30
18
<PAGE>
MID-TERM INCENTIVE PROGRAM
On January 26, 1998, the Board of Directors, upon recommendation of the
Compensation Committee, adopted the "Mid-Term Incentive Program," subject to
approval of the Company's stockholders. If the Program is not approved by the
required vote of stockholders, it will terminate.
The Mid-Term Incentive Program is designed to provide an incentive to a
limited number of the Company's most senior executives to take actions to cause
the Company to achieve targeted objectives for sales growth and total
shareholder return. The Program would be comprised of several three-year cycles,
the first three-year cycle to start on December 1, 1997, the second to start on
December 1, 1999, and the remaining cycles to start every two years thereafter.
Prior to the commencement of each cycle, the Company will establish, with
the approval of the Compensation Committee, a goal for sales growth and total
shareholder return. Total shareholder return for the Company during a cycle will
be compared to the total shareholder return of other companies in the S&P Food
Products Index. The amount of the benefit to be paid under the Program to
participants depends on the extent to which the sales growth target is achieved
and also on the relative position of the Company, based on its total shareholder
return for the three-year cycle, as compared to other companies on the S&P Food
Products Index. Payments will be adjusted if actual performance over the
three-year cycle is greater than or less than the goals. Payment will be in the
form of shares of McCormick Common Stock based on the value of such shares at
the time that the payment is due. The Program provides that the maximum benefit
that may be paid to the highest level participant at the end of any three-year
cycle is $2,000,000. However, the maximum benefit that can be paid at the end of
the first cycle is $1,570,000, which is payable only if cumulative sales growth
exceeds 50% and total shareholder returns place the Company in at least the 80th
percentile of the S&P Food Products Index.
The Compensation Committee will administer the Program and will designate as
participants in the Program certain key executives of the Company who are likely
to have a significant impact on the Company's sales growth and shareholder
return. For the first cycle beginning December 1, 1997, the Compensation
Committee has named seven key executives as participants, including Messrs.
Lawless, Davey, Nordhoff and Schroeder.
Participants will become vested in Program benefits upon completion of each
three-year cycle, except for special circumstances such as retirement, death or
disability. If a participant's employment terminates prior to completion of a
Program cycle as a result of retirement, death or disability, a pro rata benefit
is paid based on the participant's length of service in the cycle. If a
participant terminates employment voluntarily or is terminated involuntarily for
cause during a Program cycle, all benefits under the current cycle are
forfeited. In addition, if a participant becomes an employee of, or provides
services to, a competitor of the Company within two years after termination of
employment with the Company, the participant must reimburse the Company for all
Program payments made during the two years immediately preceding his termination
of employment.
19
<PAGE>
In general, upon receipt of shares of stock pursuant to the Program, it is
expected that recipients will recognize ordinary income for U.S. income tax
purposes and the Company will receive a tax deduction in the same amount. Shares
of stock will not be registered under the Securities Act of 1933, and will,
therefore, be "restricted" securities upon issuance. Recipients will be required
to make a Section 83(b) election under the Internal Revenue Code of 1986, as
amended.
If the Program had been in effect for the three-year cycle ending November
30, 1997, and assuming Program targets had been equal to those of the cycle
beginning December 1, 1997, no benefits would have been payable to any
participants, including those executive officers of the Company listed in the
Compensation Table on page 13.
REQUIRED VOTE OF STOCKHOLDERS. The favorable vote of at least a majority of
the shares of Common Stock of the Company present in person or by proxy at a
meeting at which a quorum is present is required for the approval of the
Program.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF
THE PROGRAM.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
appointed the accounting firm of Ernst & Young LLP to serve as the independent
auditors of the Company for the current fiscal year subject to ratification by
the stockholders of the Company. Ernst & Young LLP were first appointed to serve
as independent auditors of the Company in 1982 and are considered by management
of the Company to be well qualified.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting. They will have an opportunity to make a statement if they desire
to do so and are expected to be available to respond to appropriate questions.
REQUIRED VOTE OF STOCKHOLDERS. The favorable vote of at least a majority of
the shares of Common Stock of the Company present in person or by proxy at a
meeting at which a quorum is present is required for ratification of the
appointment of independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION.
OTHER MATTERS
Management knows of no other matters which may be presented for
consideration at the meeting. However, if any other matters properly come before
the meeting, it is the intention of the persons named in the proxy to vote such
proxy in accordance with their judgment on such matters.
20
<PAGE>
VOTING PROCEDURES
Each matter submitted to the stockholders for a vote is deemed approved if a
majority of the shares of Common Stock of the Company present in person or by
proxy at a meeting at which a quorum is present votes in favor of the matter.
The presence in person or by proxy of stockholders entitled to cast a majority
of all the votes entitled to be cast at the meeting constitutes a quorum.
Stockholder votes are tabulated manually by the Company's Shareholder
Relations Office. Broker non-votes are neither counted in establishing a quorum
nor voted for or against matters presented for stockholder consideration; proxy
cards which are executed and returned without any designated voting direction
are voted in the manner stated on the proxy card. Abstentions and broker
non-votes with respect to a proposal are not counted as favorable votes, and
therefore have the same effect as a vote against the proposal.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of stockholders to be presented at the 1999 Annual Meeting must be
received by the Secretary of the Company prior to October 17, 1998 to be
considered for inclusion in the 1999 proxy material.
21
<PAGE>
APPENDIX
MID-TERM INCENTIVE PROGRAM
PLAN DOCUMENT
<PAGE>
Page 1
MCCORMICK MID-TERM INCENTIVE PROGRAM
BACKGROUND
/ / Stock options, McCormick's only longer-term incentive, reward growth in
stock price, but do not provide guidance as to how to create shareholder
value. Based on a study done by compensation consultants with the
Compensation Committee, McCormick has a unique opportunity to introduce
a special Mid-Term Incentive Program that would focus participants'
performance and support key strategies, including:
_____ Focus on shareholder value
_____ Support and direct strategic growth
_____ Retention of an aggressive executive management team.
This new program should allow the executive management team and the
Compensation Committee to establish and communicate their own goals for success
and the rewards for achieving those goals. A Mid-Term Incentive Program coupled
with the existing stock option program should provide a very direct incentive to
executive management to achieve agreed upon goals.
<PAGE>
Page 2
MCCORMICK MID-TERM INCENTIVE PROGRAM
OBJECTIVE
/ / Motivate participants to achieve cumulative corporate sales growth* and
cumulative total shareholder return (TSR**) objectives for a three-year
performance period. Provide appropriate rewards to participants for
accomplishing the performance objectives.
* Corporate sales growth--Net dollar sales growth for the corporation,
adjusting for the impact of acquisitions and divestitures.
** (TSR) Total Shareholder Return--The total accumulation of stock
appreciation plus dividends (assumed to be reinvested) over a period
of time.
PARTICIPANT SELECTION CRITERIA
Those executives who have significant impact on Sales Growth and Total
Shareholder Return as determined by the Compensation Committee.
<PAGE>
Page 3
PROGRAM TERM AND PARTICIPANT VESTING
Overlapping three-year performance cycles, with a new Program Cycle starting
every two fiscal years, as shown below. Participants become vested in the
program upon the completion of each three-year performance cycle, except for
special terminations (e.g. retirement, death, disability, etc.).
<TABLE>
<CAPTION>
FISCAL YEAR
----------------------------------
1998 1999 2000 2001 2002 2003 2004 2005
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 Start -------------------- End
Program (12/1/97 - 11/30/00)
Cycle 2 Start --------------------- End
(12/1/99 - 11/30/02)
3
Start ------------------- End
(12/1/01 - 11/30/04)
etc.
</TABLE>
THREE-YEAR PERFORMANCE MEASURES
Two performance measures, equally weighted: (i) Cumulative corporate sales
growth compared to Program Cycle objectives and (ii) Cumulative McCormick Total
Shareholder Return (TSR) Index compared to S&P Food Products Index (same
companies as McCormick's proxy comparator group)
<PAGE>
Page 4
_____ Cumulative Corporate Sales Growth--Threshold, target and maximum sales
growth percentages are established at the beginning of the Program Cycle.
_____ Cumulative TSR Index--Threshold, target and maximum relative TSR
percentile rankings are established at the beginning of the Program
Cycle.
<PAGE>
Page 5
PROGRAM MECHANICS
/ / A juxtaposition of rewards and degrees of performance achievement on
selected financial goals is created and approved at the beginning of each
Program Cycle. Awards are received in unregistered restricted shares of
McCormick common stock at the end of the three-year performance period,
depending upon actual achievement of the three-year performance objectives,
as determined by a Performance matrix.
/ / The number of shares earned by the participant will depend on the incentive
amount earned and McCormick's stock price at the end date.
/ / The Program design allows McCormick to expense the award at the end date
and to receive "favorable" accounting treatment (i.e., fixed accounting
charge independent of stock price fluctuations).
/ / Each participant will recognize ordinary income for tax purposes upon
receipt of stock; McCormick will receive a tax deduction equal to the
ordinary income recognized by participants.
<PAGE>
Page 6
/ / Each participant will be responsible for the payment of any tax
liability which may arise as a result of his participation in this
program and will also be required to submit and timely file an election
under Section 83(b) of the Internal Revenue Code, as amended, to evidence
his election to be taxed at the time the stock is awarded rather than upon
expiration of the restriction on the stock.
/ / Each participant will pay the Company such amount of money as may be
necessary to satisfy the Company's obligation to withhold any federal,
state or local taxes from payments to be made under the Program. The
participant may satisfy this obligation either by authorizing the Company
to withhold shares of stock otherwise deliverable under the Program or by
delivering cash or other shares of Company stock already owned by him to
the Company. The shares of stock withheld or delivered shall have a fair
market value equal to the withholding obligations.
/ / The Program provides that the maximum benefit that may be paid to
the highest level participant at the end of any three-year cycle is
$2,000,000.
<PAGE>
Page 7
TARGET AWARDS
/ / Mid-Term Incentive Program target incentives are set so that McCormick's
annualized total long-term incentive values (McCormick stock options plus
Mid-Term Incentive Program target incentives) are between the 50th and
75th market percentile levels for each salary grade. These above median
competitive levels are earned only to the degree that mid-term performance
is achieved.
AWARD CALCULATION FORMULA -- TWO STEP PROCESS
<TABLE>
<S> <C> <C>
1. Salary Grade Target Sales Growth and TSR Total Incentive $
Performance $ X Performance Award Modifier = Amount
Amount Matrix
2. Total Incentive $ Amount = Number of McCormick
------------------------ Shares Awarded to
Price Per Share on Date Participant
of Award
</TABLE>
<PAGE>
Page 8
ADMINISTRATIVE GUIDELINES
The following are guidelines for the Program's administration:
/ / Business Acquisitions/Divestitures
____ Recalibrate the Cumulative Sales Growth threshold, target and
maximum objectives
____ No change to TSR measures
/ / New Participants
____ Approved by the Compensation Committee for inclusion at the
beginning of each program cycle
/ / Transfer to an Ineligible Position
____ Award paid based on pro rata target amount and adjusted for actual
performance
<PAGE>
Page 9
/ / Terminations
____ Voluntary
___ Forfeit all benefits under the current cycle
___ And if the participant terminates his employment with McCormick
and, within two years after termination, becomes an employee of,
or otherwise provides services to, a competitor of McCormick, the
participant shall forfeit any benefits received under the Program
within two years prior to his termination. The forfeiture shall
require the participant to deliver to the Company the shares of
stock received under the Program within two years prior to his
termination, or if the restriction on such shares has lapsed and
the shares have been sold by the participant, the participant
shall deliver to the Company the cash equivalent of such shares
based on the NASDAQ National Market List closing price of
McCormick's Common Stock Non-Voting on the date on which the
participant begins providing services to the competitor. The
shares or the cash shall be delivered to the Company within
thirty days after the participant begins providing services to
the competitor.
____ Involuntary (except "for cause")
____ Award paid based on pro rata target amount and adjusted for
actual performance
____ Retirement
____ Award paid based on pro rata target amount and adjusted for
actual performance
<PAGE>
Page 10
___ For Cause
____ Forfeit all benefits under the current cycle
/ / Death or Disability
____ Award paid based on pro rata target amount and adjusted for actual
performance
