<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
MORTON INTERNATIONAL, INC.
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(Name of Registrant as Specified In Its Charter)
MORTON INTERNATIONAL, INC.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
S. JAY STEWART
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
September 11, 1997
Dear Shareholder:
It is my pleasure to invite you to the 1997 Annual Meeting of Shareholders of
Morton International, Inc., which will be held on Thursday, October 23, 1997, at
the Mid-America Club, 200 East Randolph Drive (80th floor), Chicago, Illinois
commencing at 10:00 A.M. local time. Information relative to the matters to be
voted upon at the meeting is in the formal notice of the meeting and proxy
statement on the following pages.
It is important that your shares be represented at this meeting whether or not
you plan to attend in person. Therefore, please sign, date and return your proxy
promptly in the enclosed envelope. This will not limit your rights to vote in
person or attend the meeting.
A public news release covering voting results will be available immediately
after the meeting.
The Company's Annual Report for the fiscal year ended June 30, 1997, is being
distributed to shareholders with this proxy statement.
Sincerely,
[PASTE SIGNATURE]
<PAGE>
MORTON INTERNATIONAL, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Morton International, Inc. (the "Company")
will be held on Thursday, October 23, 1997, at the Mid-America Club, 200 East
Randolph Drive (80th floor), Chicago, Illinois at 10:00 A.M. local time to
consider and vote upon:
1. Election of four directors (see pages 2-5).
2. Approval of the Company's 1997 Incentive Plan (see pages 18-20).
3. Ratification of the appointment of Ernst & Young LLP as the Company's
independent auditing firm for the fiscal year ending June 30, 1998 (see page
21).
4. Any other business that may properly come before the meeting.
The close of business August 25, 1997, has been fixed as the record date for the
meeting. All shareholders of record on that date are entitled to be present and
vote at the meeting.
Attendance at the annual meeting will be limited to shareholders of record,
beneficial owners of Company common stock entitled to vote at the meeting having
evidence of ownership, the authorized representative (one only) of an absent
shareholder, and invited guests of management. Any person claiming to be an
authorized representative of a shareholder must, upon request, produce written
evidence of such authorization.
The meeting will be conducted pursuant to the Company's by-laws and rules of
order prescribed by the chairman of the meeting.
By order of the Board of Directors
[SIGNATURE]
P. Michael Phelps
Vice President and Secretary
September 11, 1997
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MORTON INTERNATIONAL, INC.
100 NORTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606-1596
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PROXY STATEMENT
September 11, 1997
INTRODUCTION
Effective April 30, 1997, Morton International, Inc. ("Old Morton")
contributed its salt and specialty chemicals businesses to a newly created
subsidiary, New Morton International, Inc. ("New Morton"), all the outstanding
common stock of which was then spun off on a share-for-share basis to the
shareholders of Old Morton. Immediately thereafter, New Morton's corporate name
was changed to Morton International, Inc. (the "Company"), and Old Morton's
automotive safety products business was combined with the businesses of Autoliv
AB, a Swedish corporation, through the formation of a new Delaware holding
corporation, Autoliv, Inc. Since the foregoing transactions, the Company and
Autoliv, Inc. have been independent publicly owned companies with separate,
independent boards of directors and management.
The present directors and executive officers of the Company, however, had
corresponding positions and responsibilities with Old Morton prior to April 30,
1997. Consequently, certain information in this proxy statement concerning such
persons which covers periods prior to April 30, 1997 (such as compensation
received and stock options exercised) is based on their service with Old Morton.
Therefore, the term Company as used herein includes Old Morton during the
periods when it had corresponding shareholders, directors and officers.
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by the
Company's Board of Directors (the "Board") of proxies for use at its Annual
Meeting of Shareholders, to be held on Thursday, October 23, 1997, and at any
adjournment thereof (the "1997 Annual Meeting" or the "meeting").
The shares represented by all properly executed and unrevoked proxies
received in proper form in time for the meeting will be voted. Shares will be
voted in accordance with shareholders' instructions in the accompanying proxy.
If no instructions are given, the shares will be voted in accordance with the
Board's recommendations, which are noted herein. Any proxy given may be revoked
at any time before it is voted at the meeting.
Directors will be elected by a plurality of the shares present at the
meeting in person or by proxy and entitled to vote thereon. Votes withheld as to
one or more nominees will not be counted as votes cast for such individuals. Any
other proposal brought before the meeting will be decided by a majority of votes
cast with respect thereto. Consequently, abstentions and broker non-votes (votes
withheld by brokers in the absence of instructions from street-name holders) are
not counted for purposes of determining whether a proposal has been approved,
but they are counted for purposes of establishing a quorum at the meeting.
The Company will bear the cost of the solicitation. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodian nominees and fiduciaries to supply proxy material to the beneficial
owners of the Company's common stock of whom they have knowledge, and will
reimburse them for their expenses in so doing; and certain directors, officers
and other employees of the Company, not specially employed for the purpose, may
solicit proxies, without additional remuneration therefor, by personal
interview, mail, telephone or telegraph. In addition, the Company has retained
Georgeson & Co., Inc. to assist in the solicitation for a fee of $11,000 plus
expenses.
1
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1. ELECTION OF DIRECTORS
The Company's by-laws provide that the size of the Board shall be fixed from
time to time by Board resolution. The Board presently consists of eleven
members, divided into three classes. Directors in each class are elected, on a
rotating basis at the annual shareholders meeting at which the term for such
class expires, for terms expiring (except as noted herein) at the third
subsequent annual meeting of shareholders.
Listed on the following pages as nominees for election at the 1997 Annual
Meeting for three-year terms (except for Messrs. Barford and Creson) are the
four directors whose present terms will expire at that time. All nominees are
presently serving as directors, and the Company has not been advised by any
nominee that he will not serve if elected.
THE BOARD RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR.
BOARD MEETING ATTENDANCE AND COMPENSATION OF DIRECTORS
The Board met eight times during the fiscal year ended June 30, 1997 (fiscal
1997). All of the incumbent directors were present for 75% or more of the total
meetings of the Board and Board committees of which they were members except Mr.
Fill.
Directors who are employees of the Company or any subsidiary thereof do not
receive any compensation for service on the Board or Board committees.
Non-employee directors receive for their services a retainer of $28,000 per
year, plus a fee of $1,500 for each Board meeting attended.
In addition, non-employee directors who are chairmen of the Audit and
Compensation Committees each receive additional annual retainers of $2,500; the
chairman of the Nominating & Organization Committee receives an additional
annual retainer of $1,500; and all committee chairmen and members receive $750
for attendance at each meeting of their particular committees.
Non-employee directors who are elected or continuing as such at annual
shareholders meetings also receive grants of 500 shares of Company common stock
as of the dates of each such meeting. The value of the 500 shares received by
each director as of the October 1996 annual meeting was $20,375.
The Company has a Non-Employee Directors Deferred Compensation Plan, under
which participants may elect to defer all or a portion of their cash (but not
stock) compensation. This Plan utilizes phantom Company stock, plus amounts
equivalent to dividends paid thereon, to value deferred balances, which as a
result fluctuate from time to time in accordance with the stock's market
performance. Distributions of Plan balances are made in cash following a
participant's death or termination of service as a director, in amounts based on
the stock's market value at the time of the particular distribution.
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2
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NOMINEES FOR DIRECTOR AT THE OCTOBER 1997 ANNUAL MEETING*
RALPH M. BARFORD, age 68, is President of Valleydene Corp.
Ltd., an investment company. He is also Chairman of GSW, Inc.,
a manufacturer of consumer products, and a director of Bank of
Montreal, Bell Canada, BCE Inc., Hollinger, Inc. and Northern
Telecom Limited. Mr. Barford has been a director of the
Company since 1989. He holds a Bachelor of Commerce degree
from the University of Toronto and an M.B.A. degree from
Harvard University.
[PHOTO]
JAMES R. CANTALUPO, age 53, was elected a director of the
Company in January 1996. He is President (since 1987) and
Chief Executive Officer -- International (since 1991) and a
director (since 1987) of McDonald's Corporation, a global
foodservice retailer. Mr. Cantalupo joined McDonald's as
Controller in 1974 and subsequently served in several senior
executive capacities before being promoted to his present
position. He is a graduate of the University of Illinois as
well as a certified public accountant.
[PHOTO]
WILLIAM T. CRESON, age 68, retired in 1986 from Crown
Zellerbach Corporation, a forest products and paper
manufacturer, where he had served as President, Chief
Executive Officer, and Chairman of the Board. Mr. Creson has
been a director of the Company since 1989. He holds a B.S.
degree in Mechanical Engineering from Purdue University and an
M.B.A. degree from the University of Pennsylvania.
[PHOTO]
S. JAY STEWART, age 58, became Chairman and Chief
Executive Officer of the Company in April 1994. Also, he has
been a director of the Company since 1989, and was its
President and Chief Operating Officer from 1989 through March
1994. In addition, he is a director of Household
International, Inc. and Autoliv, Inc. Mr. Stewart holds a B.S.
degree in Chemical Engineering from the University of
Cincinnati and an M.B.A. degree from West Virginia University.
[PHOTO]
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* Messrs. Barford and Creson have been nominated for terms which will expire in
July 1999, when they both will reach age 70. The terms of the other two
nominees named in this class will expire at the October 2000 Annual Meeting.
3
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INCUMBENT DIRECTORS -- TERMS EXPIRING AT THE OCTOBER 1998 ANNUAL MEETING
W. JAMES FARRELL, age 55, was elected a director of the
Company in June 1996 effective in August 1996. He is Chairman
(since May 1996) and Chief Executive Officer and a director
(since 1995) of Illinois Tool Works Inc. (ITW), a
multinational manufacturer of fasteners, components,
assemblies and systems. Mr. Farrell joined ITW in 1965, and
since 1972 he has served in numerous senior executive
capacities before election to his present positions. In
addition, he is a director of Hon Industries Inc. and Premark
International, Inc. He holds a degree in Electrical
Engineering from the University of Detroit.
[PHOTO]
RICHARD L. KEYSER, age 54, is Chairman of the Board (since
September 1997), Chief Executive Officer (since March 1995),
and a director (since 1992) of W. W. Grainger, Inc., a
nationwide distributor of maintenance, repair and operating
supplies. He joined Grainger in 1986 as a vice president, and
subsequently served in several senior executive capacities
before assuming his present positions. He has been a Company
director since January 1995. He has a B.S. in Nuclear Science
from the U.S. Naval Academy and an M.B.A. from Harvard
University.
[PHOTO]
ROGER W. STONE, age 62, is Chairman of the Board (since
1983), President (since 1975), and Chief Executive Officer
(since 1979) of Stone Container Corporation, a multinational
producer and marketer of pulp, paper, and packaging products.
He has been a director of the Company since 1989. Mr. Stone is
also a director of Abitibi-Consolidated, Autoliv, Inc.,
McDonald's Corporation, and Option Care, Inc. He is a graduate
of the University of Pennsylvania Wharton School of Finance.
[PHOTO]
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4
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INCUMBENT DIRECTORS -- TERMS EXPIRING AT THE OCTOBER 1999 ANNUAL MEETING*
DENNIS C. FILL, age 68, is (since June 1992) Chairman and
Chief Executive Officer of Advanced Technology Laboratories,
Inc., formerly named Westmark International Incorporated, a
medical electronics systems manufacturer, where he held
corresponding offices since 1986. Mr. Fill has been a director
of the Company since 1989. He is also a director of Beckman
Instruments, Inc., Cytran, Inc. and Spacelabs Medical, Inc.
Mr. Fill attended Ealing College, the Institute of Export and
the Borough Polytechnic branch of London University. He also
served in the Royal Air Force.
[PHOTO]
WILLIAM E. JOHNSTON, age 57, was elected a director of the
Company in January 1996. He is President and Chief Operating
Officer of the Company (since October 1995), prior to which he
was (since 1993) its Executive Vice President, Administration
and (from 1981 until 1993) President of its Salt Group. Mr.
Johnston holds a B.A. degree from St. Joseph's College and an
M.B.A. degree from the University of Chicago.
[PHOTO]
EDWARD J. MOONEY, age 56, is Chairman (since July 1994),
Chief Executive Officer (since April 1994), President (since
1990) and a director (since 1988) of Nalco Chemical Company, a
producer of specialty chemicals and services for water and
industrial process treatment. Mr. Mooney was Chief Operating
Officer of Nalco from 1992 to 1994. He has been a director of
the Company since August 1995. In addition, he is a director
of FMC Corporation, as well as Northern Trust Corporation and
its subsidiary The Northern Trust Company. He has a B.S. in
Chemical Engineering and a J.D. degree from the University of
Texas.
[PHOTO]
GEORGE A. SCHAEFER, age 69, is a director (since 1983) of
Caterpillar Inc., a manufacturer of construction, earthmoving
and material handling machines and engines. He retired in 1990
as Chairman and Chief Executive Officer of Caterpillar,
positions he had held since 1985. Mr. Schaefer has been a
director of the Company since 1990. He is also a director of
Aon Corporation, Autoliv, Inc., Helmerich & Payne, Inc. and
McDonnell Douglas Corporation. Mr. Schaefer is a graduate of
St. Louis University.
[PHOTO]
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*Except for Messrs. Fill and Schaefer, whose terms will expire, respectively, in
July 1999 and June 1998, when they will reach age 70.
5
<PAGE>
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COMMITTEES OF THE BOARD
There are four standing committees of the Board: Audit Committee,
Compensation Committee, Executive Committee, and Nominating and Organization
Committee.
The Audit Committee recommends to the Board the independent auditors to be
selected to audit the Company's annual financial statements and reviews the fees
charged for such audits and for any special assignments given such auditors. The
committee also reviews the annual audit and its scope, including the independent
auditors' letter of comments and management's responses thereto; possible
violations of the Company's business ethics and conflicts of interest policies;
any major accounting changes made or contemplated; and the effectiveness and
efficiency of the Company's internal audit staff. In addition, the committee
confirms that no restrictions have been imposed by Company personnel on the
scope of independent auditors' examinations. Members of this committee are
Messrs. Creson (Chairman), Cantalupo, Keyser, Mooney and Schaefer. The committee
met twice in fiscal 1997.
The Compensation Committee annually reviews and reports to the Board on
pension plan investment performance, and makes recommendations to the Board with
respect to the creation and amendment of pension and welfare plans of the
Company and its subsidiaries. The committee also approves senior officers'
salaries and administers the Company's employee cash and stock incentive
compensation plan. Members of this committee are Messrs. Stone (Chairman),
Barford, Fill, Keyser and Mooney. The committee met three times in fiscal 1997.
The Executive Committee has and may exercise all the powers and authority of
the Board in the management of its business and affairs, except that the
committee does not have the power to amend the Company's by-laws or articles of
incorporation (except to fix the designations, preferences and other terms of
any of its preferred stock), authorize the issuance of stock, authorize
distributions (other than pursuant to a formula set by the Board), adopt an
agreement of merger or consolidation, approve a plan of merger that does not
require a vote of shareholders under Indiana law, fill vacancies in the Board or
Executive Committee or recommend to shareholders action that Indiana law
requires be approved by shareholders. Members of this committee are Messrs.
Stewart (Chairman), Cantalupo, Farrell, Johnston and Stone. The committee had no
meetings in fiscal 1997.
The Nominating & Organization Committee identifies and evaluates individuals
for potential directorships and makes recommendations accordingly to the Board
to fill vacancies or new positions on the Board, as well as recommending to the
Board the management slate of nominees for election as directors at annual
shareholders meetings. The committee also makes recommendations to the Board
regarding the size and composition of the Board and Board committees;
compensation of non-employee directors; and management succession. In addition,
the committee reviews the development of the management organization structure.
Members of this committee are Messrs. Barford (Chairman), Creson, Farrell, Fill
and Schaefer. The committee met once in fiscal 1997.
Written nominations by shareholders for directors will be considered by the
Nominating & Organization Committee provided they are received by the Corporate
Secretary of the Company at its principal executive offices pursuant to timely
advance written notice in accordance with its by-laws* and contain all
information specified in such by-laws. No such nominations were received for the
1997 Annual Meeting. For the Company's 1998 Annual Meeting, any such nominations
must be received by the Company between July 17 and August 17, 1998.
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*A copy of the Company's by-laws may be obtained by written request to its
Corporate Secretary.
6
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
On August 25, 1997, the record date for the 1997 Annual Meeting, there were
135,731,969 shares of common stock outstanding, each entitled to one vote. Only
shareholders of record on that date will be entitled to vote at the meeting. The
Company has no other class of equity securities outstanding. As of the date of
this proxy statement, there was no known beneficial ownership of more than 5% of
the Company's common stock.
The following table shows the Company's common stock beneficially owned as
of August 25, 1997, by each present director and each executive officer named in
the Summary Compensation Table on page 12; and by all present directors and
executive officers of the Company as a group. Each named person has sole voting
and investment power with respect to the shares shown (except for the shares
identified in footnote (2) below).
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED(1)
------------
<S> <C>
Ralph M. Barford............................................................................... 100,000
James R. Cantalupo............................................................................. 3,152 (2)
William T. Creson.............................................................................. 4,500
W. James Farrell............................................................................... 500
Dennis C. Fill................................................................................. 13,400
James J. Fuerholzer............................................................................ 141,131
Stephen A. Gerow............................................................................... 164,211
William E. Johnston............................................................................ 469,515
Richard L. Keyser.............................................................................. 5,920 (2)
Thomas F. McDevitt............................................................................. 123,600
Edward J. Mooney............................................................................... 1,400
George A. Schaefer............................................................................. 7,500
S. Jay Stewart................................................................................. 1,037,635
Roger W. Stone................................................................................. 8,546 (2)
All directors, nominees and executive officers as a group (22 persons including those named)... 2,668,578
NOTE: The largest individual beneficial holding shown above represents less than 1% of the outstanding
shares; the holdings of the group represent less than 2% of the outstanding shares.
<FN>
- --------
(1) Shares in this column include shares which the individuals have only the
right to acquire through the exercise of stock options which are
exercisable presently or within 60 days: Mr. Stewart (775,165 shares), Mr.
Johnston (364,685 shares), Mr. Fuerholzer (124,359 shares), Mr. Gerow
(153,015 shares), Mr. McDevitt (53,691 shares), and all directors and
executive officers as a group (1,986,691 shares).
(2) The total shares owned by Messrs. Cantalupo, Keyser and Stone include,
respectively, 652, 3,920 and 4,046 shares of phantom stock credited as of
June 30, 1997, to their accounts under the Non-Employee Directors Deferred
Compensation Plan described on page 2 of this proxy statement. The
foregoing amounts include conversions made to reflect the transactions
described in the Introduction on page one pursuant to a formula specified
in the Federal tax law.
</TABLE>
7
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COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation Committee is comprised exclusively of directors who are not
and have never been Company employees. No Company executive officer serves on
the Compensation Committee of another company for which any member of the
Company's Compensation Committee serves as an executive officer.
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EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT
As reported on page 6, the Compensation Committee of the Board (the
"Committee") approves senior officers' salaries and administers the Company's
cash and stock incentive compensation plan. The purpose of this plan and the
objectives of the Committee are to:
- pay for performance, motivating both long- and short-term performance on
behalf of Company shareholders,
- provide competitive compensation programs so as to be able to attract,
retain and motivate top management talent,
- place greater emphasis on at risk incentive compensation than on fixed
salaries, particularly for senior executives,
- base the incentive compensation of business unit executives in large part
on the performance of their operations, while including a component which
recognizes overall Company performance as well, and
- most importantly, join shareholder and management interests.
To further these objectives, the compensation of senior executive officers
includes four components: (1) base salaries, (2) annual bonus programs, (3) a
long-term incentive program, and (4) stock options.
Periodically, the Committee arranges for studies by independent compensation
consulting firms comparing total compensation of the Company's senior executive
officers with compensation of executives in similarly sized companies.* The last
such study, which was performed in August 1997, confirmed that base salaries are
slightly lower than the averages in the study group. The study also showed that
the Company continues to place emphasis on performance based compensation, so
that total compensation is above such averages when goals are significantly
exceeded.
BASE SALARIES
The Committee approves salary changes for senior executive officers in
accordance with the Company's written salary administration policy. This policy
is a long-standing one designed and periodically reviewed in consultation with
external compensation consultants. Salary ranges are established for various
positions through job evaluation and comparison with competitive salary data.
Within the ranges, adjustments are recommended on the basis of position within
the range, individual
- --------
*These companies do not necessarily include those in the Custom Composite (peer
group) Index in the performance graph on page 11, since the Company's
competitors for executive employees are not always the same as those for
shareholders' investments.
8
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performance, and a corporate merit salary percentage factor. Consistent with the
Company's overall objectives, these adjustments, combined with bonuses as
outlined below, emphasize payment for performance.
ANNUAL BONUS PROGRAMS
Following fiscal 1997 (which ended on June 30, 1997), the Committee
considered annual bonus payments based on performance during that year. Under
the annual bonus program applicable to senior executive officers, award levels
may range from zero to 120% of their base salaries as of the beginning of the
performance period, depending on salary grade and attainment of Company and
applicable business unit profit targets as approved by the Committee. Based on
these factors and the terms of such annual bonus program, the Committee approved
bonus payments to senior executive officers ranging from 13% to 96% of their
salaries.
LONG-TERM INCENTIVE PROGRAM (LTIP)
Also following fiscal 1997, the Committee considered LTIP payments to senior
executive officers based on performance during the three-year period from fiscal
1995 through fiscal 1997. LTIP participants are selected by the Committee
annually prior to the beginning of each particular three-year performance
period. Depending on the participant's salary grade, possible award levels range
from zero if less than 5% compound annual growth in Company or applicable
business unit profit goals as approved by the Committee is realized over the
three year period to a maximum 240% of base salary if 20% or greater compound
annual growth is realized. Based on the terms of the LTIP for fiscal 1995
through fiscal 1997, the Committee approved LTIP payments to six executive
officers ranging from 36% to 240% of their annual base salaries as of the
beginning of the performance period.
STOCK OPTIONS
In addition, the Committee authorizes stock option grants to selected
employees, currently including all executive officers, at approximate one-year
intervals. The Company's stock option guidelines were designed and have been
revised periodically with the assistance of external compensation consultants.
These guidelines provide for a specific number of options, the value of which is
derived from the midpoint of the salary range for each specific salary grade, as
periodically adjusted by means of a formula that utilizes the stock's average
market value during the last month of the most recent fiscal year. The formula
does not, however, consider an individual's previous option grants. All options
granted to executive officers in fiscal 1997 are for 10 year terms, with an
exercise price equal to the stock's market value on the date of grant, and
become exercisable after one year of continued employment following the grant
date. Executive officers received grants in August 1996 (fiscal 1997) ranging
from 5,200 shares to 51,000 shares.
CHIEF EXECUTIVE OFFICER
The fiscal 1997 compensation of the Company's Chairman and Chief Executive
Officer,
S. J. Stewart, was determined in accordance with the salary policy, bonus
programs and stock option guidelines previously discussed.
In August 1996 the Committee approved a stock option grant of 51,000 shares,
and a salary increase of $25,000 (effective September 1, 1996), for Mr. Stewart.
His resulting base salary, $690,000, is in the lower half of the salary range
established for this position.
Company earnings per share in fiscal 1997 exceeded both the prior year and
the fiscal 1997 earnings per share goals (as established in the annual bonus
program), and therefore, in August 1997, the Committee approved pursuant to the
terms of the program an annual bonus for Mr. Stewart of $661,991. In addition,
pursuant to the terms of the LTIP, the Committee approved a payment of
9
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$1,440,000 to Mr. Stewart, since the Company greatly exceeded the goal of 10%
compound growth in earnings per share for the three year period from fiscal 1995
through fiscal 1997 by achieving an actual compounded growth rate of
approximately 21%.
LIMITATION ON DEDUCTIBILITY OF CERTAIN COMPENSATION
Section 162(m) of the Internal Revenue Code (the "Code") generally disallows
a tax deduction to public companies for annual compensation over $1 million paid
to their chief executive officers and the four other most highly compensated
executive officers that is not "performance-based" (as defined in the Code). It
is the Committee's general policy to avoid the loss of tax deductibility
whenever compliance with Section 162(m) would be consistent with the Company's
incentive compensation objectives. Consequently, the employee incentive
compensation programs in which the Company's most highly compensated officers
participate have been restructured to comply with the Code's definition of
performance-based compensation until the 1997 Annual Meeting, at which time a
new Incentive Plan intended to satisfy current Section 162(m) requirements is
being recommended for shareholder approval (see pages 18-20). Notwithstanding
its general policy, however, the Committee retains the discretion to authorize
incentive payments that may not be deductible if it believes that doing so would
be in the best interests of the Company and its shareholders.
Roger W. Stone, CHAIRMAN
Ralph M. Barford
Dennis C. Fill
Richard L. Keyser
Edward J. Mooney
10
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STOCK PERFORMANCE GRAPH
The following graph compares the cumulative shareholder returns on the
Company's common stock; the Standard & Poor's-Registered Trademark- 500 Stock
Index; and the Standard & Poor's-Registered Trademark- Chemicals (Specialty)
Index. Public trading of Company stock began on May 1, 1997; public trading of
Old Morton stock ended on April 30, 1997. Consequently, the period covered on
the graph is limited to the Company's returns from May 1 through June 30, 1997,
the end of its fiscal year.*
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
<S> <C> <C> <C>
Based on reinvestment of $100 beginning May 1,
1997
Morton International
Inc. S&P 500(0) S&P Chemicals (Specialty) Index
Apr-97 $100.00 $100.00 $100.00
May-97 $107.05 $106.09 $107.29
Jun-97 $100.21 $110.84 $114.36
SOURCE: GEORGESON & COMPANY, INC.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
APRIL 1997 MAY 1997 JUNE 1997
<CAPTION>
<S> <C> <C> <C>
Morton International, Inc.................... $ 100.00 $ 107.05 $ 100.21
<CAPTION>
<S> <C> <C> <C>
S&P 500-Registered Trademark-................ $ 100.00 $ 106.09 $ 110.84
<CAPTION>
<S> <C> <C> <C>
S&P Chemicals (Specialty) Index.............. $ 100.00 $ 107.29 $ 114.36
<CAPTION>
</TABLE>
Note: The total return for the S&P indices begins April 30, 1997. The total
return for Morton International, Inc. is based on the company's operating price
of $30.125 on May 1, 1997.
- --------
*Pursuant to the transactions described in the Introduction on page 1., Old
Morton shareholders received .341 share of Autoliv, Inc., as well as one share
of the Company, for each share of Old Morton. Consequently, their total return
for the two-month period covered on the graph would reflect the stock market
trading prices of both companies.
11
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------------
PAYOUTS
ANNUAL COMPENSATION AWARDS
--------------------------------------------------- ---------------------
SECURITIES
OTHER ANNUAL UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL COMPENSATION OPTIONS PAYOUTS COMPENSATION
POSITION FISCAL YEAR SALARY($) BONUS($) ($)(1) (#)(2) ($)(3) ($)(4)
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
S. JAY STEWART 1997 $ 685,833 $ 661,991 $ 3,031,697 66,689 $1,440,000 $ 20,575
Chairman and Chief 1996 660,833 654,528 174,365 74,797 1,070,000 19,825
Executive Officer 1995 633,333 720,000 -0- 79,766 1,000,000 19,000
- --------------------------------------------------------------------------------------------------------------------------------
WILLIAM E. JOHNSTON 1997 $ 443,750 $ 387,821 $ 959,056 35,306 $500,000 $ 13,313
President and Chief Operating 1996 396,000 299,992 153,861 66,428 500,000 11,880
Officer(5) 1995 326,750 310,500 181,117 29,029 340,000 9,802
- --------------------------------------------------------------------------------------------------------------------------------
STEPHEN A. GEROW 1997 $ 259,167 $ 225,000 $ -0- 13,469 $268,250 $ 7,775
President, Coatings 1996 248,167 162,791 -0- 14,907 360,000 7,445
Group 1995 236,667 185,288 -0- 15,953 340,000 7,100
- --------------------------------------------------------------------------------------------------------------------------------
JAMES J. FUERHOLZER 1997 $ 275,417 $ 152,673 $ -0- 22,360 $ 67,556 $ 8,263
President, Adhesives 1996 243,250 104,397 -0- 27,983 154,500 7,415
and Chemical Specialties Group 1995 202,500 139,365 -0- 15,953 -0- 6,075
- --------------------------------------------------------------------------------------------------------------------------------
THOMAS F. MCDEVITT 1997 $ 223,517 $ 154,690 $ -0- 13,730 $270,000 $ 6,706
Vice President Finance and Chief 1996 209,600 137,792 -0- 13,076 260,000 6,288
Financial Officer 1995 200,500 154,000 -0- 13,469 240,000 5,333
- --------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Amounts in this column consist of cash payments to the indicated
individuals pursuant to pre-fiscal 1991 stock option agreement provisions
for reimbursement of their income tax liability upon exercise of the
related options (for a description of such payments, see note (3) to the
option exercise table on page 14).
(2) The number of securities underlying options in this column represent
conversions as described in the first sentence of note (2) to the option
grants table on page 13.
(3) Amounts in this column consist of Long-Term Incentive Program (LTIP) awards
earned during three-year performance periods ending on the last day of the
indicated fiscal years and paid out approximately two months thereafter.
(4) Amounts in this column consist of Company contributions to the named
individuals' accounts in the Company's basic and supplemental Employee
Savings and Investment (defined contribution) Plans.
(5) Mr. Johnston's compensation for fiscal 1995 was paid to him as Executive
Vice President, Administration of the Company.
</TABLE>
12
<PAGE>
- --------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(2)
---------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL EXERCISE AT ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS OR BASE STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO PRICE FOR OPTION TERM
OPTIONS EMPLOYEES IN (PER EXPIRATION --------------------------------------
NAME(1) GRANTED(#) FISCAL YEAR SHARE) DATE 0% 5%($)(3) 10%($)(3)
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Mr. Stewart 66,689 7.8% $ 29.01 8/22/06 -0- $1,319,024 $3,342,666
Mr. Johnston 35,306 4.1% 29.01 8/22/06 -0- 698,308 1,769,650
Mr. Gerow 13,469 1.6% 29.01 8/22/06 -0- 266,400 675,109
Mr. Fuerholzer 22,360 2.6% 29.01 8/22/06 -0- 442,253 1,120,755
Mr. McDevitt 13,730 1.6% 29.01 8/22/06 -0- 271,562 688,192
All Shareholders N/A N/A N/A N/A -0- 2,502,322,030 6,341,375,324
All Optionees 855,428 100% 29.10 various(4) -0- 15,655,046 39,672,959
Optionee Gain as % of All N/A N/A N/A N/A N/A 0.6% 0.6%
Shareholders' Gain
- --------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) All options held by the named individuals include limited stock
appreciation rights (LSARs), which are issued in tandem with stock options.
LSARs give the holders thereof the right to receive cash in an amount equal
to the spread between the exercise price of the related options and the
stock's fair market value during the 90-day period following a change in
control of the Company (as such term may be defined from time to time by
the Board) in lieu of exercising the related options, which are cancelled
upon exercise of LSARs.
(2) The number of securities and exercise prices of the options shown below
represent conversions of the amounts and prices of the original grants that
were made to reflect the spin-off transaction described in the Introduction
on page one of this proxy statement pursuant to a formula specified in the
Federal tax law. The individual options were originally granted at exercise
prices equivalent to the fair market value of the Company's common stock on
the date of grant (calculated as the average of its high and low sales
prices on that date reported on the New York Stock Exchange Composite
Tape). The exercise price shown for all optionees (converted as described
above) is the weighted average of all options granted in fiscal 1997.
Options become exercisable one year following the dates of grant, and
exercise prices may be paid in cash or previously owned shares of Company
common stock.
(3) The amounts shown in these two columns represent potential realizable
values using the converted options and exercise prices. The assumed rates
of stock price appreciation are set by SEC rules and are not intended to
forecast the future appreciation of Company common stock.
(4) The expiration dates of options granted during fiscal 1997 are 8/22/06,
10/24/06 1/23/07, 3/27/07 and 5/15/07.
</TABLE>
13
<PAGE>
- --------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT FISCAL VALUE OF UNEXERCISED IN-THE-
YEAR END(#)(2) MONEY OPTIONS AT FISCAL YEAR
---------------------------- END($)(2)
SHARES ACQUIRED VALUE ----------------------------
NAME ON EXERCISE (#) REALIZED($)(1) EXERCISABLE(3) UNEXERCISABLE EXERCISABLE(4) UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
Mr. Stewart 150,537 $ 3,850,702 708,476 66,689 9,048,619 82,694
Mr. Johnston 54,662 1,218,143 329,379 35,306 4,689,515 43,779
Mr. Gerow -0- N/A 148,546 13,469 2,187,292 16,702
Mr. Fuerholzer 6,945 190,171 101,999 22,360 1,172,723 22,360
Mr. McDevitt -0- N/A 39,961 13,730 293,455 17,025
- -------------------------------------------------------------------------------------------------------------------------
<FN>
(1) The average of the Company stock's high and low sales prices reported on
the New York Stock Exchange Composite Tape for the particular exercise
dates, minus the applicable exercise prices, multiplied by the number of
option shares exercised.
(2) The share amounts shown in these four columns represent conversions as
described in the first sentence of note (2) to the option grants table on
page 13.
(3) Non-qualified options in this column that were granted to the named
individuals prior to fiscal 1991 (provided they were executive officers on
the grant dates) include supplemental cash payment rights, pursuant to
which payments are made to optionees upon exercise of such options or the
related LSARs described in note (1) to the option grants table on page 13
in reimbursement of their income tax liability from such exercises and
payments.
(4) The average of the Company stock's high and low trading prices (calculated
as in note (1) above) on the last trading day of fiscal 1997 ($30.25 per
share), minus the applicable exercise prices, multiplied by the number of
option shares held. Such values do not include the supplemental cash
payment rights described in note (3) above.
</TABLE>
14
<PAGE>
- --------------------------------------------------------------------------------
LONG-TERM INCENTIVE PROGRAM (LTIP) -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
PERFORMANCE OR NON-STOCK PRICE-BASED PROGRAM
OTHER PERIOD -------------------------------
UNTIL MATURATION
NAME OR PAYOUT THRESHOLD TARGET MAXIMUM
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Mr. Stewart 3 years $ 345,000 $690,000 $1,380,000
Mr. Johnston 3 years 224,000 448,000 896,000
Mr. Gerow 3 years 104,500 209,000 418,000
Mr. Fuerholzer 3 years 111,000 222,000 444,000
Mr. McDevitt 3 years 90,500 181,000 362,000
</TABLE>
- --------------------------------------------------------------------------------
Individual target incentive awards under the LTIP are percentages of
participants' salaries ranging from 60% to 100%, depending on their salary
grades, subject to 20% plus or minus adjustments authorized prior to the
beginning of the applicable performance period by the Compensation Committee.
The target awards reported in the foregoing table require a 10% compound annual
growth in Company or applicable business unit profits and the achievement of
return on net assets ("RONA") goals over the three-year performance period
beginning on July 1, 1997, and ending on June 30, 2000. Maximum awards can be up
to two times target award levels to reflect 20% or greater compound earnings
growth and full achievement of RONA goals over the performance period, but are
zero if compound earnings growth is less than the 5% threshold level and minimum
RONA goal levels are not achieved.
In the event of a change in control of the Company (as defined in the LTIP),
the performance periods with respect to all outstanding incentive awards would
terminate and the related incentive awards would be payable. The amount payable
with respect to any award would be equal to the percent of target based upon the
greater of 100% or the weighted average of (i) the percent of target earned to
the most recent fiscal quarter prior to the change of control ("Measurement
Date") and (ii) 100% of target from the Measurement Date to the end of the
three-year performance period.
15
<PAGE>
- --------------------------------------------------------------------------------
CHANGE OF CONTROL EMPLOYMENT AGREEMENTS
All individuals named in the Summary Compensation Table except Mr. Stewart
have change of control employment agreements with the Company ("agreements")
which are effective for 3-year periods and are automatically extended annually
for additional 1-year periods unless notice to the contrary is given. The
agreements are otherwise terminable during their periods of effectiveness only
by termination of the executives' employment. Such termination in connection
with a change in control of the Company (as defined in the agreements) will
entitle an executive to benefits under the agreements. The agreements require
continued employment of the executive following a change of control on an
equivalent basis to employment immediately before such change of control. In the
event that during the three-year period following a change of control, the
executive terminates the executive's employment for good reason (as defined in
the agreements) or, during the 30-day period commencing one year after the
change of control, for any reason, or the Company terminates the executive's
employment without cause (as defined in the agreements), the executive would be
entitled to receive an immediate lump sum payment in an amount equal to three
times the sum of such executive's then current salary, average long-term bonus
and highest annual bonus plus service and earnings credits under any Company
retirement plan, which would have been earned over, and the continuance of
fringe benefits during, the three years after such termination (except as
reduced by payments under long-term bonus plans made to an executive upon a
change of control which relate to performance periods subsequent to such
termination). The agreements provide that executives are to be made whole on an
after-tax basis with respect to excise taxes payable under Section 4999 of the
Code as a consequence of any payments made to them (whether or not under the
agreements) being classified as "parachute payments" as defined in Section 280G
of the Code.
Mr. Stewart's employment agreement has a term ending March 31, 2000,
provided three years' advance notice of termination is given by the Company.
Unless and until such notice is given, the employment agreement will continue on
a year-to-year basis through September 30, 2003 (Mr. Stewart's normal retirement
date). Mr. Stewart's agreement provides that in the event of his voluntary or
involuntary termination without cause following a change in control of the
Company, he would be entitled to receive an immediate payment of salary and
bonuses plus credits and benefits similar to those described in the preceding
paragraph through the then current term of his agreement.
- --------------------------------------------------------------------------------
SURVIVOR INCOME BENEFITS PLAN
All named Executive Officers participate in this plan, under which benefits
are payable to participants' surviving spouses (or dependent children if there
is no spouse) if a participant dies prior to age 65 while employed by the
Company. The benefit is approximately 50% of the participant's base pay at death
and continues until the participant would have attained age 65. Accruals were
made in fiscal 1997 for aggregate potential benefits payable under this plan,
but no specific amounts for individual participants were calculated.
- --------------------------------------------------------------------------------
POST-RETIREMENT LIFE INSURANCE PLAN
Two individuals named in the Summary Compensation Table (Messrs. Stewart and
Johnston) participate in this plan, under which life insurance after retirement
is provided at no cost to retirees in amounts equal to their base salaries at
retirement. Such coverage is in addition to that provided under the Company's
regular life insurance program. Accruals were made in fiscal 1997 for aggregate
potential benefits payable under all Company life insurance plans, but no
specific amounts for individual participants were calculated.
16
<PAGE>
- --------------------------------------------------------------------------------
PENSION PLANS
The following table contains estimated annual retirement benefits payable
under the Company's basic and excess defined benefit pension plans.
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------
COMPENSATION 15 20 25 30 35
- ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 200,000 $ 48,514 $ 64,685 $ 80,857 $ 97,044 $ 114,544
400,000 101,014 134,685 168,357 202,044 237,044
600,000 153,514 204,685 255,857 307,044 359,544
800,000 206,014 274,685 343,357 412,044 482,044
1,000,000 258,514 344,685 430,857 517,044 604,544
1,200,000 311,014 414,685 518,357 622,044 727,044
1,400,000 363,514 484,685 605,857 727,044 849,544
1,600,000 416,014 554,685 693,357 832,044 972,044
1,800,000 468,514 624,685 780,857 937,044 1,094,544
</TABLE>
All individuals named in the Summary Compensation Table participate in the
Company's pension plans. The number of full years of credited service at June
30, 1997, for each is as follows: Mr. Stewart, 24 years; Mr. Johnston, 20 years;
Mr. Gerow, 7 years; Mr. Fuerholzer, 39 years; and Mr. McDevitt, 36 years.
Upon reaching age 65, pension plan participants are eligible to receive
annual retirement income, on a straight-life annuity basis, in monthly
installments for life equal to 1.75% of salary plus annual bonus (as reported in
the Summary Compensation Table), averaged over the five consecutive calendar
years during which such compensation was highest out of the last ten years
completed before age 65, for each year of credited service, less 1.67% of
primary social security for each year of credited service (up to 30 years).
Two individuals named in the Summary Compensation Table, Messrs. Stewart and
McDevitt, participated in a predecessor company's pension plan prior to 1984.
Upon retirement, they will receive 2% of compensation (calculated as described
in the preceding paragraph), less 1.67% of primary social security, for each
year of credited service prior to 1984. For subsequent credited service, they
will receive benefits as described in the preceding paragraph. Consequently,
their benefits will slightly exceed those in the above table in amounts varying
with the extent of their pre-1984 credited service.
One individual named in the Summary Compensation Table, Mr. Johnston,
participates in a supplemental executive retirement program (SERP). Under the
SERP, participants are entitled, upon normal or approved early retirement, to
receive amounts which, together with standard Company pensions (including
pensions of prior employers), equal 50% of their average compensation (salary
plus standard annual bonus) with respect to the five consecutive highest
earnings years out of the final ten years' service prior to retirement.
Consequently, unless reduced as described below, the estimated total annual
pension benefits of a SERP participant will approximate those shown in the
column of the foregoing pension table which sets forth benefits for employees
with 30 years of credited service.
If approved early retirement occurs prior to age 62, the SERP pension is
reduced by 0.33% for each full month from the early retirement date to age 62.
If a change in control of the Company occurs and thereafter the employment of
the SERP participant is terminated by the Company (other than for
17
<PAGE>
- --------------------------------------------------------------------------------
cause as defined in the employment agreements) or the individual's status as a
SERP participant is terminated, the SERP pension vests as though the individual
had retired early with approval on the date of such termination.
In addition, SERP participants' rights under employment agreements
concerning pension benefits following a change of control are preserved.
- --------------------------------------------------------------------------------
2. APPROVAL OF THE COMPANY'S 1997 INCENTIVE PLAN
The Board has approved and recommends shareholder approval of the 1997
Incentive Plan (the "New Plan") in the belief that grants and awards of cash and
stock thereunder (collectively, "awards") will assist Company management to
attract, retain and provide appropriate incentives to key personnel. In
addition, approval by shareholders will enable certain awards to qualify as
"performance-based compensation" not subject to the limitations on deductibility
of executive compensation in excess of $1 million contained in Section 162(m) of
the Code.
The New Plan is similar to the Company's current incentive plan (the
"Predecessor Plan") which was adopted by the Company predecessor's Board of
Directors and approved by its shareholders in 1989. The following is a summary
of the major provisions of the New Plan.*
ADMINISTRATION AND ELIGIBILITY. The New Plan will be administered by the
Compensation Committee of the Board (the "Committee"). The Committee will be
empowered, among other things, to interpret the Plan, to make all determinations
deemed necessary or advisable for its administration, and to authorize awards
thereunder to key Company employees. Stock awards may include options, limited
stock appreciation rights, restricted stock, and other forms of awards measured
in whole or in part by the value of shares.
Options and other stock awards may not be granted to any New Plan
participant in any fiscal year covering more than 500,000 shares of Company
common stock, and total cash awards may not exceed $5,000,000 to any such
participant in any fiscal year. The benefits or amounts that will be received by
participants are not yet determinable. Key personnel are eligible to participate
in the New Plan, subject to selection by the Committee based upon an employee's
past or anticipated contributions to the Company's growth and success.
STOCK OPTIONS. All options to be granted under the New Plan, which may
include incentive stock options satisfying certain Code requirements, must have
an exercise price of not less than the fair market value of Company common stock
(the average of the high and low stock market trading prices) on the date of
grant. In addition, a participant may be required to complete a specified period
of employment following the grant date before an option becomes exercisable. The
exercise price of an option may be paid in cash, through the surrender or
withholding of shares of Company common stock having a fair market value equal
to the exercise price, or through a combination of the foregoing.
RESTRICTED STOCK AWARDS. Awards of common stock may be made on terms and
conditions fixed by the Committee, including restrictions as to vesting or
transferability of the award. If the Committee intends a restricted stock award
to qualify as performance-based compensation under Section 162(m) of the Code,
such shares will vest on the attainment of specific performance goals, as
discussed below.
- --------
* A copy of the New Plan may be obtained by written request to the Company's
Corporate Secretary.
18
<PAGE>
- --------------------------------------------------------------------------------
LIMITED STOCK APPRECIATION RIGHTS ("LSARS"). LSARs may be granted only in
tandem with stock options and at the same prices as the related options. The
holder of an LSAR is entitled to receive, in lieu of the related option, cash or
shares of Company common stock equal in value to the excess of the stock's fair
market value on the exercise date over its price on the grant date, multiplied
by the number of shares covered by the right.
OTHER AWARDS. Other forms of awards, payable in cash or Company common
stock, may be granted under the New Plan. Pursuant to Code Section 162(m),
awards in excess of $1 million per year paid to the Chief Executive Officer or
any of the four other highest paid executive officers are not deductible by the
Company unless such compensation is based on pre-established, objective
performance criteria approved by its shareholders. The shareholders must also
have approved the eligibility requirements for and maximum amount of such
compensation. Accordingly, the New Plan authorizes performance based awards to
be based on one or more of the following criteria: Earnings per share, operating
income, profit margins, return on net assets, increased inventory and/or
receivable turns, cash flow, stock price, total shareholder return, and any
other objective measure approved by the Committee.
Such awards will be based on the extent to which performance criteria have
been satisfied, and will not become payable (or vested, in the case of
restricted stock) until the Committee certifies that the applicable performance
targets have been met.
FOREIGN ALTERNATIVES. Without amending and notwithstanding other provisions
of the New Plan, in the case of any award to be held by any participant who is
employed outside the United States or is a foreign national, the Committee may
specify that such award shall be made on such terms and conditions different
from those specified in the New Plan as may, in the judgment of the Committee,
be necessary or desirable to further its purposes.
TERM, EXERCISE PERIOD AND TRANSFERABILITY OF STOCK AWARDS. Under the New
Plan, stock awards may be granted for such terms as the Committee may determine.
It is presently anticipated that options and LSARs will be exercisable only
during the holder's employment by the Company, or by a related company which the
Committee may designate, and that unearned portions of restricted stock and
other awards will generally be forfeited upon termination of the holder's
employment prior to the end of the restriction or performance period, subject to
exceptions in the case of death, retirement or termination following a change in
control of the Company.
LIMITATION ON NUMBER OF SHARES. The New Plan authorizes 8,000,000 shares of
Company common stock for issuance pursuant to future awards, which represents
less than 6% of the 135,731,969 shares of common stock outstanding on August 25,
1997, the record date for the 1997 Annual Meeting. As of that date, an
additional 6,527,361 shares were subject to unexercised options previously
granted under the Predecessor Plan. The total of the foregoing amounts,
14,527,361 shares, represents 10.7% of the currently outstanding shares. If the
New Plan is approved by shareholders, no further awards will be made under the
Predecessor Plan. Any common stock surrendered or withheld in payment of the
exercise price of an option, or in satisfaction of any tax liabilities resulting
from an award under the New Plan, will be added to the aggregate shares of
common stock available for future issuance.
AMENDMENT, TERMINATION AND ADJUSTMENT. The New Plan may be amended or
terminated by the Board at any time, but no amendment shall be made without
shareholder approval to the extent such approval is required by law, agreement
or the rules of any exchange upon which the Company stock is listed. In
addition, no amendment shall impair the rights of holders of any award
theretofore granted without their consent.
19
<PAGE>
- --------------------------------------------------------------------------------
The New Plan provides that in the event of a reorganization,
recapitalization, spin-off, stock dividend or stock split, or a combination or
other increase or reduction in the number of issued shares of the Company's
common stock, the Board or the Committee may, in order to prevent dilution or
enlargement of rights under awards, make such adjustments in the number and type
of shares authorized by the Plan and covered by outstanding awards and the price
thereof as may be determined to be appropriate and equitable. The Committee may
provide in award agreements that in the event of a change in control, merger,
consolidation, reorganization, recapitalization, sale or exchange of
substantially all assets or dissolution of or spinoff or similar transaction by
the Company, the rights under such awards may be accelerated or adjustments may
be made in order to prevent the dilution or enlargement of rights thereunder.
FEDERAL INCOME TAX CONSEQUENCES. The following discussion is intended only
as a brief summary of the Federal income tax rules relevant to stock option,
LSARs, restricted stock and cash awards. The laws governing the tax aspects of
awards are highly technical and such laws are subject to change in the future.
Under present law, upon exercise of a stock option that is not an Incentive
Stock Option ("ISO"), the holder recognizes ordinary income, and the Company is
entitled to a deduction, equal to the amount by which the fair market value of
the shares acquired upon exercise exceeds the exercise price. However, an ISO
will not result in taxable income to the recipient or a tax deduction to the
Company at the time of exercise if (i) at all times during the period beginning
on the grant date and ending on the day three months before the exercise date,
the holder was an employee of the Company, (ii) the recipient does not dispose
of the shares acquired pursuant to the exercise of the ISO for at least one year
from the date of exercise and at least two years from the date the ISO was
granted (whichever is longer), and (iii) certain other requirements are
satisfied.
Stock awards are taxable as ordinary income to the holder and deductible by
the Company generally in the year paid in an amount equal to the fair market
value of the shares received. However, if the shares are subject to restrictions
involving both forfeitability and nontransferability, the recipient's taxable
income and the Company's deduction are deferred and measured by the fair market
value of the shares at the time that the first of the two restrictions lapses
unless the recipient makes a timely election to recognize income at the time the
shares are received.
LSAR exercises result in ordinary income to the holder and a tax deduction
for the Company. The amount of such income and deduction equals the value of any
cash or shares of common stock received.
Cash awards are taxable to recipients as ordinary income and generally
deductible by the Company as of the date they are paid.
WITHHOLDING OF TAXES. The Company may withhold, or allow stock award
holders to remit to the Company, any applicable Federal, state or local taxes.
To satisfy such tax liability, the holder may elect to surrender previously
acquired shares of common stock or to have the Company withhold shares that
would otherwise have been issued to the holder under the incentive. Taxes are
withheld by the Company from cash awards in accordance with applicable law at
the time they are paid.
THE BOARD RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE THE 1997 INCENTIVE
PLAN.
- --------------------------------------------------------------------------------
20
<PAGE>
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3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Upon recommendation by the Audit Committee, the Board has appointed Ernst &
Young LLP as the independent auditing firm for the Company's fiscal year ending
June 30, 1998. The Company has been advised that Ernst & Young LLP has no
relationship with the Company or its subsidiaries other than that arising from
the firm's employment as auditors.
In accordance with a resolution of the Board, this selection is being
presented to the shareholders for ratification at the 1997 Annual Meeting. While
ratification by shareholders of this appointment is not required by law or the
Company's articles of incorporation or by-laws, management believes that such
ratification is desirable. In the event this appointment is not ratified by a
majority vote of shareholders, the Board will consider that fact when it
appoints independent auditors for the next fiscal year.
Ernst & Young LLP has been the independent auditing firm for the Company and
Old Morton since the latter's formation in 1989. Audit services provided to the
Company and Old Morton by Ernst & Young LLP during fiscal 1997 consisted of the
examination of the financial statements of both companies and their subsidiaries
for that year and the preparation of various reports based thereon, as well as
services relating to filings with the SEC and employee benefit plan audits.
Representatives of Ernst & Young LLP are expected to be present at the 1997
Annual Meeting with the opportunity to make a statement if they so desire and to
be available to respond to appropriate questions relating to that firm's
examination of the Company's financial statements for fiscal 1997.
THE BOARD RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE APPOINTMENT OF
ERNST & YOUNG LLP.
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4. DISCRETIONARY VOTING OF PROXIES ON OTHER MATTERS
Management does not now intend to bring before the 1997 Annual Meeting any
matters other than those disclosed in the notice of the meeting. Should any
matter requiring a vote of the shareholders be properly brought before the
meeting by or at the direction of the Board, the proxies in the enclosed form
confer upon the person or persons entitled to vote the shares represented by
such proxies discretionary authority to vote such shares in respect of any such
matter in accordance with their best judgment.
For business to be properly brought before an annual shareholders meeting by
a shareholder, timely advance written notice thereof must be received by the
Corporate Secretary of the Company at its principal executive offices in
accordance with the Company's by-laws.* No such notices were received for the
1997 Annual Meeting. For the Company's 1998 Annual Shareholders Meeting, any
such notices must be received by the Company between July 24 and August 24,
1998.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Shareholder proposals intended for the proxy statement for the 1998 Annual
Shareholders Meeting must be received by the Corporate Secretary of the Company
at its principal executive offices no later than May 19, 1998.
By Order of the Board
[SIGNATURE]
P. Michael Phelps
Vice President and Secretary
Chicago, Illinois
September 11, 1997
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*A copy of the Company's by-laws may be obtained by written request to its
Corporate Secretary.
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APPENDIX A
MORTON INTERNATIONAL, INC.
1997 INCENTIVE PLAN
1. PURPOSE. The purpose of the Morton International, Inc. 1997 Incentive
Plan (the "Plan") is to promote the long term financial interests and growth of
Morton International, Inc. (the "Company") by (a) attracting and retaining
executive personnel, (b) motivating executive personnel by means of
growth-related incentives, (c) providing incentive compensation opportunities
that are competitive with those of other major corporations; and (d) furthering
the identity of interests of participants with those of the shareholders of the
Company.
2. DEFINITIONS. The following definitions are applicable to the Plan:
"Affiliate" means any entity in which the Company has a direct or
indirect equity interest.
"Change in Control" has the meaning specified in the 1989 Incentive
Plan, as amended effective June 23, 1994, of the Predecessor.
"Code" means that the Internal Revenue Code of 1986, as amended, and
any successor statute.
"Committee" means the Company's Compensation Committee, consisting
of two or more directors of the Company who are "Non-Employee Directors"
as such term is used in Rule 16b-3 and "outside directors" as such term
is used in Section 162(m) of the Code.
"common stock" means the common stock, $1.00 par value, of the
Company or such other securities as may be substituted therefor pursuant
to paragraph 5(b).
"Distribution" means the distribution of shares of common stock of
the Company to the shareholders of the Predecessor.
the "fair market value" of the common stock means the average of the
highest and lowest reported sale prices of such common stock (on the New
York Stock Exchange-Composite Transactions Table if so reported) on such
date or if there is no sale on such date, then on the last previous date
on which a sale was reported.
"participant" means any key employee of the Company or an Affiliate
selected by the Committee based on the employee's past or anticipated
contributions to the Company's growth and success.
"Predecessor" means the Indiana corporation previously known as
Morton International, Inc. which transferred the Company's initial
business assets to it effective April 30, 1977.
"Rule 16b-3" means such rule adopted under the Securities Exchange
Act of 1934, as amended, or any successor rule.
3. LIMITATION ON AGGREGATE SHARES AND INDIVIDUAL AWARDS. The number of
shares of common stock with respect to which awards may be granted under the
Plan and which may be issued upon the exercise or payment thereof shall not
exceed, in the aggregate, a number of shares equal to 8,000,000 plus the number
of shares subject to options to purchase shares of common stock of the
Predecessor which were exchanged for options to purchase common stock of the
Company in connection with the Distribution; provided, however, that to the
extent any awards expire unexercised or unpaid or are canceled, terminated or
forfeited in any manner without the issuance of shares of common stock
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thereunder, or if the Company receives any shares of common stock as the
exercise price of any award such shares shall again be available under the Plan.
Such shares of common stock may be either authorized and unissued shares,
treasury shares, or a combination thereof, as the Committee shall determine.
Awards may not be made to any participant in any fiscal year covering more than
500,000 shares of common stock.
4. AWARDS. The Committee may grant to participants, in accordance with
this paragraph 4 and the other provisions of the Plan, stock options, limited
stock appreciation rights ("LSARs"), restricted stock and other awards.
(a) OPTIONS.
(i) Options granted under the Plan may be incentive stock options
("ISOs") within the meaning of Section 422 of the Code or any successor
provision, or in such other form, consistent with the Plan, as the Committee
may determine.
(ii) The option price per share of common stock shall be fixed by the
Committee at not less than 100% of the fair market value of a share of
common stock on the date of grant.
(iii) Options shall be exercisable at such time or times as the
Committee shall determine at or subsequent to grant.
(iv) Options shall be exercised in whole or in part by written notice to
the Company (to the attention of the Corporate Secretary) and payment in
full of the option price. Payment of the option price may be made, at the
discretion of the optionee, and to the extent permitted by the Committee,
(A) in cash (including check, bank draft, or money order), (B) in common
stock that has been held for at least six months or common stock withheld
from the shares purchased on exercise of the option (in each case valued at
the fair market value thereof on the date of exercise), (C) by a combination
of cash and common stock or (D) with any other consideration.
(b) LSARS.
(i) An LSAR shall entitle its holder to receive from the Company, at the
time of exercise of such right, an amount equal to the excess of the fair
market value (at the date of exercise) of a share of common stock over a
specified price fixed by the Committee multiplied by the number of shares as
to which the holder is exercising the LSAR. LSARs may only be in tandem with
previously or contemporaneously granted options. The specified price of a
tandem LSAR shall be the option price of the related option. The amount
payable may be paid by the Company in common stock (valued at its fair
market value on the date of exercise), cash or a combination thereof, as the
Committee may determine, which determination shall be made after considering
any preference expressed by the holder.
(ii) An LSAR shall be subject to such terms as may be specified by the
Committee at the time of grant or otherwise and may be exercised only in
accordance with such terms by written notice to the Company (to the
attention of the Corporate Secretary) prior to its stated expiration. To the
extent an LSAR is exercised, the related option will be canceled and, to the
extent the related option is exercised, the LSAR will be canceled.
(c) RESTRICTED STOCK.
(i) The Committee may award to any participant shares of common stock,
subject to this paragraph 4(c) and such other terms and conditions as the
Committee may prescribe (such shares being called "restricted stock"). Each
certificate for restricted stock shall be registered in the name of the
participant and deposited, together with a stock power endorsed in blank,
with the Company.
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(ii) There shall be established for each restricted stock award a
restriction period (the "restriction period") of such length as shall be
determined by the Committee. Shares of restricted stock may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as
hereinafter provided, during the restriction period. Except for such
restrictions on transfer and such other restrictions as the Committee may
impose, the participant shall have all the rights of a holder of common
stock as to such restricted stock. The Committee, in its sole discretion,
may permit or require the payment of cash dividends to be deferred and, if
the Committee so determines, reinvested in additional restricted stock or
otherwise invested. At the expiration of the restriction period, the Company
shall redeliver to the participant (or the participant's legal
representative or designated beneficiary) the certificates deposited
pursuant to this paragraph.
(iii) Except as provided by the Committee at the time of grant or
otherwise, upon a termination of employment for any reason during the
restriction period all shares still subject to restriction shall be
forfeited by the participant.
(d) OTHER AWARDS; DEFERRALS.
(i) Other awards, including, without limitation, performance shares,
convertible debentures, other convertible securities and other forms of
awards measured in whole or in part by the value of shares, the performance
of the participant or the performance of the Company, may be granted under
the Plan. Such awards may be payable in common stock, cash or both, and
shall be subject to such terms as the Committee shall determine. At the time
of such an award, the Committee shall, if applicable, determine a
performance period and performance goals to be achieved during the
performance period, subject to such later revisions as the Committee shall
deem appropriate to reflect significant unanticipated events such as changes
in laws, regulations or accounting practices, unusual or nonrecurring items
or occurrences. Following the conclusion of each performance period, the
Committee shall determine the extent to which performance goals have been
attained or a degree of achievement between maximum and minimum levels
during the performance period in order to evaluate the level of payment to
be made, if any.
(ii) A participant may elect to defer all or a portion of any award in
accordance with procedures established by the Committee. Deferred amounts
will be subject to such terms and conditions and shall accrue such yield
thereon (which may be measured by the fair market value of the common stock
and dividends thereon) as the Committee may determine. Payment of deferred
amounts may be in cash, common stock or a combination thereof, as the
Committee may determine. Deferred amounts shall be considered an award under
the Plan. The Committee may establish a trust to hold deferred amounts or
any portion thereof for the benefit of participants.
(e) PERFORMANCE-BASED AWARDS. The Committee may specify with respect to
any award granted under paragraphs 4(c) and 4(d) that such award is intended to
qualify as "performance-based compensation" within the meaning of Section 162(m)
of the Code (a "performance-based award"). With respect to any performance-based
award, the following conditions shall apply:
(i) The amount of the payment (including, in the case of a restricted
stock award, the number of shares that become vested) with respect to the
performance-based award shall be determined solely by applying an objective
formula or standard to a performance measure; provided, however, that the
Committee may, in its discretion, reduce or eliminate the amount that would
otherwise be payable with respect to any performance-based award;
(ii) such formula or standard and performance measure shall both be
established in writing by the Committee at the time the performance-based
award to which they relate is granted, which
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grant shall be made not later than the earlier of (A) 90 days after the
commencement of the measurement period to which such award relates or (B)
the date that 25% of the measurement period to which the award relates has
elapsed;
(iii) such formula or standard includes a minimum target that must be
attained for any amount to be paid to the recipient with respect to such
performance-based award (or, in the case of any restricted stock award, the
terms of such award shall provide that all of the restricted stock granted
under the award shall be forfeited if the minimum target is not met);
(iv) such performance measure shall be based on one or more of the
following performance criteria: earnings per share, operating income, profit
margins, return on net assets, increased inventory and/or receivable turns,
cash flow, stock price, total shareholder return, and any other objective
measure approved by the Committee;
(v) the maximum amount paid to any participant in any fiscal year of the
Company pursuant to performance-based awards (A) in the form of cash and
unrestricted stock or other securities shall not exceed $5,000,000
(measured, in the case of unrestricted stock or other securities, on the
basis of the fair market value of such stock or securities on the date such
property is received by the participant) and (B) in the form of restricted
stock shall not exceed 500,000 shares (measured by the number of shares of
restricted stock that become vested in such taxable year); and
(vi) prior to any payment (including the vesting of any restricted
stock) with respect to a performance-based award, the Committee shall
certify in writing that the performance targets were met with respect to
such award (as determined by applying the objective formula or standard set
forth in the award grant) and that all other material terms of the award
have been satisfied by the recipient.
(f) FOREIGN ALTERNATIVES. Without amending and notwithstanding the other
provisions of the Plan, in the case of any award to be held by any participant
who is employed outside the United States or who is a foreign national, the
Committee may specify that such award shall be made on such terms and conditions
different from those specified in the Plan, as may, in the judgment of the
Committee, be necessary or desirable to further the purposes of the Plan.
5. MISCELLANEOUS PROVISIONS.
(a) ADMINISTRATION. The Plan shall be administered by the Committee. Subject
to the limitations of the Plan, the Committee shall have the sole and complete
authority: (i) to select participants in the Plan, (ii) to make awards in such
forms and amounts as it shall determine, (iii) to impose such limitations,
restrictions and conditions upon such awards as it shall deem appropriate, (iv)
to interpret the Plan and to adopt, amend and rescind administrative guidelines
and other rules and regulations relating to the Plan, (v) to correct any defect
or omission or to reconcile any inconsistency in the Plan or in any award
granted hereunder, and (vi) to make all other determinations and to take all
other actions necessary or advisable for the implementation and administration
of the Plan. The Committee's determinations on matters within its authority
shall be conclusive and binding upon the Company and all other persons. All
expenses associated with the Plan shall be borne by the Company, subject to such
allocation to its Affiliates and operating units as it deems appropriate. The
Committee may delegate any of its authority under (i), (ii) and (iii) above to
the Chief Executive Officer of the Company.
(b) ADJUSTMENTS UPON CERTAIN CHANGES. In the event of a reorganization,
recapitalization, spinoff, stock dividend or stock split, or combination or
other increase or reduction in the number of issued shares of common stock, the
Board of Directors or the Committee shall, in order to prevent the dilution or
enlargement of rights under awards, make such adjustments in the number and type
of shares authorized by the Plan, the number and type of shares covered by, or
with respect-to which
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payments are measured tinder, outstanding awards and the exercise prices
specified therein as may be determined to be appropriate and equitable. The
Committee may provide for adjustments to an award in the agreement evidencing
the award in order to prevent the dilution or enlargement of rights thereunder
or to provide for acceleration of benefits thereunder in the event of a change
in control, merger, consolidation, reorganization, recapitalization, sale or
exchange of substantially all assets or dissolution of, or spinoff or similar
transaction by, the Company.
Notwithstanding any other provision of the Plan to the contrary, in the
event of a Change in Control: (i) any LSARs and options outstanding as of the
date such Change in Control is determined to have occurred and not then
exercisable and vested shall become fully exercisable and vested to the full
extent of the original grant, and (ii) the restrictions applicable to any
restricted stock shall lapse, and such restricted stock shall become free of all
restrictions and become fully vested and transferable to the full extent of the
original grant.
(c) TAX WITHHOLDING. The Company shall have the power to withheld, or
require a participant to remit to the Company, an amount sufficient to satisfy
any withholding or other tax due with respect to any amount payable and/or
shares issuable under the Plan, and the Company may defer such payment or
issuance unless indemnified to its satisfaction. Subject to the consent of the
Company, a participant may make an irrevocable election to have shares of common
stock otherwise issuable under an award withheld or tender back to the Company
shares of common stock received pursuant to an award having a fair market value
sufficient to satisfy all or part of the participant's estimated tax obligations
associated with the transaction. Such election must be made by a participant
prior to the date on which the relevant tax obligation arises. The Company may
disapprove of any election and may limit, suspend or terminate the right to make
such elections.
(d) LISTING AND LEGAL COMPLIANCE. The Company may suspend the exercise or
payment of any award so long as it determines that securities exchange listing
or registration or qualification under any securities laws is required in
connection therewith and has not been completed on terms acceptable to the
Committee.
(e) BENEFICIARY DESIGNATION AND TRANSFERABILITY. Subject to any
limitations on transferability imposed by the Company, participants may name,
from time to time, beneficiaries (who may be named contingently or successively)
to whom benefits under the Plan are to be paid in the event of their death
before they receive any or all of such benefit. Each designation will revoke all
prior designations by the same participant and will be effective only when filed
by the participant in writing with the Company during the participant's
lifetime. In the absence of any such designation, benefits remaining unpaid at
the participant's death shall be paid to the participant's estate.
(f) RIGHTS OF PARTICIPANTS. Nothing in the Plan shall interfere with or
limit in any way the right of the Company to terminate any participant's
employment at any time, nor confer upon any participant any right to continue in
the employ of the Company for any period of time or to continue his or her
present rate of compensation or in any other rate or benefit. No employee shall
have a right to be selected as a participant, or, having been so selected, to be
selected again as a participant.
(g) AMENDMENT AND TERMINATION OF PLAN. The Board of Directors may
terminate the Plan at any time and may amend it from time to time in such
respects as the Board of Directors may deem advisable; provided, however, that
no such amendment shall be made without shareholder approval to the extent that
such approval is required by law, agreement or the rules of any exchange upon
which the common stock is listed. No such amendment or termination shall impair
the rights of participants under outstanding awards without the consent of the
participants affected thereby.
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The Committee may amend or modify any award in any manner to the extent that
the Committee would have had the authority under the Plan to initially grant
such award. No such amendment or modification shall impair the rights of any
participant under any award without the consent of such participant.
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PROXY
MORTON INTERNATIONAL, INC. PROXY/VOTING INSTRUCTION CARD
CHICAGO, ILLINOIS
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON OCTOBER 23, 1997.
The undersigned hereby appoints Dennis C. Fill, George A. Schaefer, Raymond
P. Buschmann, or any of them, each with power of substitution, as proxies to
vote as specified on this card all shares of common stock of Morton
International, Inc. (the "Company") registered in the name(s) of the
undersigned on August 25, 1997, or in the name(s) of agents for the benefit
of the undersigned in the Company's Book Entry Ownership Program, Dividend
Reinvestment Plan, and/or Employee Savings & Investment Plan, at the
Company's Annual Meeting of Shareholders on October 23, 1997, and at any
adjournment thereof. Said proxies are authorized to vote in their discretion
as to any other business which may properly come before the meeting. IF A
VOTE IS NOT SPECIFIED, SAID PROXIES WILL VOTE FOR PROPOSALS 1, 2 AND 3.
Receipt is acknowledged of the Company's Annual Report to Shareholders for the
fiscal year ended June 30, 1997, and Notice and Proxy Statement for the above
Annual Meeting.
Nominees for Election as Directors:
Ralph M. Barford, James R. Cantalupo, William T. Creson,
S. Jay Stewart
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE) BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
THE SIGNER(S) HEREBY REVOKES ALL PROXIES HERETOFORE GIVEN BY THE SIGNER(S) TO
VOTE AT SAID MEETING OR ANY ADJOURMENTS THEREOF.
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SEE REVERSE SIDE
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1601
/X/ Please mark your
votes as in this
example.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
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FOR WITHHELD AS TO
ALL NOMINEES
1. Election of / / / / To withhold authority to vote
Directors. for any nominee(s), mark the
(see reverse "FOR" box and write the name
side) of each such nominee on the
line below.
2. Approval of the Company's 1997 Incentive FOR AGAINST ABSTAIN
Plan. / / / / / /
3. Ratification of appointment of
Ernst & Young LLP as the Company's / / / / / /
independent auditors for fiscal 1998.
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DATE ,1997
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SIGNATURE(S) /
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NOTE: Please date and sign exactly as name(s) appears hereon. If shares are held
jointly or by two or more persons, each shareholder named should sign.
Executors, administrators, trustees, etc., should so indicate when
signing. If the signer is a corporation, please sign corporate name
by duly authorized officer. If a partnership, please sign in partnership
name by authorized person.
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DETACH CARD
