<PAGE>
MCCORMICK & COMPANY, INCORPORATED
18 LOVETON CIRCLE
SPARKS, MARYLAND 21152
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MARCH 15, 2000
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
15, 2000, 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 ratification of the appointment of Ernst & Young LLP as independent
auditors of the Company to serve for the 2000 fiscal year; and
(c) 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, 1999
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 MAYBE REVOKED BY
YOU AT ANY TIME BEFORE IT IS VOTED.
February 15, 2000 Robert W. Skelton
Secretary
<PAGE>
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished on or about February 15, 2000 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, electronic mail 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, 1999, there were outstanding
9,132,795 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, 1999
will be entitled to vote at the meeting or any adjournments thereof.
PRINCIPAL STOCKHOLDERS
On December 31, 1999, the assets of The McCormick Profit Sharing Plan (the
"Plan") included 2,431,102 shares of the Company's Common Stock, which
represented 26.6% 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, Francis A. Contino, Carroll D. Nordhoff,
and Karen D. Weatherholtz, and the Company's Senior Vice President, J. Allan
Anderson, the Company's Vice President & Treasurer, Christopher J. Kurtzman and
the Company's Vice President, General Counsel & Secretary, Robert W. Skelton.
2
<PAGE>
Harry K. Wells and his wife Lois L.Wells, whose address is P. O. Box 409,
Riderwood, Maryland 21139, held in two trusts 576,623 shares of Common Stock as
of December 31, 1999, representing 6.3% of the outstanding shares of Common
Stock.
Hugh P. McCormick and his wife Joy J. McCormick, whose address is 606
Brightwood Club Drive, Lutherville, Maryland 21093 held 478,952 shares of Common
Stock as of December 31, 1999, representing 5.2% of the outstanding shares of
Common Stock.
ELECTION OF DIRECTORS
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, 1999, 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 shown in the table, 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>
Year First
Principal Occupation & Elected Amount and Nature* of
Name Age Business Experience Director Beneficial Ownership
- --------------------------------------------------------------------------------------------------------------------
Common
Non-
Common Voting
--------------------
<S> <C> <C> <C> <C> <C>
James T. Brady 59 Managing Director-Mid- 1998 138 1,000
Atlantic, Ballantrae International,
Ltd. (1999 to present); Consultant,
(1998 to 1999); Secretary,
Maryland Department of Business
and Economic Development
(1995 to 1998)
Francis A. Contino 54 Executive Vice President & 1998 6,188 3,370
Chief Financial Officer (June 1998
to present); Managing Partner
(Baltimore Office), Ernst &Young
LLP (1995 to June 1998)
Robert G. Davey 50 President-Global Industrial Group 1994 56,624 17,248
(June 1998 to present);
Executive Vice President &
Chief Financial Officer (1996 to
June 1998); Vice President & Chief
Financial Officer (1994 to 1996)
Edward S. Dunn, Jr. 56 C.J. McNutt Chair in Food Marketing, 1998 469 2,047
Erivan Haub School of Business, St.
Joseph's University (1998 to present);
President, Dunn Consulting (1997 to
present); President, Harris Teeter, Inc.
(1989 to 1997)
Freeman A. Hrabowski, III 49 President, University of 1997 1,957 1,512
Maryland Baltimore County
(1992 to present)
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Year First
Principal Occupation & Elected Amount and Nature* of
Name Age Business Experience Director Beneficial Ownership
- -----------------------------------------------------------------------------------------------------------
Common
Non-
Common Voting
--------------------
<S> <C> <C> <C> <C> <C>
Robert J. Lawless 53 Chairman of the Board (1999 to 1994 104,598 33,600
present); President (1996 to present); (1.1%)
Chief Executive Officer (1997 to
Present) & Chief Operating Officer
(1995 to present); Executive Vice
President (1995 to 1996)
Carroll D. Nordhoff 54 Executive Vice President 1991 81,421 23,249
(1994 to present)
Robert W. Schroeder 54 President-U.S. Consumer 1996 47,735 14,892
Foods (1999 to present); Vice
President & General Manager
McCormick/Schilling
Division (1995 to 1999)
William E. Stevens 57 Chairman and Chief Executive 1988 4,532 9,450
Officer, Wesmark Group (1999
to present); Executive Vice
President, Mills & Partners,
(1996 to 1999); President and
Chief Executive Officer,
United Industries Corp.
(1989 to 1996)
Karen D. Weatherholtz 49 Senior Vice President-Human 1992 27,711 7,199
Relations (1999 to present);
Vice President - Human Relations
(1988 to 1999)
Directors and Executive Officers as a Group
(14 persons)..........................................................................436,883 156,878
(4.8%)
</TABLE>
* 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, 1999 pursuant to the
exercise of stock options: Mr. Contino - 6,188 shares of Common Stock, 2,063
shares of Common Stock Non-Voting; Mr. Davey - 40,905 shares of Common Stock,
13,634 shares of Common Stock Non-Voting; Mr. Hrabowski - 1,150 shares of Common
Stock, 1,250 shares of Common Stock Non-Voting; Mr. Lawless - 73,606 shares of
Common Stock, 24,534 shares of Common Stock Non-
5
<PAGE>
Voting; Mr. Nordhoff - 43,248 shares of Common Stock, 14,416 of Common Stock
Non-Voting; Mr. Schroeder - 26,710 shares of Common Stock, 8,903 of Common Stock
Non-Voting; Mr. Stevens - 2,250 shares of Common Stock, 2,250 shares of Common
Stock Non-Voting; Ms. Weatherholtz - 12,116 shares of Common Stock, 4,039 shares
of Common Stock Non-Voting; and directors and executive officers as a group -
250,396 shares of Common Stock, 85,831 shares of Common Stock Non-Voting. Also
includes shares of Common Stock which are beneficially owned by virtue of
participation in the McCormick Profit Sharing Plan: Mr. Davey - 3,145 shares;
Mr. Lawless - 1,610 shares; Mr. Nordhoff - 8,182 shares; Mr. Schroeder - 14,632
shares; Ms. Weatherholtz - 8,906 shares; and directors and executive officers as
a group - 44,691 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 15, 2000 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. Brady, Hrabowski
and Stevens. The Audit Committee held four 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 and serve at the
pleasure of the Board of Directors: Messrs. Dunn, Hrabowski and Stevens. None of
the Committee members is an employee of the Company or is eligible to
participate in any Company stock option program that is administered by the
Committee. The Compensation Committee held three 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. Contino, Davey, Lawless and Nordhoff. The Executive Committee
held 17 meetings during the last fiscal year.
6
<PAGE>
ATTENDANCE AT MEETINGS
During the last fiscal year, there were eight 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. Mr. Brady is a director of Constellation
Energy Group, Inc. and Allfirst Financial, Inc. Dr. Hrabowski is a director of
Constellation Energy Group, Inc., the Baltimore Equitable Society, and
Mercantile Shareholders Corporation. Mr. Lawless is a director of Carpenter
Technology Corporation. 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
mid-term incentive program, and a long-term 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. The Compensation Committee engaged Towers
Perrin in 1997 to conduct a full review of the Company's compensation policies
and practices. Implementation of the consultant's recommendations resulted in
total compensation levels that are competitive with peer companies. An outside
consultant will be engaged during the first half of 2000 to conduct another full
review.
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
7
<PAGE>
executives of the Company. Those companies included most of the thirteen
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 1999.
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.
MID-TERM INCENTIVE PROGRAM
In 1998, the Compensation Committee, the Board of Directors and
shareholders approved a Mid-Term Incentive Program for the three-year period
beginning December 1, 1997 and ending November 30, 2000. Any payout, if earned,
will occur at the end of the three-year period. According to plan provisions, a
second cycle of the plan began December 1, 1999 and will end November 30, 2002.
The Compensation Committee believes that this Program plays an important role in
aligning the compensation of top executives with the key strategic needs of the
Company during the next three years. This Program facilitates clear focus on the
strategic objectives that will drive the Company's success; specifically, sales
growth and total shareholder return. It is targeted to a small number of
executives who are in positions which have a significant impact on the
achievement of the objectives of the Company as a whole, and who must provide
strategic focus to a time horizon that extends beyond any one fiscal year. The
Program is designed such that award
8
<PAGE>
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. It enhances our overall incentive program
when combined with stock options to achieve McCormick's longer term strategies,
and it 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 approximately 470 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.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Lawless' base compensation is shown in the salary column of the
Summary Compensation Table on page 11. During 1999, Mr. Lawless received a
promotional increase when he was promoted to the position of Chief Executive
Officer, President and Chairman of the Board. He also received a merit increase
determined according to the same criteria as other executives.
In March 1999, Mr. Lawless was awarded a stock option in the amount of
83,800 shares. Mr. Lawless' annual incentive award for fiscal year 1999 was
$786,200 and was determined by the criteria and calculations applied to other
executives and described on page 8.
1999 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:
COMPENSATION COMMITTEE EXECUTIVE COMMITTEE
William E. Stevens, Chairman Robert J. Lawless, Chairman
Edward S. Dunn, Jr. Francis A. Contino
Freeman A. Hrabowski, III Robert G. Davey
Carroll D. Nordhoff
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the period from December 1, 1998 until March 17, 1999, the
Compensation Committee was comprised of five independent outside directors.
James S. Cook and George V. McGowan retired from the Board and the Committee in
March 1999. No member of the Committee has any interlocking or insider
relationship with the Company that is required to be reported under the
applicable rules and regulations of the Securities and Exchange Commission.
Until March 17, 1999, members of the Executive Committee were Francis
A. Contino, Robert G. Davey, Robert J. Lawless (Chairman), Charles P. McCormick,
Jr. and Carroll D. Nordhoff. Mr. McCormick retired from the Board and the
Executive Committee in March 1999. 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.
10
<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, 1999, 1998 and 1997 to the Chief Executive Officer of the Company
and each of the four most highly compensated executive officers who were
executive officers on the last day of the 1999 fiscal year, determined by
reference to total salary and bonus paid to such individuals for the 1999 fiscal
year.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Long Term
Compensation
- ---------------------------------------------------------------------------------------------------------------
Annual Compensation
Awards All Other
------------------
Fiscal (1) Other Annual Securities Compensation
Name and Principal Position Year Salary ($) Bonus ($) Compensation Underlying ($) (2)
($) Options/SARs (#)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ROBERT J. LAWLESS 1999 583,033 786,200 (3) 83,800 9,745
Chairman of the Board, 1998 534,700 247,800 83,800 9,405
President & Chief 1997 479,567 385,000 53,000 6,117
Executive Officer
ROBERT G. DAVEY 1999 380,950 395,200 (3) 42,700 7,816
President - Global 1998 344,700 144,000 38,800 6,505
Industrial 1997 284,567 195,240 28,600 4,991
Group
FRANCIS A. CONTINO 1999 326,367 301,000 (3) 31,800 3,294
Executive Vice President & 1998 146,283 55,000 33,000 0
Chief Financial Officer 1997 N/A N/A N/A N/A
CARROLL D. NORDHOFF 1999 292,283 301,000 (3) 31,800 6,910
Executive Vice President 1998 281,200 110,000 31,800 6,044
1997 267,400 170,160 28,600 5,245
ROBERT W. SCHROEDER 1999 285,967 191,000 (3) 26,400 6,621
President - U.S. Consumer 1998 271,550 146,425 26,400 5,702
Foods 1997 250,400 142,000 22,100 4,908
- ---------------------------------------------------------------------------------------------------------------
</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 1999 are estimates. The stated
figures represent the amounts that would have been contributed to the
individual's account under the Company's Profit Sharing Plan but
11
<PAGE>
for certain limits imposed by the Internal Revenue Code. Amounts in excess
of these limits were paid in cash to these individuals as follows: In 1999,
for Messrs. Davey, Lawless, Nordhoff and Schroeder the excess amounts were
$2,433, $4,362, $1,528, and $1,238, respectively; in 1998 for Messrs.
Davey, Lawless, Nordhoff and Schroeder the excess amounts were $2,239,
$5,139, $1,778, and $1,436, respectively; and in for 1997 for Messrs.
Davey, Lawless, Nordhoff and Schroeder the excess amounts were $725,
$1,858, $979 and $642, respectively.
(3) There is no amount of other annual compensation that is required to be
reported.
COMPENSATION OF DIRECTORS
Corporate Board of Directors fees are paid at the rate of $7,200 per year
for each director who is an employee of the Company. Fees paid to each director
who is not an employee of the Company consist of an annual retainer fee of
$22,000 in cash, $4,000 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.
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>
- --------------------------------------------------------------------------------------------------------------
AVERAGE YEARS OF SERVICE
---------------------------------------------------------------------------------------
COMPENSATION 10 Years 15 Years 20 Years 25 Years 30 Years 35 Years
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$350,000 $58,323 $87,483 $116,643 $145,804 $174,965 $204,126
$400,000 $67,023 $100,533 $134,043 $167,554 $201,065 $234,576
$450,000 $75,723 $113,583 $151,443 $189,304 $227,165 $265,026
$500,000 $84,423 $126,633 $168,843 $211,054 $253,265 $295,476
$550,000 $93,123 $139,683 $186,243 $232,804 $279,365 $325,926
$600,000 $101,823 $152,733 $203,643 $254,554 $305,465 $356,376
$650,000 $110,523 $165,783 $221,043 $276,304 $331,565 $386,826
$700,000 $119,223 $178,833 $238,443 $298,054 $357,665 $417,276
$750,000 $127,923 $191,883 $255,843 $319,804 $383,765 $447,726
$800,000 $136,623 $204,933 $273,243 $341,554 $409,865 $478,176
$850,000 $145,323 $217,983 $290,643 $363,304 $435,965 $508,626
$900,000 $154,023 $231,033 $308,043 $385,054 $462,065 $539,076
- --------------------------------------------------------------------------------------------------------------
</TABLE>
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
12
<PAGE>
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 11.
For purposes of calculating the pension benefit, the average of the highest
consecutive 60 months of compensation for the executives listed in the
compensation table as of November 30, 1999 is as follows: Mr. Contino -
$527,611, Mr. Davey - $441,933, Mr. Lawless - $793,348, Mr. Nordhoff - $412,986,
and Mr. Schroeder - $360,360. The years of credited service for these executives
as of the same date are: Mr. Contino - 1.5, Mr. Davey - 22.5, Mr. Lawless - 23,
Mr. Nordhoff - 29 and Mr. Schroeder - 14.
In 1999, the Company adopted a deferred compensation plan which allows
a limited number of management employees to defer the payment of portions of
salary and bonus. Plan participants may invest their deferred compensation in
any one or a combination of the plan's investment funds. In most cases, deferred
amounts plus earnings are paid out upon the participant's retirement or
termination of employment.
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<PAGE>
STOCK OPTIONS
During the last fiscal year, the Company has granted stock options to
certain employees, including executive officers, pursuant to stock option plans
approved by the Company's stockholders.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Potential
Realizable Value
At Assumed
Annual Rates of
Stock Price
Appreciation For
Option Term ($)**
- ---------------------------------------------------------------------------------------------------------------
Individual Grants*
- ---------------------------------------------------------------------------------------------------------------
Number of % of Total Exercise or Expiration
Securities Options/SARs Base Date
Name Underlying Granted To Price
Options/SARs Employees in ($/Shares)
Granted (#) Fiscal Year 0% 5% 10%
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert J. Lawless 83,800 6.5 $29.0625 03/17/09 $0 $1,476,187 $3,793,170
- ---------------------------------------------------------------------------------------------------------------
Robert G. Davey 42,700 3.3 $29.0625 03/17/09 $0 $752,186 $1,932,797
- ---------------------------------------------------------------------------------------------------------------
Francis A. Contino 31,800 2.5 $29.0625 03/17/09 $0 $560,176 $1,439,413
- ---------------------------------------------------------------------------------------------------------------
Carroll D. Nordhoff 31,800 2.5 $29.0625 03/17/09 $0 $560,176 $1,439,413
- ---------------------------------------------------------------------------------------------------------------
Robert W. Schroeder 26,400 2.1 $29.0625 03/17/09 $0 $465,052 $1,194,984
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
* The stock options are exercisable cumulatively as follows: none of the
shares granted during the first year of the option; not more than 25% of
the shares granted during the second year of the option; not more than 50%
of the shares granted during the third year of the option, less any shares
for which the option has been previously exercised; not more than 75% of
the shares granted during the fourth year of the option, less any shares
for which the option has been previously exercised; 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 fourth year of the option and the
expiration date. Approximately 470 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
$18.28 and $46.32 per share, respectively, over the 10-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 69 million shares of the Company's Common Stock outstanding
as of December 31, 1999 of approximately $1.26 billion and $3.20 billion,
over the same period.
14
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Value of Unexercised
Number of Shares In-the-Money
Shares Acquired Value Underlying Unexercised Options/SARs
Name on Exercise (#) Realized ($) Options/SARs at FY-End at FY-End ($)
(#) Exercisable/
Exercisable/Unexercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Robert J. Lawless 4,800 $21,900 98,140/159,710 $660,718/$370,198
- -------------------------------------------------------------------------------------------------------------
Robert G. Davey 4,000 $25,125 54,539/84,861 $392,796/$246,898
- -------------------------------------------------------------------------------------------------------------
Francis A. Contino 0 $0 8,251/56,549 $3,135/$104,805
- -------------------------------------------------------------------------------------------------------------
Carroll D. Nordhoff 13,250 $63,766 57,664/68,786 $438,965/$216,638
- -------------------------------------------------------------------------------------------------------------
Robert W. Schroeder 3,000 $16,313 35,613/58,887 $257,506/$186,025
- -------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG MCCORMICK & COMPANY, INCORPORATED,
S&P 500 STOCK INDEX & S&P FOOD PRODUCTS INDEX**
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.
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
- ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
McC 100 127 136 150 193 189
- ------------------------------------------------------------------
S&P 500 100 137 175 225 278 336
- ------------------------------------------------------------------
S&P 100 128 163 219 246 199
Food
- ------------------------------------------------------------------
</TABLE>
Assumes $100 invested on December 1, 1994 in McCormick & Company, Incorporated
Common Stock; S&P 500 Stock Index and S&P Food Products Index
* Total Return Assumes Reinvestment of Dividends
** Fiscal Year ending November 30
16
<PAGE>
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 that 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.
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 that 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 2001 ANNUAL MEETING
Proposals of stockholders to be presented at the 2001 Annual Meeting must be
received by the Secretary of the Company prior to October 15, 2000 to be
considered for inclusion in the 2001 proxy material.
17
