<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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-2.
</TABLE>
NCR CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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<PAGE> 2
NCR LOGO
----------------------------------------
1997
NOTICE OF
ANNUAL MEETING
AND PROXY STATEMENT
----------------------------------------
Wednesday, April 16, 1997
at 9:30 A.M. local time
Auditorium, Building B
NCR Sugar Camp Education Center
101 W. Schantz Avenue
Dayton, Ohio
<PAGE> 3
NCR Logo
- --------------------------------------------------------------------------------
LARS NYBERG
Chairman & Chief Executive Officer
March 3, 1997
Dear NCR Stockholder:
You are cordially invited to attend NCR's 1997 Annual Meeting of
Stockholders on Wednesday, April 16, 1997. The meeting will begin promptly at
9:30 A.M. local time, in the Auditorium of Building B at NCR's Sugar Camp
Education Center, located at 101 W. Schantz Avenue in Dayton, Ohio.
The official notice of meeting, proxy statement, form of proxy and 1996
Annual Report to Stockholders are included with this letter. The matters listed
in the notice of meeting are described in detail in the proxy statement.
The annual report includes a financial review of NCR's performance in 1996
while the Company was still a wholly-owned subsidiary of AT&T Corp. ("AT&T"). On
December 31, 1996, AT&T distributed all of the outstanding shares of NCR common
stock to AT&T stockholders of record as of December 13, 1996. As a result of
that distribution, NCR became a publicly held company.
If you plan to attend the meeting, please complete and return to NCR the
meeting reservation request form printed on the back of this booklet.
Your vote is important. Whether or not you plan to attend the annual
meeting, I urge you to complete, sign and date the enclosed proxy card and
return it in the accompanying envelope as soon as possible so that your stock
may be represented at the meeting.
Sincerely,
/s/ Lars Nyberg
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<PAGE> 4
NCR LOGO
NOTICE OF MEETING
The 1997 Annual Meeting of Stockholders of NCR Corporation will be held in
the Auditorium of Building B at NCR's Sugar Camp Education Center, 101 W.
Schantz Avenue, Dayton, Ohio 45479, on Wednesday, April 16, 1997, at 9:30 A.M.
local time, for the following purposes:
- ITEM 1: To elect three Class A directors to hold office for a three year
term;
- ITEM 2: To approve material terms of performance goals for compensation
provided under the NCR Management Stock Plan to qualify such compensation
under Section 162(m) of the Internal Revenue Code; and
- To transact such other business as may properly come before the meeting
and any adjournment thereof.
Holders of record of NCR common stock at the close of business on February
17, 1997, will be entitled to vote with respect to this solicitation.
Stockholders are reminded that your shares of NCR common stock cannot be voted
unless you properly execute and return the enclosed proxy card or make other
arrangements to have your shares represented at the meeting.
By Order of the Board of Directors,
/s/ Laura K. Nyquist
Laura K. Nyquist
Corporate Secretary
Dayton, Ohio
March 3, 1997
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN THE
PROXY CARD IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES.
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<PAGE> 5
NCR Corporation
1700 S. Patterson Blvd.
Dayton, Ohio 45479 NCR LOGO
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement and the accompanying proxy card are being furnished in
connection with the solicitation of proxies on behalf of the Board of Directors
of NCR Corporation ("NCR" or the "Company") for the Annual Meeting of
Stockholders to be held on April 16, 1997, in Dayton, Ohio. Only stockholders of
record at the close of business on February 17, 1997 (the "Record Date") are
entitled to notice of, and to vote at, the meeting. There were 101,437,215.564
shares of NCR common stock outstanding and entitled to vote on January 31, 1997.
Each share of NCR common stock is entitled to one vote on each matter properly
brought before the meeting.
Commencing approximately on March 3, 1997, the Company is mailing its
annual report for the year ended December 31, 1996, together with this proxy
statement and the enclosed proxy card to holders of NCR common stock on the
Record Date. If you have NCR common stock in multiple accounts, you may receive
more than one annual report. If you like, you may reduce the number of reports
that you receive and save the Company the cost of producing and mailing these
extra reports. To authorize NCR to discontinue mailing extra reports, please
mark the appropriate box on the proxy card for selected accounts, making sure
that at least one account continues to receive an annual report. Eliminating
these duplicate mailings will not affect receipt of future proxy statements and
proxy cards. To resume the mailing of an annual report to an account, please
call the NCR stockholder services number, 1-800-NCR-2303 (1-800-627-2303).
If you own NCR common stock beneficially and receive more than one NCR
annual report, please consider giving permission to your nominee to eliminate
duplicate mailings.
This is NCR's first solicitation of proxies for its Annual Meeting of
Stockholders since the Company became a wholly-owned subsidiary of AT&T Corp.
("AT&T") on September 19, 1991. On December 31, 1996 (the "Distribution Date"),
as part of the restructuring of its business, AT&T distributed to AT&T
stockholders of record as of December 13, 1996, all of the outstanding shares of
NCR common stock (the "Spinoff"). As a result of the Spinoff, AT&T fully
divested its ownership of the Company and NCR became a publicly owned company.
VOTING OF PROXIES
Your vote is important. Shares can be voted at the annual meeting only if
you are present in person or represented by proxy. Even if you plan to attend
the meeting, you are urged to sign, date and return the accompanying proxy card.
When the enclosed proxy card is properly signed, dated, and returned, the
stock represented by the proxy will be voted in accordance with your directions.
You can specify your voting instructions by marking the appropriate boxes on the
proxy card. If your proxy card is signed and returned without specific voting
instructions, your shares of NCR common stock will be voted as recommended by
the directors: "FOR" the election of the three nominees for director named on
the proxy card, and "FOR" the approval of material terms of performance goals
for compensation under the NCR Management Stock Plan. Abstentions marked on the
proxy card are voted "against" the directors' proposals but are counted in the
determination of a quorum.
You may revoke your proxy at any time before it is voted at the meeting by
(a) executing a later-dated proxy, (b) voting by ballot at the meeting, or (c)
filing a notice of revocation with the inspectors of election in care of the
Corporate Secretary of the Company at the above address.
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VOTING SHARES HELD IN EMPLOYEE SAVINGS PLAN
If you are a participant in the NCR Savings Plan or the AT&T Savings Plan,
the enclosed proxy card includes any NCR common stock allocated to your account.
The trustees of such plans will vote the number of shares allocated to your
account pursuant to the instructions you provide, so please sign and return your
card promptly. If cards representing allocated shares in these savings plans are
not returned, those shares will be voted by the trustees of the plans in
accordance with the terms of such plans.
VOTES REQUIRED
The presence, in person or by proxy, of the holders of at least a majority
of the shares of NCR common stock outstanding on the Record Date is necessary to
have a quorum for the annual meeting. Abstentions and broker "no-votes" are
counted as present for purposes of determining a quorum. A broker "no-vote"
occurs when a nominee holding shares of NCR common stock for a beneficial owner
does not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that item and has not received
instructions from the beneficial owner.
The affirmative vote of a majority of the shares present in person or by
proxy at the meeting is required for the passage of the directors' proposals
(Items 1 and 2). Any shares not voted by abstention have the same effect as a
vote against the proposals and broker "no-votes" have no effect on the outcome
of the vote.
SOLICITATION OF PROXIES
Solicitation of proxies may be made by the Company through the mail, in
person and by telecommunications. The cost of soliciting proxies will be borne
by the Company. The Company also has retained Georgeson & Company, Inc. to
assist in the solicitation of proxies, at an estimated cost of $17,000, plus
reimbursement of reasonable out-of-pocket expenses. In accordance with the
regulations of the Securities and Exchange Commission ("SEC") and the New York
Stock Exchange ("NYSE"), NCR will also reimburse brokerage houses and other
custodians, nominees and fiduciaries for their expenses incurred in sending
proxies and proxy materials to the beneficial owners of NCR common stock.
ANNUAL MEETING ADMISSION
ADMISSION TO THE MEETING IS LIMITED TO STOCKHOLDERS OF RECORD OR THEIR
PROXY, BENEFICIAL OWNERS OF NCR COMMON STOCK HAVING EVIDENCE OF OWNERSHIP, AND
GUESTS OF NCR. IF YOU ARE A REGISTERED OWNER OF NCR COMMON STOCK AND PLAN TO
ATTEND THE MEETING IN PERSON, PLEASE COMPLETE AND RETURN TO NCR'S CORPORATE
SECRETARY THE MEETING RESERVATION REQUEST FORM PRINTED ON THE BACK OF THIS PROXY
STATEMENT.
Stockholders who have not obtained a reservation for the meeting will be
admitted upon verification of ownership at the meeting. Results of the meeting
will be included in NCR's next quarterly report filed with the SEC. Information
on obtaining a full transcript of the meeting will also be found in that
quarterly report.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Since 1991, Coopers & Lybrand L.L.P. has served as the Company's
independent public accounting firm. It is expected that representatives of
Coopers & Lybrand will be present at the annual meeting. They will be given an
opportunity to make a statement if they desire to do so, and it is expected that
they will be available to respond to appropriate questions.
PROCEDURES FOR STOCKHOLDER PROPOSALS AND NOMINATIONS
Under the Company's Bylaws, nominations for director may be made only by
the Board of Directors or a committee of the board, or by a stockholder entitled
to vote who has delivered notice to the Company not less than 90, nor more than
120, days before the first anniversary of the preceding year's annual meeting.
For purposes of the 1997 Annual Meeting of Stockholders, the Bylaws provide that
April 16, 1997, is deemed the first anniversary of the previous year's meeting.
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<PAGE> 7
The Bylaws also provide that no business may be brought before an annual
meeting except as specified in the notice of meeting (which includes stockholder
proposals that the Company is required to set forth in its proxy statement under
SEC Rule 14a-8) or as otherwise brought before the meeting by or at the
direction of the board or by a stockholder entitled to vote who has delivered
notice to the Company (containing certain information specified in the Bylaws)
within the time limits described above for a nomination for the election of a
director. These requirements are separate and apart from, and in addition to,
the SEC's requirements that a stockholder must comply with in order to have a
stockholder proposal included in the Company's proxy statement under SEC Rule
14a-8.
A copy of the full text of Company's Bylaws may be obtained upon written
request to the Corporate Secretary at the address provided above.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholder proposals intended to be presented at NCR's 1998 Annual Meeting
of Stockholders must be received by NCR's Corporate Secretary no later than
November 4, 1997. Such proposals must meet the requirements set forth in the
rules and regulations of the SEC in order to be eligible for inclusion in the
Company's 1998 proxy materials.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Directors does not know of any matters which will be brought
before the 1997 annual meeting other than those specifically set forth in the
notice of meeting. If any other matters are properly introduced at the meeting
for consideration, including, among other things, consideration of a motion to
adjourn the meeting to another time or place, the individuals named on the
enclosed proxy card will have discretion to vote in accordance with their best
judgment.
ELECTION OF CLASS A DIRECTORS
(ITEM 1 ON PROXY CARD)
The Board of Directors currently consists of three classes of directors, as
nearly equal in number as possible. Directors hold office for staggered terms of
three years (or less if they are filling a vacancy) and until their successors
are elected and qualified. One of the three classes, comprising approximately
one third of the directors, is elected each year to succeed the directors whose
terms are expiring. The directors in Class A will be elected at the annual
meeting to serve for a term expiring at the Company's annual meeting in the year
2000. The directors in Classes B and C are serving terms expiring at the
Company's Annual Meeting of Stockholders in 1998 and 1999, respectively.
Prior to the Spinoff, NCR's Board of Directors consisted of Messrs. Lars
Nyberg, John L. Giering, and Jon S. Hoak. In anticipation of the Spinoff of NCR
from AT&T, in December 1996, NCR's board expanded its size from three to eight
members, as permitted under the Bylaws of the Company. Effective as of December
31, 1996, Messrs. Giering and Hoak resigned from NCR's board. Prior to the
Spinoff, AT&T, acting as NCR's sole stockholder, reelected Mr. Nyberg as
Chairman of the board and elected seven new directors to NCR's board, including
the two other nominees for director. This election was effective as of January
1, 1997. The nominees have served continuously on the board since that time.
NCR's Board of Directors has proposed the following nominees for election
as directors at the annual meeting:
NOMINEES FOR CLASS A DIRECTORS
WITH TERMS EXPIRING AT THE ANNUAL MEETING IN THE YEAR 2000:
LARS NYBERG
DAVID R. HOLMES
JAMES O. ROBBINS
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
ABOVE-NAMED NOMINEES AS DIRECTORS FOR A TERM OF THREE YEARS. Proxies solicited
by the Board of Directors will be voted "FOR" the election of the nominees,
unless otherwise instructed on the proxy card.
Information is provided below with respect to each nominee for election and
each director continuing in office. Should one or more of these nominees become
unavailable to accept nomination or election as a director, the individuals
named as proxies on the enclosed proxy card will vote the shares that they
represent for the election of such other persons as the board may recommend,
unless the board reduces the number of directors. The Board of Directors knows
of no reason why any of the nominees will be unavailable or unable to serve.
NOMINEES FOR ELECTION AS DIRECTORS
Class A -- Nominees for Terms Expiring in 2000
LARS NYBERG, 46, has been Chairman, Chief Executive Officer, and President of
NCR since June 1, 1995. Before joining NCR, from 1993 to 1995, Mr. Nyberg was
Chairman and Chief Executive Officer of the Communications Division for Philips
Electronics NV, an electronics and electrical products company. He also served
as a member of the Philips Group Management Committee during that time. In 1992,
Mr. Nyberg was appointed Managing Director, Philips Consumer Electronics
Division. From 1990 to 1992, he was the Chairman and Chief Executive Officer of
Philips Computer Division. Mr. Nyberg became a director of NCR in 1995. He is
Chairman of the Executive Committee and a member of the Committee on Directors.
DAVID R. HOLMES, 56, has been President and Chief Executive Officer of The
Reynolds and Reynolds Company since 1989 and its Chairman since August 1990. He
joined Reynolds and Reynolds, a provider of information management systems and
services to the automotive, health-care and general business markets, as Senior
Vice President of its Computer Systems Division. Prior to joining Reynolds and
Reynolds, he was Vice President and General Manager at Nabisco Brands, Inc. Mr.
Holmes is a director of The Dayton Power & Light Company and Wright Health
Associates, Inc. Mr. Holmes became a director of NCR on January 1, 1997, and is
a member of the Compensation Committee.
JAMES O. ROBBINS, 54, has served as President and CEO of Cox Communications,
Inc., a cable television operator, since September 1995. Previously, he was
President of the Cable Division of Cox Enterprises, Inc., a position he held
since September 1985. Before joining Cox in 1983, he was Senior Vice President
of Operations, Western Region, for Viacom Communications, Inc. Mr. Robbins is a
director of Cox Communications, Inc., Teleport Communications Group, Inc., and
Telewest Communications plc. He became a director of NCR on January 1, 1997, and
is a member of the Audit and Finance Committee.
DIRECTORS WHOSE TERMS OF OFFICE CONTINUE
Class B -- Terms Expire in 1998
DUANE L. BURNHAM, 55, has been Chairman and Chief Executive Officer of Abbott
Laboratories, a manufacturer of health care products based in Chicago, since
1990. Mr. Burnham joined Abbott in 1982 as Chief Financial Officer and Senior
Vice President, Finance. Mr. Burnham is also a director of Sara Lee Corporation
and became a director of NCR on January 1, 1997. He is Chairman of the
Compensation Committee and a member of the Executive Committee.
LINDA FAYNE LEVINSON, 55, is President of Fayne Levinson Associates, an
independent consulting firm she founded in 1994 that advises both major
corporations and start-up entrepreneurial ventures in the areas of strategy,
market and corporate development. In 1993, Ms. Levinson was an executive with
Creative Artists Agency Inc. From 1989 to 1992, she was a partner in the
merchant banking operations of Alfred Checchi Associates, Inc. She is also a
director of Genentech, Inc., Egghead, Inc., Administaff, Inc., and Jacobs
Engineering Group Inc. Ms. Levinson became a director of NCR on January 1, 1997,
and is a member of the Compensation Committee and the Committee on Directors.
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Class C -- Terms Expire in 1999
RONALD A. MITSCH, 62, is Vice Chairman and Executive Vice President of Minnesota
Mining and Manufacturing Co. (3M), a global, diversified manufacturing company.
Dr. Mitsch has been 3M's Executive Vice President, Industrial and Consumer
Sector and Corporate Services, since 1991, and its Vice Chairman since 1996. Dr.
Mitsch is also a director of 3M, Lubrizol Corporation, and Shigematsu Works
Inc., Tokyo, Japan. He became a director of NCR on January 1, 1997, and is
Chairman of the Committee on Directors and a member of the Audit and Finance
Committee.
C.K. PRAHALAD, 55, is a Professor of Business Administration at the University
of Michigan. Mr. Prahalad is a specialist in corporate strategy and the role of
top management in large, diversified, multi-national corporations. He is also a
director of OIS Optical Imaging Systems, Inc. Mr. Prahalad became a director of
NCR on January 1, 1997, and is a member of the Audit and Finance Committee.
WILLIAM S. STAVROPOULOS, 57, has been President and Chief Executive Officer of
the Dow Chemical Co., a chemical and plastics producer, since 1995. Mr.
Stavropoulos became President of Dow Chemical in 1993, and was its Chief
Operating Officer from 1993 to 1995. He was a Senior Vice President at Dow
Chemical from 1991 to 1993, and President of Dow U.S.A. from 1990 to 1993. Mr.
Stavropoulos is also a director of Dow Corning Corporation. He became a director
of NCR on January 1, 1997, and is Chairman of the Audit and Finance Committee
and a member of the Executive Committee.
THE BOARD OF DIRECTORS
The Board of Directors is responsible for overseeing the overall
performance of the Company. Members of the board are kept informed of the
Company's business through discussions with the Chairman and other members of
the Company's management and staff, by reviewing materials provided to them, and
by participating in board and committee meetings. In 1997, NCR's Board of
Directors is scheduled to meet at least six times.
During 1996, NCR's Board of Directors acted by unanimous written consent
and did not hold any meetings. In addition, prior to the Spinoff, NCR's board
did not have any operating committees. During that time, matters concerning
compensation of the Company's executive officers were either approved by AT&T's
Board of Directors or by an executive officer of AT&T.
COMMITTEES OF THE BOARD
In 1997, NCR's Board of Directors established four committees: the Audit
and Finance Committee, the Compensation Committee, the Committee on Directors,
and the Executive Committee. These committees are briefly described below.
The Audit and Finance Committee regularly meets with management to review
the adequacy of the Company's internal controls as well as the scope and results
of audits performed by the Company's independent accountants and internal
auditors. In addition, the committee is the principal agent of the Board of
Directors in assuring the adequacy of the Company's financial and accounting and
reporting control processes. The Audit and Finance Committee is also responsible
for, among other things: (a) recommending to the Board of Directors the
appointment of the Company's independent accountants, (b) reviewing NCR's risk
management policies and practices, and (c) reviewing the Company's cash position
and capital structure, capital appropriation plans, and other significant
financial matters affecting the Company. The committee consists of three
non-employee directors and is expected to meet four times in 1997.
The Compensation Committee reviews and approves the Company's total
compensation philosophy and programs covering executive officers and key
management employees as well as the competitiveness of NCR's total compensation
practices. The committee also reviews the performance levels of NCR's executive
officers and determines base salaries and incentive awards for NCR's Chairman
and executive officers. The committee makes recommendations to the Board of
Directors concerning the board's compensation. In addition, the Compensation
Committee reviews NCR's executive compensation plans in relation to its
corporate strategies, management's proposals to make significant organizational
changes or significant changes to existing executive
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officer compensation plans, and NCR's plans for management succession. The
committee, which consists of three non-employee directors, is expected to meet
three times in 1997.
The Committee on Directors establishes procedures for the selection,
retention, and performance evaluation of directors, and reviews board governance
procedures. The committee reviews the composition of NCR's Board of Directors
and the qualifications of persons identified as prospective directors,
recommends the candidates to be nominated for election as directors, and, in the
event of a vacancy on the board, recommends any successors. The committee
consists of three members and is expected to meet at least two times in 1997.
The Executive Committee will meet between regular board meetings if urgent
action is required. This committee has the authority to exercise all powers of
the full Board of Directors, except that it will not have the power, among other
things, to: declare dividends, issue stock, amend the Bylaws, recommend to the
stockholders any action that requires stockholder approval, or approve any
merger or share exchange which requires stockholder approval.
COMPENSATION OF DIRECTORS
Each of NCR's non-employee directors will receive an annual retainer of
$30,000 for the year beginning on the date of the Company's annual stockholders
meeting and ending on the day before the next such meeting (the "Service Year").
The retainer will be payable in 25% increments on June 30, September 30,
December 31, and March 31, provided the director is still serving on NCR's board
on each of those dates. Upon a director's resignation or other termination from
the board during the Service Year, he or she will forfeit the remaining amount
of the retainer for that Service Year.
During the period of time between January 1, 1997 to April 19, 1997, before
a full Service Year has been completed (the "Interim Period"), NCR's
non-employee directors will receive a retainer of $10,000, with $5,000 of such
retainer payable at the January 16, 1997 board meeting, and the remaining $5,000
payable on March 31, 1997, provided the director is still serving on NCR's
board.
Prior to the Service Year, non-employee directors may elect to receive all
or a portion of the retainer, except for the Interim Period retainer, in NCR
common stock instead of cash. These directors may also elect to defer receipt of
the cash or stock of the Service Year retainer (a) until his or her resignation
or other termination as a director, (b) until the date five or ten years from
the first day of the Service Year for which it is payable, or (c) in one to five
equal annual installments, beginning either the Service Year after the retainer
is earned, or the year following the date of termination as a director.
The Company will maintain unfunded bookkeeping accounts for deferred cash
payments, including any interest thereon. Stock unit accounts based on NCR
common stock will be maintained for deferred stock payments, and dividend
payments on NCR common stock, if any, will be reinvested in additional deferred
stock units. Deferred stock payments may be paid in cash or in stock. A
non-employee director who leaves the board prior to the date of payment of
deferred stock units may elect, prior to termination, to convert the deferred
stock units to a deferred cash account.
On January 2, 1997, each of the non-employee directors received an initial
grant of NCR common stock with a value equal to two times the annual retainer.
The non-employee directors had the option of receiving this stock immediately or
deferring receipt for the same time periods available for deferral of the annual
retainer. If deferred, a stock unit account will be maintained, in the manner
described in the preceding paragraph.
In addition, NCR's non-employee directors will receive stock option grants
at the beginning of each Service Year with a present value of $30,000. These
options shall be for a number of shares that is determined by dividing the
annual retainer amount by an accepted formula, and then dividing the result by
the fair market value of a share of NCR common stock on the grant date. The
options will have an exercise price of the fair market value of the stock and
are fully vested on the date of grant.
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Directors who are also employees of the Company or a subsidiary of the
Company do not receive compensation for serving as directors.
STOCK OWNERSHIP OF MANAGEMENT AND DIRECTORS
The following table contains information concerning the beneficial
ownership of the Company's common stock, as of January 31, 1997, for (a) each
director elected to the board as of January 1, 1997, including the nominees for
re-election at the 1997 annual meeting, (b) each of the executive officers named
in the Summary Compensation Table found below (the "Named Executives"), and (c)
directors and executive officers as a group.
Except as otherwise noted, the individuals named below and their family
members had sole voting and investment power with respect to such securities. To
the Company's knowledge, no person or entity beneficially owns more than 5% of
NCR's outstanding common stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY
NAME OWNED (1)(2)(3)
---- ----------------
<S> <C>
Lars Nyberg.............................................................. 34,342
Duane L. Burnham(4)...................................................... 2,795
David R. Holmes(4)....................................................... 1,795
Linda Fayne Levinson(4).................................................. 1,811
Ronald A. Mitsch(4)...................................................... 1,795
C.K. Prahalad(4)......................................................... 1,795
James O. Robbins(4)(5)................................................... 3,095
William S. Stavropoulos.................................................. 1,795
Raymond G. Carlin........................................................ 36,476
Robert R. Carpenter...................................................... 81
Anthony Fano............................................................. 62,171
John L. Giering.......................................................... 83,945
Directors and Executive Officers as a Group (24 persons)................. 553,121
--------
</TABLE>
- ---------------
(1) No individual director or executive officer beneficially owns 1% or more of
the Company's outstanding common stock, nor do the directors and executive
officers as a group.
(2) Includes beneficial ownership of the following number of shares of NCR
common stock which may be acquired within 60 days of January 31, 1997,
pursuant to stock options awarded under employee incentive compensation
plans of NCR: Mr. Nyberg -- 20,250; Mr. Carlin -- 34,179; Mr.
Fano -- 59,343; Mr. Giering -- 79,124; and all other executive officers as a
group -- 491,429. Also includes beneficial ownership of the following number
of shares of NCR common stock which may be acquired within 60 days of
January 31, 1997, pursuant to vested restricted stock units awarded under
NCR's employee incentive compensation plans: Mr. Nyberg -- 13,864; Mr.
Carlin -- 2,152; Mr. Fano -- 2,690; Mr. Giering -- 4,448; and all other
executive officers as a group -- 45,032. One executive officer, other than a
Named Executive, owns 1,000 shares of NCR Japan Ltd., a subsidiary of NCR.
(3) Some of NCR's executive officers and directors own fractional shares of NCR
common stock. For purposes of this table, all fractional shares have been
rounded to the nearest whole number.
(4) Includes 1,795 units denominated as NCR common stock equivalents held in
deferred compensation stock unit accounts.
(5) Includes 300 shares held by Mr. Robbins' children for which he disclaims any
beneficial interest.
10
<PAGE> 12
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
As a wholly-owned subsidiary of AT&T prior to the Spinoff, all of the
compensation decisions and actions pertaining to the executive officers of NCR
were either approved by the Compensation Committee of the board of AT&T or by an
executive officer of AT&T.
The current members of NCR's Compensation Committee (the "Committee") were
appointed effective January 2, 1997. Except for the approval of the awards
earned in 1996 under the Management Incentive Plan (the "MIP"), and the Long
Term Incentive Program 1996-1998 cycle with respect to executive officers
employed by NCR, the Committee neither reviewed nor approved other compensation
actions relating to the Company's 1996 fiscal year.
As a newly public company, the Committee recognizes that a transition period is
necessary to establish fully its long-range compensation philosophy and
objectives. Nevertheless, the following philosophy and principles have been set
forth as a framework within which the Committee will operate.
COMPENSATION COMMITTEE PHILOSOPHY AND GUIDING PRINCIPLES
The Company's compensation and benefit programs are designed to:
- - Attract and retain the best people in the industry;
- - Emphasize performance-based pay by paying above-average awards for
above-average performance and best-in-class awards for best-in-class
performance; and
- - Recognize corporate, business unit, individual, and team performance through
the use of incentives, including equity-based incentives, that reward for the
creation of stockholder value and the achievement of key financial, strategic,
individual, and team objectives.
EXECUTIVE COMPENSATION POLICIES
Compensation Levels
The Committee relates total compensation levels for the Company's executive
officers to the total compensation paid to similarly situated executives of a
peer group of companies (the "Peer Group") with which the Company competes for
customers and executive talent. The companies comprising the Peer Group are
selected primarily on the basis of industry classification. A performance graph,
comparing the performance of NCR common stock to the performance of a
broad-based index and a peer index or a peer group of companies, is not provided
in this proxy statement because the Distribution of NCR stock did not occur
until December 31, 1996. Accordingly, a peer group or a peer index for such
purpose has not yet been determined.
Total compensation is targeted to approximate the median of the Peer Group.
However, because of the performance-oriented nature of the incentive programs,
total compensation may exceed market norms when the company's targeted
performance goals are exceeded. Likewise, total compensation may lag the market
when performance goals are not achieved.
Based on the most recently completed compensation study, total compensation for
the executive positions in the study, including some of the executive officers,
ranked below the median of the total compensation of similarly situated
positions in the Peer Group.
Policy with Respect to Qualifying Compensation for Deductibility
The Company's policy with respect to the deductibility limit of Section 162(m)
of the Internal Revenue Code generally is to preserve the federal income tax
deductibility of compensation paid when it is appropriate and is in the best
interests of the Company and its stockholders. However, NCR reserves the right
to authorize the payment of nondeductible compensation if it deems that is
appropriate.
11
<PAGE> 13
Annual Compensation
Base salaries and annual cash compensation for the executive officers in 1996
were established while NCR was a controlled subsidiary of AT&T. Accordingly,
decisions were approved either by the AT&T Compensation Committee or an
executive officer of AT&T.
Eligible management and key employees participate in the NCR MIP which pays
annual cash incentive awards if certain specified objectives are met. Objectives
for 1996 were based on financial elements such as profits, asset turnover and
cash flow, as well as management goals and discretionary objectives that varied
by work groups. These goals were weighted depending upon the executive officer's
area of responsibility. On balance, objectives were exceeded.
Long-Term Incentives
- - Stock Options and Restricted Stock. In 1996, the AT&T Compensation Committee
authorized the grant of stock options and restricted stock under the AT&T 1987
Long Term Incentive Program to some of the executive officers of the Company.
After the Spinoff, most of the unexercised grants of stock options and awards
of performance shares, stock units, restricted stock, restricted stock units,
or phantom share accounts for stock of AT&T were replaced with awards for NCR
stock. These awards were subject to the same terms and conditions as the AT&T
awards and were based on the relative market value of NCR common stock and
AT&T common stock on the NYSE over the five trading days ending on December
30, 1996, in order to preserve the economic value of such awards at the time
of the Spinoff.
- - Long Term Incentive Program ("LTIP"). The Company's LTIP was established under
the NCR Management Stock Plan to support the Company's business turnaround.
The program is specifically designed to reward performance against
company-wide objectives in the current year, and the performance of NCR stock
in subsequent years. The company-wide objectives established for 1996 related
to certain financial goals, such as profits and cash flow, and management
objectives. Weightings for the objectives ranged from 10% to 60%. Awards
earned in 1996 were issued in the form of restricted stock units which will
vest in two years. On balance, restricted stock units awarded under the plan
were based upon the Company exceeding its objectives.
Compensation of the Chairman and Chief Executive Officer
The actions taken with respect to Mr. Nyberg's 1996 total compensation and the
commitments entered into under the letter agreements with him were approved by
the AT&T Compensation Committee or by an executive officer of AT&T. The terms of
these agreements are discussed in more detail below under the caption
"Employment Agreements and Change in Control Arrangements."
THE COMPENSATION COMMITTEE:
Duane L. Burnham, Chairman
David R. Holmes
Linda Fayne Levinson
12
<PAGE> 14
EXECUTIVE COMPENSATION
The following tables set forth certain compensation information for the
Named Executives, including the Chairman of the Board and Chief Executive
Officer of NCR, as measured by salary and bonus for the year ended December 31,
1996, based on employment with NCR, AT&T or their respective subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION(1) LONG-TERM COMPENSATION(1)
-------------------------------------------------------------------------------------
AWARDS(3) PAYOUTS
-------------------------------------------------------------------------------------
OTHER
ANNUAL RESTRICTED AT&T AT&T ALL OTHER
COMPEN- STOCK OPTIONS/ LTIP COMPEN-
NAME AND SALARY BONUS SATION AWARDS SARS PAYOUTS SATION
PRINCIPAL POSITION YEAR ($) ($) $(2) $(4e) #(5) $(6) $(7)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Lars Nyberg(8) 1996 659,000 772,915 129,472 705,206(4a) 0 489,127 2,288,588
Chairman of the Board, 98,852(4b)
Chief Executive Officer, and 1995 295,384 760,506 122,198 990,942(4a) 438,484 0 0
President 45,036(4b)
2,222,500(4c)
1994 0 0 0 0 0 0 0
Raymond G. Carlin 1996 280,000 211,788 10,955 140,946(4a) 14,125 0 5,625
Senior Vice President 42,056(4b)
Americas Region 1995 265,000 64,382 9,080 178,054(4a) 13,200 50,000 5,625
39,774(4b)
1994 215,771 115,700 9,859 27,049(4b) 8,760 49,140 5,625
Robert R. Carpenter(9) 1996 324,000 182,736 30,344 120,129(4a) 7,155 101,463 28,727
Senior Vice President 1995 305,000 167,900 55,610 171,806(4a) 6,219 92,598 31,536
Worldwide Customer Support Services 1994 283,333 220,400 36,285 0 5,278 88,856 21,799
Anthony Fano 1996 303,000 171,084 26,241 152,518(4a) 15,149 0 5,625
Senior Vice President 1995 286,000 45,383 94,772 204,452(4a) 15,380 80,900 5,625
Retail Systems Group 1994 225,000 120,998 9,785 501,165(4d) 9,220 79,560 5,625
John L. Giering 1996 326,000 232,275 22,025 205,094(4a) 21,430 0 3,534,852
Senior Vice President & 1995 310,000 84,476 15,523 303,832(4a) 21,280 144,000 399,149
Chief Financial Officer 1994 297,570 167,364 14,143 0 20,120 141,570 281,495
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) Compensation deferred at the election of the Named Executives is included in
the category and year it would have otherwise been reported had it not been
deferred.
(2) Includes (a) dividend equivalents paid with respect to long-term performance
shares prior to the end of the three-year performance period, (b) tax
payment reimbursements, (c) the value of certain personal benefits and
perquisites, (d) relocation reimbursements, (e) payments of above-market
interest on deferred compensation, and (f) payment under AT&T Senior
Management Incentive Compensation Plan.
(3) All awards were granted with respect to AT&T common stock except for awards
granted under the NCR Management Stock Plan for the 1996-1998 cycle of the
LTIP to Messrs. Carlin, Fano and Giering, as described in footnote 4(a) of
this table. The amounts shown in the column "Restricted Stock Awards"
represent the dollar value of such awards on the dates originally granted.
The amounts shown for stock options represent the number of shares of AT&T
common stock underlying such options on the dates originally granted.
(4)(a) Awards classified as performance share awards under the AT&T 1987 Long
Term Incentive Plan (the "AT&T Stock Plan") for the 1994-1996 and
1995-1997 performance cycles were granted to Messrs. Nyberg, Carlin,
Carpenter, Fano, and Giering. The awards for Messrs. Carpenter, Carlin,
Fano, and Giering were made in 1994 for the 1994-1996 cycle and in 1995
for the 1995-1997 cycle; the awards for Mr. Nyberg for both cycles were
granted in 1995. At the time of these grants, the payout of such awards
was tied to achieving specified levels of performance, customer
satisfaction, and employee satisfaction. The target amount, i.e., the
full award, would have been earned if 100% of each participant's specific
objectives was achieved over the three-year cycle. At its December 1995
meeting, AT&T's Compensation Committee recommended and approved that the
performance objectives for the 1994-1996 and 1995-1997 performance cycles
be deemed to have been met at the target level. This action was taken in
acknowledgment that AT&T's restructuring had rendered the original
performance criteria inapplicable and of the difficulty of establishing
revised criteria while the restructuring was in process. In 1996, the
AT&T Compensation Committee granted awards to Messrs. Nyberg and
Carpenter for the 1996-1998 cycle without performance criteria. Each of
these awards was replaced with NCR awards at the Spinoff based on the
factors described in
13
<PAGE> 15
footnote 4(e) of this table. In addition, NCR's Compensation Committee,
in January 1997, granted performance-based awards of NCR restricted stock
units under the NCR Management Stock Plan to Messrs. Carlin, Fano,
Giering for the 1996-1998 cycle based on achievement of specific 1996
performance objectives.
The awards under the 1996-1998, 1995-1997, and 1994-1996 cycles will vest
in one installment at the end of the cycle and be payable in the first
quarter following the end of the three-year cycles, with certain
exceptions in the case of death, disability, or retirement. For example,
awards granted under the 1995-1997 cycle will vest in one installment and
be payable in the first quarter of 1998 if the participant remains in the
employ of NCR for the three full years ending December 31, 1997. Awards
are distributed as common stock, or as cash equal to the value of these
shares, or partly in common stock and partly in cash. Dividend
equivalents, if any, on such awards are paid in cash. The number of
shares of AT&T common stock represented by the awards made for the
1996-1998 performance cycle for Messrs. Nyberg and Carpenter,
respectively, were 10,555 and 1,798. The number of shares of NCR common
stock represented by the performance-based awards made for the 1996-1998
cycle to Messrs. Carlin, Fano, and Giering under the NCR Management Stock
Plan, respectively, were 4,056, 4,389, and 5,902. The number of shares of
AT&T common stock represented by the awards made for the 1995-1997
performance cycle for Messrs. Nyberg, Carlin, Carpenter, Fano, and
Giering, respectively, were 10,555, 2,123, 1,798, 2,291, and 3,104. The
number of shares of AT&T common stock represented by the 1994-1996
performance cycle awards for Messrs. Nyberg, Carlin, Carpenter, Fano, and
Giering, respectively, were 8,783, 1,364, 1,553, 1,705, and 2,818. The
value of awards for all three performance cycles is reflected in the
table above as of the date of grant with the date of grant for the
1994-1996 cycle occurring in 1995 at the time the AT&T Compensation
Committee took its action.
(b) Pursuant to the Officer Plan (as defined below), Mr. Nyberg received
1,596 and 834 restricted shares of AT&T common stock, respectively, in
1996 and 1995. Also pursuant to such plan, Mr. Carlin received 679, 754,
and 514 restricted shares of AT&T common stock, respectively, in 1996,
1995, and 1994. Dividends on these shares are reinvested in additional
shares of restricted stock. The value of such awards at the date of grant
is reflected in the table above.
(c) During 1995, Mr. Nyberg received a special restricted stock unit grant of
35,000 shares of AT&T common stock. The grant to Mr. Nyberg was part of
an AT&T special equity incentive/retention program. The grant vests four
years after the date of grant and carries stringent penalties for
competition and other specified adverse activities. Dividends on such
units are paid in cash. The grant to Mr. Nyberg was not converted into
awards based on NCR common stock upon the Spinoff but remained restricted
stock units based on AT&T common stock. The value of this award at the
date of grant is reflected in the table above.
(d) In March 1994, Mr. Fano received a phantom stock grant equivalent to
9,546 shares of AT&T common stock. The phantom stock vests after four
years, except in the event of death or disability, in which event the
grant vests ratably over the four-year period. The phantom stock is
payable in cash, and dividends are reinvested in additional shares of
phantom stock. The value of this award at the date of grant is reflected
in the table above.
(e) On April 10, 1996, as part of AT&T's plan to restructure itself into
three separate companies, including NCR, AT&T conducted an initial public
offering of approximately 17.6% of the shares of its newly formed
subsidiary, Lucent Technologies, Inc. ("Lucent"). Thereafter, on
September 30, 1996, AT&T fully divested its ownership interest in Lucent
by means of a distribution of all of its remaining shares of Lucent. As a
result of the spinoff of Lucent from AT&T, on October 1, 1996, the
restricted stock awards (including stock units and phantom share units)
set forth in the table above were replaced with restricted stock awards
to reflect the economic value of the original awards at the time of the
Lucent spinoff. The number of shares of AT&T common stock covered by the
replacement awards was calculated by multiplying the number of shares of
AT&T common stock under the original award by a factor of 1.34777. Based
on this calculation, the aggregate value of the restricted stock awards
on December 31, 1996 (based on an AT&T common stock price of $43.5 per
share) for the 1994-1996, 1995-1997 and 1996-1998 performance share
awards for Messrs. Nyberg, Carlin, Carpenter, Fano, and Giering,
respectively, was $1,752,485, $204,407, $301,847, $234,204, and $347,174.
The aggregate number of shares and value on December 31, 1996 (based on
an AT&T common stock price of $43.5 per share) for all awards of other
restricted shares of AT&T common stock, restricted stock units, or
phantom share units, as such awards were replaced under the formula
described above, for Messrs. Nyberg, Carlin, and Fano, respectively, was
50,446 shares ($2,194,401), 4,279 shares ($186,136), and 12,865 shares
($559,628). On January 2, 1997, as a result of the Spinoff of NCR from
AT&T, the outstanding AT&T awards, other than those awards made to Mr.
Carpenter and the award to Mr. Nyberg discussed in footnote 4(c) of the
above table, were replaced with NCR awards, which replacement was
intended to preserve the economic value of the awards at the time of the
Spinoff. The number of shares of AT&T common stock covered by the NCR
replacement awards was calculated by multiplying the number of shares of
AT&T common stock under the post-Lucent awards by a factor of 1.17128.
(5) Amounts represent the number of shares of AT&T common stock underlying the
options on the date originally granted. Subsequently, on October 1, 1996, to
the extent outstanding, such options were replaced with new options of AT&T
common stock to reflect the economic value of the original grants at the
time of the Lucent spinoff. The number of shares of AT&T common stock
underlying the replacement options was calculated by multiplying the number
of shares of AT&T common stock underlying the original option by a factor of
1.34777, and the exercise price of the options was decreased by dividing the
original exercise price by the same factor. After the Spinoff of NCR from
AT&T, on January 2, 1997, the outstanding AT&T options for Messrs. Nyberg,
Carlin, Fano and Giering were replaced with options for NCR common stock.
The number of shares of NCR common stock covered by the replacement options
was calculated by multiplying the number of shares of AT&T common stock
under the post-Lucent replacement options by a factor of 1.17128, and the
exercise price of post-Lucent replacement options was decreased by dividing
the original exercise price by the same factor.
14
<PAGE> 16
(6) Includes distribution in 1995 to Messrs. Carlin, Carpenter, Fano, and
Giering of performance units for the three-year performance cycle ended
December 31, 1994. Also, includes payments in 1996 to Mr. Nyberg and Mr.
Carpenter under the AT&T 1987 Stock Plan.
(7) Includes a lump-sum cash payment of $1,900,000 and payment of a $375,000
signing bonus made by AT&T to Mr. Nyberg pursuant to a 1996 employment
agreement with AT&T. For a summary of Mr. Nyberg's employment agreements,
see the caption "Employment Agreements and Change in Control Arrangements"
below. Also, includes $13,588 premium payment in 1996 for split-dollar life
insurance policy for Mr. Nyberg. Includes AT&T contributions to the AT&T
Savings Plan of $6,000 in 1994, 1995 and 1996 for Mr. Carpenter. Also,
includes for Mr. Carpenter in 1996, 1995, and 1994, respectively, AT&T
contributions under a nonqualified savings plan of $6,160, $5,201, and $0,
and premiums for split-dollar life insurance policies of $16,567, $20,335,
and $15,799. Includes for each of Messrs. Carlin, Fano and Giering, NCR
contributions of $5,625 to the NCR Savings Plan in 1996, 1995 and 1994. For
Mr. Giering, includes in 1996, 1995 and 1994, respectively, accrued interest
of $516,579, $393,524 and $275,870, and, in 1996, a tax payment
reimbursement of $727,648 on a lump-sum amount payable pursuant to an
employment agreement with NCR and AT&T, dated September 23, 1991, providing
for Mr. Giering's employment as Senior Vice President, Finance and
Administration, of NCR. This agreement expired on December 31, 1996, and Mr.
Giering received in 1996 the lump-sum payment of $2,275,000, plus interest
and tax payment reimbursement, pursuant to said agreement, which amounts are
included in the above table. In addition, includes $10,000 lump-sum payment
in 1996 to Mr. Giering for achievement of performance objectives relating to
the Company's real estate portfolio.
(8) Mr. Nyberg became Chairman of the Board, Chief Executive Officer and
President of NCR effective June 1995.
(9) Effective December 31, 1996, Mr. Carpenter ceased to be an executive officer
of NCR.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
-----------------------------------------------------------------------
NUMBER OF PERCENT OF GRANT
SHARES TOTAL DATE
UNDERLYING OPTIONS EXERCISE PRESENT
OPTIONS GRANTED TO PRICE EXPIRATION VALUE
NAME GRANTED(#)(1) EMPLOYEES(2) ($/SHARE)(3) DATE ($)(4)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lars Nyberg 0 0 0 0 0
Raymond G. Carlin 10,480 1.03% 66.8125 1/2/06 117,290
Robert R. Carpenter 6,218 0.61% 66.8125 1/2/06 69,595
Anthony Fano 11,240 1.11% 66.8125 1/2/06 125,795
John L. Giering 15,900 1.56% 66.8125 1/2/06 177,949
- -------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) The options were granted with respect to AT&T common stock under the AT&T
Stock Plan. On October 1, 1996, to the extent outstanding, such options were
replaced with new options of AT&T common stock to reflect the economic value
of the original grants at the time of the Lucent spinoff. The number of
shares of AT&T common stock underlying the replacement options was
calculated by multiplying the number of shares of AT&T common stock
underlying the original option by a factor of 1.34777, and the exercise
price of the options was decreased by dividing the original exercise price
by the same factor. On January 2, 1997, the outstanding AT&T options for
Messrs. Carlin, Fano and Giering were replaced with options for NCR common
stock. The number of shares of NCR common stock covered by the replacement
options was calculated by multiplying the number of shares of AT&T common
stock under the post-Lucent replacement options by a factor of 1.17128, and
the exercise price of post-Lucent replacement options was decreased by
dividing the original exercise price by the same factor. The options for Mr.
Carpenter become exercisable in equal installments over a period of three
years. The options for Messrs. Carlin, Fano, and Giering become exercisable
in equal installments over a period of four years.
(2) Percent of total options granted based on total options granted to NCR
employees.
(3) Based on the conversion described above in footnote 1 of this table, the
exercise price of the options between October 1 and December 31, 1996, was
$49.576; and $42.3234 as of January 2, 1997.
(4) In accordance with SEC rules, the Black-Scholes option pricing model was
chosen to estimate the grant date present value of the options set forth in
this table. NCR's use of this model should not be construed as an
endorsement of its accuracy at valuing options. All stock option valuation
models, including the Black-Scholes model, require certain assumptions to be
made. The following assumptions were made for purposes of calculating the
grant date present value: volatility at 16.33%, dividend yield at 2%, an
expected term of 7 years, and interest rate of 5.49%. These assumptions
relate to the original grant as an option for AT&T common stock as converted
to account for the Lucent spinoff. The real value of the options in this
table depends upon the actual performance of the stock underlying the
options, as converted to NCR stock after the Spinoff, during the applicable
period.
15
<PAGE> 17
AGGREGATED OPTION/STOCK APPRECIATION RIGHTS
("SAR") EXERCISES IN 1996 AND YEAR-END VALUES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
VALUE OF
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT YEAR END AT YEAR END
# (1) $(1)
- -------------------------------------------------------------------------------------------------------------
SHARES VALUE
ACQUIRED REALIZED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) ($) UNEXERCISABLE(2) UNEXERCISABLE(3)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lars Nyberg 0 0 17,289 59,375
573,686 118,734
Raymond G. Carlin 0 0 16,737 107,624
34,886 120,299
Robert R. Carpenter 7,113 91,031 24,731 270,102
13,969 36,032
Anthony Fano 0 0 35,512 333,239
39,987 144,899
John L. Giering 42,341 1,899,666 41,368 224,441
63,378 237,100
- -------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) None of the individuals set forth in this table above has stock appreciation
rights.
(2) All options were granted with respect to AT&T common stock under the AT&T
Stock Plan, and the amounts shown represent the number of shares of AT&T
common stock resulting from the replacement of the original grants on
October 1, 1996, which was intended to preserve the economic value of the
options at the time of the Lucent spinoff. To the extent that such options
were outstanding for Messrs. Carlin, Fano, and Giering on December 31, 1996,
they were replaced on January 2, 1997, with NCR options to preserve the
economic value of the options at the time of the Spinoff. The options
granted to Mr. Nyberg, with the exception of a 400,000 stock option grant in
1995, were also replaced with NCR stock options on January 2, 1997. The
number of shares of NCR common stock covered by the replacement options was
calculated by multiplying the number of shares of AT&T common stock
underlying the options after the Lucent spinoff by a factor of 1.17128, and
the exercise price was determined by dividing the post-Lucent exercise price
by a factor of 1.17128.
(3) The value of in-the-money options assumes the closing market price of AT&T
common stock underlying the post-Lucent replacement options as of December
31, 1996 ($43.5).
PENSION PLANS
The Company maintains the NCR Pension Plan, a qualified, non-contributory
defined benefit plan which provides retirement benefits to employees based in
the United States, including Messrs. Nyberg, Giering, Fano and Carlin. Benefits
payable under the NCR Pension Plan are funded solely by contributions made by
NCR on an actuarial basis to a trust. Generally, benefits for employees are
based on a participant's years of credited service with NCR and its subsidiaries
and the participant's Modified Average Pay (as defined in the NCR Pension Plan).
For each year of credited service, the participant receives between 1.3% and
1.7% of his or her Modified Average Pay and such benefits vest after a
participant has completed five years of service with NCR or its subsidiaries, as
well as at age 65. An additional benefit (the "PensionPlus benefit") equivalent
to 1.5% of a participant's Compensation (as defined in the NCR Pension Plan)
paid in each month since January 1, 1992 and 2% of Compensation paid in 1991 is
also provided.
The NCR Nonqualified Excess Plan (the "Excess Plan") provides supplemental
retirement benefits to those employees of NCR whose retirement benefits under
the NCR Pension Plan are affected by limits under the Internal Revenue Code of
1986, as amended (the "Code"). The supplemental pension benefits provided by the
Excess Plan equal the difference between the benefits under the NCR Pension Plan
without regard to Code limits and the actual pension benefits payable under the
NCR Pension Plan. The supplemental benefits under the Excess Plan will be paid
at the same time and in the same form as the benefits under the NCR Pension
Plan. The Excess Plan is a nonqualified plan, funded from general corporate
assets.
16
<PAGE> 18
NCR also maintains two nonqualified, unfunded supplemental retirement plans
that cover executive officers designated as participants thereunder by the Plan
Committee, which consisted of NCR's Board of Directors prior to the Spinoff and
NCR's Compensation Committee as of 1997. The NCR Senior Executive Retirement,
Death & Disability Plan (the "Senior Executive Plan") covers Messrs. Giering and
Fano. The Retirement Plan for Officers of NCR (the "Officer Plan") is generally
designed to replace the Senior Executive Plan for officers and senior managers
appointed after November 30, 1988, and covers Messrs. Nyberg and Carlin.
The Senior Executive Plan provides monthly benefits upon termination of
employment based upon 4% of a final average monthly pay per year of service.
Final average monthly pay is determined by taking into account the participant's
highest consecutive 36 months of compensation (i.e., salary, any management
incentive plan award and 50% of certain long-term incentive plan awards) during
the last 6 years of employment. The benefit is actuarially reduced to the extent
that the participant is under age 62 at the time of termination. The benefit is
offset by the participant's Social Security primary insurance amount, by the
benefit under the NCR Pension Plan, the Excess Plan or under any other pension,
profit sharing, savings or other retirement plan of NCR, an NCR affiliate or a
prior employer, and any disability income benefits received pursuant to a
disability income plan sponsored by NCR. The Senior Executive Plan also provides
for disability benefits in the event that a participant's employment is
terminated due to total disability and for death benefits in a reduced amount.
No benefits are payable under the Senior Executive Plan if a participant
voluntarily terminates employment with NCR before attaining age 55, or is
involuntarily terminated by the Company before attaining age 52. The Plan
Committee has discretion to disallow benefits in the event that a participant
engages in certain competition with NCR during the three-year period following
termination of employment with NCR.
Prior to January 1, 1997, the Senior Executive Plan contained a change in
control provision that was triggered when NCR's stockholders approved the merger
of NCR with a wholly-owned subsidiary of AT&T in 1991. Messrs. Giering and Fano
are entitled to benefits under the Senior Executive Plan that are enhanced by
this change in control provision, which includes an additional five years of
service and a guaranteed minimum compensation amount for purposes of calculating
the pension benefit under the Senior Executive Plan, and the ability to commence
receiving benefits at any time after attaining age 50, subject to more favorable
early retirement reduction factors.
The Officer Plan provides for monthly benefits upon termination of
employment based upon 2.5% of career average monthly salary for service after
becoming a participant, including salary, the management incentive plan award
and certain long-term incentive plan awards. The monthly benefit is actuarially
reduced to the extent that the participant is under age 62 at the time of
termination. The monthly benefit is offset by the participant's benefit under
the NCR Pension Plan (other than the PensionPlus benefits) and any
employer-provided benefit under any other retirement plan of NCR, an NCR
affiliate or a prior employer, and any disability income benefits received
pursuant to a disability income plan sponsored by NCR. The Officer Plan permits
participants to elect a joint and survivor form of annuity providing for reduced
lifetime benefits and an annuity for the life of the participant's surviving
spouse. Under the Officer Plan, no benefit is payable if the participant
terminates employment prior to one year from the effective date of participation
in the plan. In addition, a participant whose employment is terminated prior to
age 55 for any reason other than death receives no benefits, unless he or she
has been employed by NCR for at least ten years prior to termination of
employment. However, a participant will be entitled to his or her accrued
benefit under the Officer Plan if the participant's employment with NCR is
terminated under circumstances entitling the participant to severance benefits
under an NCR change in control severance plan (as described under the caption
"Employment Agreements and Change in Control Arrangements"). The Officer Plan
also provides death benefits in reduced amount. The Plan Committee has
discretion to disallow benefits in the event that a participant engages in
certain competition with NCR during the three-year period following termination
of employment with NCR.
Certain of NCR's nonqualified executive pension plan benefits are supported
by a benefits trust, the assets of which are subject to the claims of NCR's
creditors.
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<PAGE> 19
If Messrs. Nyberg, Carlin, Fano, and Giering continue in their current
positions, at current salaries and at target bonus levels and retire at age 62
from NCR, the estimated annual pension amounts payable from NCR's qualified and
nonqualified defined benefit pension plans, including supplemental pension
plans, would be $823,685, $423,512, $301,880, and $391,200, respectively. For
Mr. Carpenter, the estimated annual pension amount so payable under AT&T's
qualified and nonqualified defined benefit pension plans, including supplemental
pension plans, would be $219,682.
EMPLOYMENT AGREEMENTS AND
CHANGE IN CONTROL ARRANGEMENTS
AT&T entered into letter employment agreements with Mr. Nyberg on April 18,
1995 (the "1995 Agreement") and June 7, 1996 (the "1996 Agreement"), which
provided for Mr. Nyberg's employment with NCR prior to the Spinoff. The 1995
Agreement provided for an initial base salary of $600,000 per year, a guaranteed
1995 annual incentive award of $590,000, and awards under the AT&T Stock Plan of
10,555 performance units and options to purchase 38,484 shares of AT&T common
stock. The 1995 Agreement also provided for an award to Mr. Nyberg of 7,397
performance units that were payable in the first quarter of 1996 and 8,783
performance units that are payable in the first quarter of 1997. On January 2,
1997, the outstanding performance units were replaced with comparable awards
based on NCR common stock under the NCR Management Stock Plan, which replacement
was intended to preserve the economic value of the awards at the time of the
Spinoff. The number of shares of NCR common stock underlying the performance
units was calculated by multiplying the number of shares of AT&T common stock
underlying the original award by a factor of 1.34777, and then multiplying that
figure by a factor of 1.17128.
The 1996 Agreement supplemented the 1995 Agreement and provided for an
annual bonus of $375,000, payable by NCR to Mr. Nyberg on June 1 of each of the
years 1996 through 1998, and a bonus of $3,875,000, payable by NCR to Mr. Nyberg
on June 1, 1999, provided in each case that Mr. Nyberg was employed by NCR on
such dates (collectively, the "Completion Bonus"). In the event his employment
was terminated as a result of death, Disability, involuntary termination other
than for Cause, or Termination for Good Reason (as such terms are defined in the
1996 Agreement), Mr. Nyberg (or his estate) will receive a one-time payment of
$5,000,000, less any bonus payments already received. The 1996 Agreement also
provided for a bonus of $2,000,000 to be paid to Mr. Nyberg on or after June 1,
1999, upon execution of an employment contract with NCR for an additional
two-year period beyond June 1, 1999 (the "Re-enlistment Bonus"). The 1996
Agreement provided that prior to the Spinoff, AT&T would cause NCR to establish
a rabbi trust with assets sufficient to fund the portion of the Completion Bonus
unpaid at the Spinoff, and the Re-enlistment Bonus. The NCR Board of Directors
authorized the rabbi trust on December 20, 1996, and the trust was funded as
required by the 1996 Agreement prior to the Spinoff.
The 1996 Agreement provided that, after the Distribution Date, 400,000
stock options for AT&T common stock and 35,000 AT&T restricted stock units that
were granted to Mr. Nyberg in September 1995 will continue to become exercisable
or vest, as applicable, in accordance with the terms under which such awards
were granted, and that such restricted stock units will not be converted into
comparable awards based on NCR common stock but will remain outstanding.
Pursuant to the terms of the 1996 Agreement, on January 2, 1997, NCR
provided Mr. Nyberg with (a) a grant of options to purchase 149,533 shares of
NCR common stock, representing the number of shares of NCR common stock valued
at the market price of such shares at the date of grant equal to $5,000,000, and
(b) a grant of 149,533 restricted shares of NCR common stock such that the
market price per share of NCR common stock at the date of grant multiplied by
such number of restricted shares equals $5,000,000. Such options and restricted
shares will become exercisable or vest, as applicable, in September 1999. Also
pursuant to the 1996 Agreement, on December 31, 1996, AT&T made a lump-sum cash
payment to Mr. Nyberg of $1,900,000 in lieu of benefits and entitlements that
would have become payable to Mr. Nyberg under a special pension arrangement
established for him by AT&T, had he remained employed by AT&T.
AT&T entered into an employment agreement with Mr. Carpenter on March 2,
1992. Subsequently, on March 1, 1994, AT&T assigned Mr. Carpenter to NCR to
serve as a Senior Vice President, Worldwide
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<PAGE> 20
Services. As of December 31, 1996, Mr. Carpenter ceased to be assigned to NCR
and is no longer an executive of the Company.
On December 20, 1996, the NCR Board of Directors approved the NCR Change in
Control Severance Plan for Executive Officers (the "CIC Plan") and a Change in
Control Agreement with Mr. Nyberg (the "CIC Agreement"). The CIC Plan provides
that certain severance benefits are payable to an executive officer whose
employment with NCR is terminated as a result of involuntary termination other
than for Cause, or voluntary termination for Good Reason (as such terms are
defined in the CIC Plan), during the three years following the occurrence of any
of certain enumerated events, or voluntary termination for any reason during the
thirteenth calendar month following the month in which the triggering event
occurs. The severance benefits include severance pay equal to base pay for three
years, payment of the target bonus under the MIP for the years during which
separation pay is received, reimbursement for any excise tax liability with
respect to the severance benefits under Internal Revenue Code Section 4999,
continued medical insurance coverage for the officer and eligible dependents and
continued life insurance coverage for the officer, outplacement services, and
financial counseling. In addition, the officer will be fully vested in any NCR
stock options or other stock awards, and any accrued benefit under the Officer
Plan. Payment of the severance pay ceases if the officer becomes employed with
NCR or an unrelated company. If the officer dies while receiving severance
benefits, the benefits will continue to be paid to the officer's estate. Under
the terms of the CIC Plan, NCR will establish a trust that will be funded upon
the occurrence of a change in control to pay benefits under the plan. The CIC
Plan continues in effect through December 31, 2000, and, commencing on January
1, 1998, and January 1 of each year thereafter, automatically extends for one
additional year beyond the original or extended termination date, so that on
January 1 of each following year, the CIC plan has an unexpired term of three
years. The Board of Directors may, not later than November 30 of any year, by
resolution adopted by a majority of the entire membership of the board,
determine that the CIC Plan shall not be extended, in which case the CIC Plan
shall expire at the end of the three-year term beginning on the January 1
immediately preceding the date of the resolution.
The CIC Agreement with Mr. Nyberg contains the same terms as the CIC Plan,
except that the severance payments include payment of target long-term incentive
bonuses for the severance pay period.
DIRECTORS' PROPOSAL TO APPROVE MATERIAL TERMS OF PERFORMANCE GOALS FOR
COMPENSATION PROVIDED UNDER THE NCR MANAGEMENT STOCK PLAN TO QUALIFY SUCH
COMPENSATION UNDER SECTION 162(M) OF THE INTERNAL REVENUE CODE.
(ITEM 2 ON PROXY CARD)
The NCR Management Stock Plan (the "Plan") was approved by AT&T, as NCR's
sole stockholder, on November 20, 1996 and adopted by the NCR Board of Directors
on December 20, 1996. The Plan permits the Company to provide several different
forms of stock-based benefits, including stock options, stock appreciation
rights, restricted stock awards, performance awards, other stock unit awards and
other rights, interests or options relating to shares of NCR common stock to
employees and non-employee directors.
The Board of Directors submits for stockholder approval the material terms
of the performance goals for compensation provided under the Plan, in order to
qualify such compensation under Section 162(m) of the Code as performance-based
compensation so that such compensation is tax deductible to the Company.
Following is a description of the terms which are subject to stockholder
approval and a summary of the material terms of the Plan.
The following material terms of the performance goals under the Plan are
submitted for stockholder approval:
- Eligibility under the Plan includes all employees and non-employee
directors of the Company.
- The performance measures that may be utilized by the Compensation
Committee when setting performance objectives for an award under the Plan
include the Company's achievement of contribution margin, cash flow,
profits, pre-tax income, net income, earnings per share, asset turnover,
revenue, expenses, return on assets, return on equity, return on
investment, net profit margin, operating profit
19
<PAGE> 21
margin, operating cash flow, total stockholder return, capitalization,
liquidity, economic value added, financial results, customer
satisfaction, employee satisfaction, and other measures of quality,
safety, productivity or process improvement.
- The individual maximum amount of awards that may be granted to an
individual under the Plan for any one calendar year is limited to options
and awards with respect to 1,000,000 shares of Company stock. The maximum
amount of cash that may be paid to an individual with respect to grants
of performance units under the Plan in any one calendar year is
$2,000,000.
PURPOSES
The purposes of the Plan are (a) to encourage selected key employees of the
Company to acquire a proprietary interest in the growth and performance of the
Company, thus enhancing the value of the Company for the benefit of
stockholders, and (b) to enhance the ability of the Company to attract and
retain individuals of exceptional managerial talent upon whom, in large measure,
the sustained progress, growth and profitability of the Company depends.
AWARDS
Awards under the Plan may consist of any of the following, either
separately or in combination with other awards: (a) stock options, (b) stock
appreciation rights entitling a participant to receive for each such right, upon
exercise, the excess of the fair market value of one share of common stock on
the date of exercise over the grant price, (c) restricted stock, issued for no
cash consideration or for such minimum consideration as may be required by
applicable law, subject to restrictions established by the Compensation
Committee and forfeitable if employment with the Company is terminated during
the restriction period, (d) performance awards, issued for no cash consideration
or such minimum consideration as may be required by applicable law,
distributable after the close of a performance period during which specified
performance criteria must be achieved, payable in cash, shares, other property
or any combination thereof, and (e) other awards of shares or awards valued in
whole or in part by reference to shares of common stock, payable in shares,
other securities of the Company, cash or any other form of property, issued for
no cash consideration or such minimum consideration as may be required by
applicable law.
STOCK OPTIONS
Both tax-qualified incentive stock options and nonqualified stock options
may be granted under the Plan. The purchase price per share of NCR common stock
subject to any stock option and the term of such option shall be determined by
the Compensation Committee; however, the purchase price per share shall not be
less than the fair market value of a share of NCR common stock on the date the
option is granted. Options will be exercisable at such time or times as
determined by the Committee. Options granted as incentive stock options must
also meet requirements of the Code; one current requirement is that the fair
market value of shares with respect to which incentive stock options are first
exercisable in any one year by any participant may not exceed $100,000. Payment
of the purchase price of stock options may be made in cash, shares of NCR common
stock or other securities or other property, or any combination thereof as
determined by the Committee. The Committee in its sole discretion may provide at
the time of grant that the shares to be issued upon an option's exercise shall
be in the form of restricted stock or other similar securities, or may reserve
the right to do so after the time of grant.
SHARES AVAILABLE
The total number of shares of common stock of the Company available for
grants under the Plan for each calendar year is 5.6% for 1997 and 4% in each
calendar year thereafter of the total outstanding shares of NCR common stock as
of the first day of each such year for which the Plan is in effect. Such number
will be increased in any year by the number of shares available in prior years
but not covered by awards in such years, and by the number of shares subject to
awards that are forfeited or otherwise terminated without issuance of
20
<PAGE> 22
shares. No award will be granted under the Plan after December 31, 2006. At
January 31, 1997, the closing price of a share of NCR common stock on the NYSE
was $37.875.
ADMINISTRATION
The Plan is administered by the Compensation Committee of the Board of
Directors. Under the Plan, the Committee is generally authorized to: (a) select
employees of the Company to whom awards may be granted, (b) determine the types
of award to be granted to each participant, (c) determine the number of shares
to be covered by each award, (d) determine the terms and conditions of any
award, (e) determine whether, to what extent and under what circumstances awards
may be settled in cash, shares of NCR common stock or other property, or
canceled or suspended, (f) determine whether, to what extent and under what
circumstances cash, shares and other property and other amounts payable with
respect to awards shall be deferred either automatically or at the election of
the participant, (g) interpret and administer the Plan and any instrument or
agreement entered into under the Plan, and (h) make any other determination and
take any other action that the Committee deems necessary or desirable for
administration of the Plan.
ELIGIBILITY
Any employee of the Company or its affiliates is eligible to be selected as
a participant in the Plan. The Company may permit non-employee directors to
receive awards under the Plan. Currently approximately 850 employees and all the
Company's directors have been selected to receive awards under the Plan.
AMENDMENT AND TERMINATION
The Board of Directors may amend, alter or discontinue the Plan, but no
amendment, alteration or discontinuation may be made that would impair the
rights of a participant under an award previously granted without the
participant's consent. The Compensation Committee may amend the terms of any
award previously granted prospectively or retroactively, but no such amendment
may impair the rights of any participant under such award without such
participant's consent.
CHANGE IN CONTROL
Upon the occurrence of a change in control of the Company, as defined in
the Plan, any outstanding unvested options and stock appreciation rights under
the Plan shall become vested, any restrictions and deferral limitations
applicable to any restricted stock shall lapse, all performance awards shall be
considered earned and payable, and any restrictions and other conditions on any
other stock awards shall lapse. Within 60 days after a change in control the
Committee may determine that participants may elect to surrender outstanding
options to the Company for cash.
FEDERAL INCOME TAX CONSEQUENCES OF THE ISSUANCE AND EXERCISE OF OPTIONS
In general, under the Code as presently in effect, a participant will not
be deemed to receive any income for federal income tax purposes at the time an
option is granted, nor will NCR be entitled to a tax deduction at
21
<PAGE> 23
that time. However, when any part of an option is exercised, the federal income
tax consequences may be summarized as follows:
- When a nonstatutory option is exercised, the participant will recognize
ordinary income in an amount equal to the difference between the option
price and the fair market value of the shares on the exercise date.
- There is no tax liability at the time of exercise of an incentive stock
option. However, the excess of the fair market value of the stock on the
exercise date over the option price is included in the participant's
income for purposes of the alternative minimum tax. If no disposition of
the stock is made before the later of one year from the date of exercise
or two years from the date of grant of the incentive stock option, the
participant will realize a long-term capital gain or loss upon a sale of
the stock, equal to the difference between the option price and the sale
price. If the stock is not held for the required period, ordinary income
tax treatment will generally apply to the amount of any gain at sale or
exercise, whichever is less, and the balance of any gain or loss will be
treated as capital gain or loss (long-term or short-term, depending on
whether the shares have been held for more than one year).
- Upon the exercise of a nonstatutory option, NCR will generally be allowed
an income tax deduction equal to the ordinary income recognized by the
employee. NCR does not receive an income tax deduction as a result of the
exercise of an incentive stock option, provided that the stock is held
for the required period as described above. If the holding period is not
satisfied, NCR will receive a tax deduction equal to the ordinary income
recognized by the employee.
The benefits or amounts that will be received by participants in the Plan
are not currently determinable, nor are the benefits which would have been
received by participants for the last completed fiscal year if the Plan had been
in effect.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE THE
MATERIAL TERMS OF PERFORMANCE GOALS FOR COMPENSATION PROVIDED UNDER THE PLAN TO
QUALIFY SUCH COMPENSATION FOR TAX DEDUCTIBILITY UNDER SECTION 162(M) OF THE
CODE. Proxies solicited by the Board of Directors will be voted "FOR" this
proposal, unless otherwise instructed on the proxy card.
The above notice and proxy statement are sent by order of the Board of
Directors.
/s/ Laura K. Nyquist
Laura K. Nyquist
Corporate Secretary
Dated: March 3, 1997
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<PAGE> 24
Detach Here
- --------------------------------------------------------------------------------
NCR LOGO
1997 ANNUAL STOCKHOLDERS MEETING
RESERVATION REQUEST FORM
Complete the following information and return to Laura K. Nyquist, Corporate
Secretary, NCR Corporation, 1700 South Patterson Blvd., Dayton, Ohio 45479, for
admission to the 1997 Annual Stockholders Meeting of NCR Corporation.
<TABLE>
<S> <C>
Stockholder's Name and Address: ---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
Number of Shares of NCR Common
Stock held: ---------------------------------------------------------
</TABLE>
If the shares listed above are not registered in your name, identify the
name of the stockholder of record below and bring evidence that you beneficially
own the shares.
<TABLE>
<S> <C>
Stockholder of Record: ---------------------------------------------------------
</TABLE>
THIS IS NOT A PROXY CARD
- --------------------------------------------------------------------------------
<PAGE> 25
[NCR LOGO]
1997 ANNUAL STOCKHOLDERS MEETING
NCR's Annual Meeting of Stockholders will be held at 9:30 a.m. on April 16,
1997, at the following address:
NCR's Sugar Camp Education Center
101 W. Schantz Ave.
Dayton, OH 45479
Please see your proxy statement for instructions should you wish to attend the
meeting.
DETACH PROXY CARD HERE
- --------------------------------------------------------------------------------
<PAGE> 26
/ X / Please mark votes as in this example.
Directors recommend a vote "FOR"
FOR WITHHELD
1. Election of Class A Directors: / / / /
Lars Nyberg
David R. Holmes
James O. Robbins
--------------------------------------
For all nominees except as noted above:
2. Approval of material terms of FOR AGAINST WITHHELD
performance goals under the NCR / / / / / /
Management Stock Plan to qualify
such compensation under the
Internal Revenue Code:
Discontinue Annual Report for this account / /
Vote Limitations on other side of card / /
You must return this card promptly to have your shares of NCR common stock
voted. If you attend the meeting and decide to vote by ballot, such vote will
supersede this proxy. If signing for a corporation or partnership or as agent,
attorney or fiduciary, indicate the capacity in which you are signing.
Signature:_______________________ Date____________1997
Signature:________________________Date____________1997
Please Sign this Proxy as Name(s) Appear Above.
<PAGE> 27
NCR Logo
PROXY/VOTING INSTRUCTION CARD
NCR Corporation
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR NCR'S ANNUAL
MEETING OF STOCKHOLDERS ON APRIL 16, 1997.
The undersigned hereby appoints Lars Nyberg, John L. Giering, and Jon S. Hoak,
and each of them, proxies, with the powers the undersigned would possess if
personally present, and with full power of substitution, to vote all shares of
common stock of NCR Corporation that the undersigned is entitled to vote at
NCR's Annual Meeting of Stockholders to be held in Dayton, Ohio, on April 16,
1997, and at any adjournment thereof, upon all subjects that may properly come
before the meeting, or any adjournment thereof, including the matters described
in the proxy statement furnished herewith. This proxy card also provides voting
instructions to the trustee of the NCR Savings Plan or the AT&T Savings Plan
for shares of NCR common stock the undersigned may hold under either plan for
which the undersigned is entitled to vote at said meeting.
THE PROXIES OR THE TRUSTEES OF THE PLANS, AS THE CASE MAY BE, WILL VOTE YOUR
SHARES IN ACCORDANCE WITH YOUR DIRECTIONS ON THIS CARD. IF YOU DO NOT INDICATE
YOUR CHOICES ON THIS CARD, THE PROXIES WILL VOTE YOUR SHARES IN ACCORDANCE WITH
THE DIRECTORS' RECOMMENDATIONS. IF YOU ARE A SAVINGS PLAN PARTICIPANT ENTITLED
TO VOTE AT THE 1997 ANNUAL MEETING OF STOCKHOLDERS AND DO NOT INDICATE YOUR
CHOICES ON THIS CARD, THOSE SHARES WILL BE VOTED BY THE TRUSTEE OF THE PLAN.
Your vote is important. Please sign on reverse side and return promptly in the
enclosed envelope.
- --------------------------------------------------------------------------------
<PAGE> 28
APPENDIX
NCR MANAGEMENT STOCK PLAN
ADOPTED EFFECTIVE JANUARY 1, 1997
ARTICLE 1
PURPOSE
The purposes of the NCR Management Stock Plan (the "Plan") are to
encourage selected key employees of NCR Corporation (the "Company") and its
Affiliates to acquire a proprietary and vested interest in the growth and
performance of the Company, to generate an increased incentive to contribute to
the Company's future success and prosperity, thus enhancing the value of the
Company for the benefit of share owners, and to enhance the ability of the
Company and its Affiliates to attract and retain individuals of exceptional
managerial talent upon whom, in large measure, the sustained progress, growth
and profitability of the Company depends.
ARTICLE 2
DEFINITIONS
As used in the Plan, the following terms shall have the meanings set forth
below:
2.1 "AFFILIATE" means (i) any Person that directly, or through one or
more intermediaries, controls, or is controlled by, or is under common control
with, the Company or (ii) any entity in which the Company has a significant
equity interest, as determined by the Committee. For purposes of this Article
2.1, "Person" means any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, limited liability
company, other entity or government or political subdivision thereof.
2.2 "AWARD" means any Option, Stock Appreciation Right, Restricted
Stock Award, Performance Share, Performance Unit, Dividend Equivalent, Other
Stock Unit Award, or any other right, interest, or option relating to Shares or
other securities of the Company granted pursuant to the provisions of the Plan.
2.3 "AWARD AGREEMENT" means any written agreement, contract, or other
instrument or document evidencing any Award granted by the Committee hereunder
and signed by both the Company and the Participant.
2.4 "BOARD" means the Board of Directors of the Company.
2.5 "CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
<PAGE> 29
2.6 "COMMITTEE" means the Compensation Committee of the Board, composed
of no fewer than three directors, each of whom is a Non-Employee Director and an
"outside director" within the meaning of Section 162(m) of the Code.
2.7 "COMPANY" means NCR Corporation, a Maryland corporation.
2.8 "DIVIDEND EQUIVALENT" means any right granted pursuant to Article
13.8, Deferrals.
2.9 "EMPLOYEE" means any employee of the Company or of any Affiliate.
Unless otherwise determined by the Committee in its sole discretion, for
purposes of the Plan, an Employee shall be considered to have terminated
employment and to have ceased to be an Employee if his or her employer ceases to
be an Affiliate, even if he or she continues to be employed by such employer.
2.10 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.
2.11 "FAIR MARKET VALUE" means, unless otherwise determined by the
Committee, the average of the high and low sale prices of a share of Common
Stock on the U.S. stock exchange on which the Common Stock is listed on the date
of measurement or on any date as determined by the Committee and if there were
no trades on such date, on the day on which a trade occurred next preceding such
date.
2.12 "INCENTIVE STOCK OPTION" means an Option granted under Article 6,
Stock Options, that is intended to meet the requirements of Section 422 of the
Code or any successor provision thereto.
2.13 "NON-EMPLOYEE DIRECTOR" means a member of the Board who qualifies
as a Non-Employee Director as defined in Rule 16b-3(b)(3), as promulgated by the
Commission under the Exchange Act, or any successor definition adopted by the
Commission.
2.14 "NONSTATUTORY STOCK OPTION" means an Option granted under Article
6, Stock Options, that is not intended to be an Incentive Stock Option.
2.15 "OPTION" means any right granted to a Participant under the Plan
allowing such Participant to purchase Shares at such price or prices and during
such period or periods as the Committee shall determine.
2.16 "OTHER STOCK UNIT AWARD" means any right granted to a Participant
by the Committee pursuant to Article 10, Other Stock Unit Awards.
Page 2
<PAGE> 30
2.17 "PARTICIPANT" means an Employee who is selected by the Committee
to receive an Award under the Plan.
2.18 "PERFORMANCE AWARD" means any Award of Performance Shares or
Performance Units pursuant to Article 9, Performance Awards.
2.19 "PERFORMANCE PERIOD" means that period established by the
Committee at the time any Performance Award is granted or at any time thereafter
during which any performance goals specified by the Committee with respect to
such Award are to be measured.
2.20 "PERFORMANCE SHARE" means any grant pursuant to Article 9,
Performance Awards, of a unit valued by reference to a designated number of
Shares, which value may be paid to the Participant by delivery of such property
as the Committee shall determine, including, without limitation, cash, Shares,
or any combination thereof, upon achievement of such performance goals during
the Performance Period as the Committee shall establish at the time of such
grant or thereafter.
2.21 "PERFORMANCE UNIT" means any grant pursuant to Article 9,
Performance Awards, of a unit valued by reference to a designated amount of
property other than Shares, which value may be paid to the Participant by
delivery of such property as the Committee shall determine, including, without
limitation, cash, Shares, or any combination thereof, upon achievement of such
performance goals during the Performance Period as the Committee shall establish
at the time of such grant or thereafter.
2.22 "RESTRICTED STOCK" means any Share issued with the restriction
that the holder may not sell, transfer, pledge, or assign such Share and with
such other restrictions as the Committee, in its sole discretion, may impose
(including, without limitation, any restriction on the right to vote such Share,
and the right to receive any cash dividends), which restrictions may lapse
separately or in combination at such time or times, in installments or
otherwise, as the Committee may deem appropriate.
2.23 "RESTRICTED STOCK AWARD" means an award of Restricted Stock under
Article 8, Restricted Stock.
2.24 "SENIOR MANAGER" means any manager of the Company or any Affiliate
holding a position above E band or any future salary grade that is the
equivalent thereof.
2.25 "SHARES" means the shares of common stock, $.01 par value, of the
Company and such other securities of the Company as the Committee may from time
to time determine.
Page 3
<PAGE> 31
2.26 "STOCK APPRECIATION RIGHT" means any right granted to a
Participant pursuant to Article 7, Stock Appreciation Rights, to receive, upon
exercise by the Participant, the excess of (i) the Fair Market Value of one
Share on the date of exercise or, if the Committee shall so determine in the
case of any such right other than one related to any Incentive Stock Option, at
any time during a specified period before the date of exercise over (ii) the
grant price of the right on the date of grant, or if granted in connection with
an outstanding Option on the date of grant of the related option, as specified
by the Committee in its sole discretion, which, other than in the case of
Substitute Awards, shall not be less than the Fair Market Value of one Share on
such date of grant of the right or the related Option, as the case may be. Any
payment by the Company in respect of such right may be made in cash, Shares,
other property, or any combination thereof, as the Committee, in its sole
discretion, shall determine.
2.27 "SUBSTITUTE AWARD" is defined in Article 5.1, Available Shares.
ARTICLE 3
PARTICIPATION
3.1 PARTICIPATION. Any Employee shall be eligible to be selected as a
Participant.
3.2 PARTICIPATION BY NON-EMPLOYEES. NCR also may permit non-employee
directors to be eligible to receive either (or both) discretionary or
formula-based Awards under the Plan. The formula may be set forth in a policy or
in the Plan.
ARTICLE 4
ADMINISTRATION
4.1 ADMINISTRATION. The Plan shall be administered by the Committee. A
majority of the members of the Committee may determine its actions and fix the
time and place of its meetings. Decisions of the Committee shall be final,
conclusive and binding upon all persons, including the Company, any Participant,
any stockholder, and any employee of the Company or of any Affiliate.
4.2 AUTHORITY OF COMMITTEE. The Committee shall have full power and
authority, subject to such orders or resolutions not inconsistent with the
provisions of the Plan as may from time to time be adopted by the Board, to:
(a) select the officers appointed by the Board of the Company and its
Affiliates to whom Awards may from time to time be granted hereunder;
(b) determine the type or types of Award to be granted to each
Participant hereunder;
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(c) determine the number of Shares to be covered by each Award granted
to a Board-appointed officer hereunder;
(d) determine the terms and conditions, not inconsistent with the
provisions of the Plan, of any Award granted hereunder;
(e) determine whether, to what extent and under what circumstances
Awards may be settled in cash, Shares or other property or canceled or
suspended;
(f) determine whether, to what extent and under what circumstances
cash, Shares and other property and other amounts payable with respect to an
Award under this Plan shall be deferred either automatically or at the election
of the Participant;
(g) interpret and administer the Plan and any instrument or agreement
entered into under the Plan;
(h) establish such rules and regulations and appoint such agents as it
shall deem appropriate for the proper administration of the Plan; and
(i) make any other determination and take any other action that the
Committee deems necessary or desirable for administration of the Plan.
Notwithstanding the above, the Chairman and Chief Executive Officer shall have
full power and authority to select Employees other than the officers appointed
by the Board of the Company and its Affiliates to whom Awards may from time to
time be granted hereunder, and to determine the number of Shares to be covered
by such Awards.
ARTICLE 5
SHARES SUBJECT TO THE PLAN
5.1 AVAILABLE SHARES. Subject to adjustment as provided in Article 5.3,
Adjustments, the total number of Shares available for grant under the Plan for
each calendar year shall be 5.6% for 1997, and 4% for each calendar year
thereafter, of the total outstanding Shares as of the first day of such year for
which the Plan is in effect; provided that such number shall be increased in any
year by the number of Shares available for grant hereunder in previous years but
not covered by Awards granted hereunder in such years; and provided, further,
that if any Shares subject to an Award are forfeited or if any Award based on
Shares otherwise terminated without issuance of such Shares or other
consideration in lieu of such Shares, the Shares subject to such Award shall to
the extent of such forfeiture or termination, again be available for awards
under the Plan if no Participant shall have received any benefits of ownership
in respect thereof; and provided further that no more than ten million Shares
shall be cumulatively available for the grant of Incentive Stock
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Options under the Plan; and provided further that no Participant may be granted
Awards in any one calendar year with respect to more than two million Shares.
5.2 SUBSTITUTE AWARDS. In addition, Awards granted or Shares issued by
the Company (i) pursuant to the Employee Benefits Agreement between AT&T Corp.
and the Company dated __________, 1996, as amended, modified or otherwise
supplemented, or (ii) through the assumption of, or in substitution or exchange
for, employee benefit awards or the right or obligation to make future employee
benefit awards, in connection with the acquisition of another corporation or
business entity (clauses (i) and (ii) collectively, the "Substitute Awards")
shall not reduce the shares available for grants under the Plan or to a
Participant in any calendar year. Any Shares issued hereunder may consist, in
whole or in part, of authorized and unissued shares or treasury shares.
5.3 ADJUSTMENTS. In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split, reverse stock
split, spin off or similar transaction or other change in corporate structure
affecting the Shares, such adjustments and other substitutions shall be made to
the Plan and to Awards as the Committee in its sole discretion deems equitable
or appropriate, including without limitation such adjustments in the aggregate
number, class and kind of Shares which may be delivered under the Plan, in the
aggregate or to any one Participant, in the number, class, kind and option or
exercise price of Shares subject to outstanding Options, Stock Appreciation
Rights or other Awards granted under the Plan, and in the number, class and kind
of Shares subject to, Awards granted under the Plan (including, if the Committee
deems appropriate, the substitution of similar options to purchase the shares
of, or other awards denominated in the shares of, another company) as the
Committee may determine to be appropriate in its sole discretion, provided that
the number of Shares or other securities subject to any Award shall always be a
whole number.
ARTICLE 6
STOCK OPTIONS
6.1 STOCK OPTIONS. Options may be granted hereunder to Participants
either alone or in addition to other Awards granted under the Plan. Any Option
granted under the Plan shall be evidenced by an Award Agreement in such form as
the Committee may from time to time approve. Any such Option shall be subject to
the following terms and conditions and to such additional terms and conditions,
not inconsistent with the provisions of the Plan, as the Committee shall deem
desirable:
(a) OPTION PRICE. The purchase price per Share purchasable under an
Option shall be determined by the Committee in its sole discretion; provided
that except in the case of an Option pursuant to a Substitute Award, such
purchase price shall not be less than the Fair Market Value of the Share on the
date of the grant of the option.
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(b) OPTION PERIOD. The term of each option shall be fixed by the
Committee in its sole discretion; provided that no Incentive Stock Option shall
be exercisable after the expiration of ten years from the date the Option is
granted.
(c) EXERCISABILITY. Options shall be exercisable at such time or times
as determined by the Committee at or subsequent to grant. Unless otherwise
determined by the Committee at or subsequent to grant, no Incentive Stock Option
shall be exercisable during the year ending on the day before the first
anniversary date of the granting of the Incentive Stock Option.
(d) METHOD OF EXERCISE. Subject to the other provisions of the Plan and
any applicable Award Agreement, any Option may be exercised by the Participant
in whole or in part at such time or times, and the Participant may make payment
of the option price in such form or forms, including, without limitation,
payment by delivery of cash, Shares held for more than six months, or other
consideration (including, where permitted by law and the Committee, Awards)
having a Fair Market Value on the exercise date equal to the total option price,
or by any combination of cash, Shares and other consideration as the Committee
may specify in the applicable Award Agreement.
(e) INCENTIVE STOCK OPTIONS. In accordance with rules and procedures
established by the Committee, the aggregate Fair Market Value (determined as of
the time of grant) of the Shares with respect to which Incentive Stock Options
held by any Participant which are exercisable for the first time by such
Participant during any calendar year under the Plan (and under any other benefit
plans of the Company or of any parent or subsidiary corporation of the Company)
shall not exceed $100,000 or, if different, the maximum limitation in effect at
the time of grant under Article 422 of the Code, or any successor provision, and
any regulations promulgated thereunder. The terms of any Incentive Stock Option
granted hereunder shall comply in all respects with the provisions of Section
422 of the Code, or any successor provision, and any regulations promulgated
thereunder.
(f) FORM OF SETTLEMENT. In its sole discretion, the Committee may
provide, at the time of grant, that the shares to be issued upon an Option's
exercise shall be in the form of Restricted Stock or other similar securities,
or may reserve the right so to provide after the time of grant.
ARTICLE 7
STOCK APPRECIATION RIGHTS
7.1 STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be granted
hereunder to Participants either alone or in addition to other Awards granted
under the Plan and may, but need not, relate to a specific Option granted under
Article 6. The provisions of Stock Appreciation Rights need not be the same with
respect to each recipient. Any Stock
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Appreciation Right related to a Nonstatutory Stock Option may be granted at the
same time such Option is granted or at any time thereafter before exercise or
expiration of such Option. Any Stock Appreciation Right related to an Incentive
Stock Option must be granted at the same time such option is granted.
7.2 TERMINATION OF STOCK APPRECIATION RIGHTS. In the case of any Stock
Appreciation Right related to any Option, the Stock Appreciation Right or
applicable portion thereof shall terminate and no longer be exercisable upon the
termination or exercise of the related Option, except that a Stock Appreciation
Right granted with respect to less than the full number of Shares covered by a
related Option shall not be reduced until the exercise or termination of the
related Option exceeds the number of shares not covered by the Stock
Appreciation Right. Any Option related to any Stock Appreciation Right shall no
longer be exercisable to the extent the related Stock Appreciation Right has
been exercised. The Committee may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it shall deem appropriate.
ARTICLE 8
RESTRICTED STOCK
8.1 ISSUANCE. Restricted Stock Awards may be issued hereunder to
Participants, for no cash consideration or for such minimum consideration as may
be required by applicable law, either alone or in addition to other Awards
granted under the Plan. The provisions of Restricted Stock Awards need not be
the same with respect to each recipient.
8.2 REGISTRATION. Any Restricted Stock issued hereunder may be
evidenced in such manner as the Committee in its sole discretion shall deem
appropriate, including, without limitation, book-entry registration or issuance
of a stock certificate or certificates. In the event any stock certificate is
issued in respect of shares of Restricted Stock awarded under the Plan, such
certificate shall be registered in the name of the Participant, and shall bear
an appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award.
8.3 FORFEITURE. Except as otherwise determined by the Committee at the
time of grant, upon termination of employment for any reason during the
restriction period, all shares of Restricted Stock still subject to restriction
shall be forfeited by the Participant and reacquired by the Company, provided
that, except as provided in Article 14, Change in Control, in the event of a
Participant's retirement, permanent disability, other termination of employment
or death, or in cases of special circumstances, the Committee may, in its sole
discretion, when it finds that a waiver would be in the best interests of the
Company, waive in whole or in part any or all remaining restrictions with
respect to such Participant's shares of Restricted Stock. Unrestricted Shares,
evidenced in such manner as the Committee shall
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deem appropriate, shall be issued to the grantee promptly after the period of
forfeiture, as determined or modified by the Committee, shall expire.
ARTICLE 9
PERFORMANCE AWARDS
9.1 PERFORMANCE AWARDS. Performance Awards may be issued hereunder to
Participants, for no cash consideration or for such minimum consideration as may
be required by applicable law, either alone or in addition to other Awards
granted under the Plan. The performance criteria to be achieved during any
Performance Period and the length of the Performance Period shall be determined
by the Committee upon the grant of each Performance Award. Except as provided in
Article 14, Change in Control, Performance Awards will be distributed only after
the end of the relevant Performance Period. Performance Awards may be paid in
cash, Shares, other property or any combination thereof, in the sole discretion
of the Committee at the time of payment. The performance levels to be achieved
for each Performance Period and the amount of the Award to be distributed shall
be conclusively determined by the Committee. Performance Awards may be paid in a
lump sum or in installments following the close of the Performance Period. The
maximum value of the property, including cash, that may be paid or distributed
to any Participant pursuant to a grant of Performance Units made in any one
calendar year shall be two million dollars ($2,000,000).
ARTICLE 10
OTHER STOCK UNIT AWARDS
10.1 STOCK AND ADMINISTRATION. Other Awards of Shares and other Awards
that are valued in whole or in part by reference to, or are otherwise based on,
Shares or other property ("Other Stock Unit Awards") may be granted hereunder to
Participants, either alone or in addition to other Awards granted under the
Plan. Other Stock Unit Awards may be paid in Shares, other securities of the
Company, cash or any other form of property as the Committee shall determine.
Subject to the provisions of the Plan, the Committee shall have sole and
complete authority to determine the Employees of the Company and its Affiliates
to whom and the time or times at which such Awards shall be made, the number of
shares of Stock to be granted pursuant to such Awards, and all other conditions
of the Awards. The provisions of Other Stock Unit Awards need not be the same
with respect to each recipients
10.2 TERMS AND CONDITIONS. Shares (including securities convertible
into Shares) granted under this Article 10 may be issued for no cash
consideration or for such minimum consideration as may be required by applicable
law; Shares (including securities convertible into Shares) purchased pursuant to
a purchase right awarded under this Article 10 shall be purchased for such
consideration as the Committee shall in its sole discretion
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determine, which shall not be less than the Fair Market Value of such Shares or
other securities as of the date such purchase right is awarded.
ARTICLE 11
CODE SECTION 162(M) PROVISIONS
11.1 APPLICABILITY. Notwithstanding any other provision of this Plan,
if the Committee determines at the time Restricted Stock, a Performance Award or
an Other Stock Unit Award is granted to a Participant that such Participant is,
or is likely to be at the time he or she recognizes income for federal income
tax purposes in connection with such Award, a covered employee within the
meaning of Section 162(m)(3) of the Code, then the Committee may provide that
this Article 11 is applicable to such Award.
11.2 PERFORMANCE GOALS. If an Award is subject to this Article 11, then
the lapsing of restrictions thereon and the distribution of cash, Shares or
other property pursuant thereto, as applicable, shall be subject to the
achievement of one or more objective performance goals established by the
Committee, which shall be based on the attainment of one or any combination of
the following: specified levels of earnings per share from continuing
operations, operating income, revenues, gross margin, return on operating
assets, return on equity, economic value added, stock price appreciation, total
stockholder return (measured in terms of stock price appreciation and dividend
growth), or cost control, of the Company or the Affiliate or division of the
Company for or within which the Participant is primarily employed. Such
Performance Goals also may be based upon the attaining specified levels of
Company performance under one or more of the measures described above relative
to the performance of other corporations. Such performance goals shall be set by
the Committee within the time period prescribed by, and shall otherwise comply
with the requirements of, Section 162(m) of the Code and the regulations
thereunder.
11.3 NO UPWARD ADJUSTMENTS. Notwithstanding any provision of this Plan,
other than Article 14, Change in Control, with respect to any Award that is
subject to this Article 11, the Committee may not adjust upwards the amount
payable pursuant to such Award, nor may it waive the achievement of the
applicable performance goals except in the case of the death or disability of
the Participant.
11.4 OTHER RESTRICTIONS. The Committee shall have the power to impose
such other restrictions on Awards subject to this Article 11 as it may deem
necessary or appropriate to ensure that such Awards satisfy all requirements for
"performance-based compensation" within the meaning of Section 162(m)(4)(B) of
the Code or any successor thereto.
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ARTICLE 12
AMENDMENTS AND TERMINATION
12.1 AMENDMENT OR TERMINATION OF PLAN. The Board may amend, alter or
discontinue the Plan, but no amendment, alteration, or discontinuation shall be
made that would impair the rights of an optionee or Participant under an Award
heretofore granted, without the optionee's or Participant's consent.
12.2 AMENDMENT OR SUBSTITUTION OF AWARDS. The Committee may amend the
terms of any Award heretofore granted, prospectively or retroactively, but no
such amendment shall impair the rights of any Participant without his consent.
ARTICLE 13
GENERAL PROVISIONS
13.1 NONTRANSFERABILITY. Unless the Committee determines otherwise at
the time the Award is granted, no Award, and no Shares subject to Awards
described in Article 10, Other Stock Unit Awards, which have not been issued or
as to which any applicable restriction, performance or deferral period has not
lapsed, may be sold, assigned, transferred, pledged or otherwise encumbered,
except by will or by the laws of descent and distribution; provided that, if so
determined by the Committee, a Participant may, in the manner established by the
Committee, designate a beneficiary to exercise the rights of the Participant
with respect to any Award upon the death of the Participant. Each Award shall be
exercisable, during the Participant's lifetime, only by the Participant or, if
permissible under applicable law, by the Participant's guardian or legal
representative.
13.2 TERM OF AWARDS. The term of each Award shall be for such period of
months or years from the date of its grant as may be determined by the
Committee; provided that in no event shall the term of any Incentive Stock
Option or any Stock Appreciation Right related to any Incentive Stock Option
exceed a period of ten (10) years from the date of its grant.
13.3 EMPLOYEE CLAIMS. No Employee or Participant shall have any claim
to be granted any Award under the Plan and there is no obligation for uniformity
of treatment of Employees or Participants under the Plan.
13.4 AGREEMENT REQUIRED. The prospective recipient of any Award under
the Plan shall not, with respect to such Award, be deemed to have become a
Participant, or to have any rights with respect to such Award, until and unless
such recipient shall have executed an agreement or other instrument evidencing
the Award and delivered a fully
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executed copy thereof to the Company, and otherwise complied with the then
applicable terms and conditions.
13.5 ADJUSTMENTS. Except as provided in Article 11, Code Section 162(m)
Provisions, the Committee shall be authorized to make adjustments in Performance
Award criteria or in the terms and conditions of other Awards in recognition of
unusual or nonrecurring events affecting the Company or its financial statements
or changes in applicable laws, regulations or accounting principles. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem desirable to carry it into effect. In the event the Company shall assume
outstanding employee benefit awards or the right or obligation to make future
such awards in connection with the acquisition of another corporation or
business entity, the Committee may, in its discretion, make such adjustments in
the terms of Awards under the Plan as it shall deem appropriate.
13.6 CANCELLATION OR SUSPENSION. The Committee shall have full power
and authority to determine whether, to what extent and under what circumstances
any Award shall be canceled or suspended. In particular, but without limitation,
all outstanding Awards to any Participant shall be canceled if the Participant,
without the consent of the Committee, while employed by the Company or after
termination of such employment, becomes associated with, employed by, renders
services to, or owns any interest in (other than any nonsubstantial interest, as
determined by the Committee), any business that is in competition with the
Company or with any business in which the Company has a substantial interest, as
determined by the Committee or any one or more Senior Managers or committee of
Senior Managers to whom the authority to make such determination is delegated by
the Committee.
13.7 RESTRICTIONS ON CERTIFICATES. All certificates for Shares
delivered under the Plan pursuant to any Award shall be subject to such stock
transfer orders and other restrictions as the Committee may deem advisable under
the rules, regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Shares are then listed, and any
applicable Federal or state securities law, and the Committee may cause a legend
or legends to be put on any such certificates to make appropriate reference to
such restrictions.
13.8 DEFERRALS. The Committee shall be authorized to establish
procedures pursuant to which the payment of any Award may be deferred. Subject
to the provisions of this Plan and any Award Agreement, the recipient of an
Award (including, without limitation, any deferred Award) may, if so determined
by the Committee, be entitled to receive, currently or on a deferred basis,
interest or dividends, or interest or dividend equivalents, with respect to the
number of shares covered by the Award, as determined by the Committee, in its
sole discretion, and the Committee may provide that such amounts (if any) shall
be deemed to have been reinvested in additional Shares or otherwise reinvested.
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13.9 NO PAYMENT REQUIRED. Except as otherwise required in any
applicable Award Agreement, or by the terms of the Plan, recipients of Awards
under the Plan shall not be required to make any payment or provide
consideration other than the rendering of services.
13.10 DELEGATION OF AUTHORITY. The Committee may delegate to one or
more Senior Managers or a committee of Senior Managers the right to grant Awards
to Employees who are not officers or directors of the Company and to cancel or
suspend Awards to Employees who are not officers or directors of the Company.
13.11 TAX WITHHOLDING. The Company shall be authorized to withhold from
any Award granted or payment due under the Plan the amount of withholding taxes
due in respect of an Award or payment hereunder and to take such other action as
may be necessary in the opinion of the Company to satisfy all obligations for
the payment of such taxes. The Committee shall be authorized to establish
procedures for election by Participants to satisfy such withholding taxes by
delivery of, or directing the Company to retain, Shares.
13.12 OTHER ARRANGEMENTS. Nothing contained in this Plan shall prevent
the Board of Directors from adopting other or additional compensation
arrangements, subject to stockholder approval if such approval is otherwise
required; and such arrangements may be either generally applicable or applicable
only in specific cases.
13.13 APPLICABLE LAW. The validity, construction, and effect of the
Plan and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Ohio and applicable Federal law.
13.14 SEVERABILITY. If any provision of this Plan is or becomes or is
deemed invalid, illegal or unenforceable in any jurisdiction, or would
disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws or if it cannot he construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan, it
shall be stricken and the remainder of the Plan shall remain in full force and
effect.
13.15 AWARDS TO FOREIGN NATIONALS AND EXPATRIATES. Awards may be
granted to Employees who are foreign nationals or employed outside the United
States, or both, on such terms and conditions different from those specified in
the Plan as may, in the judgment of the Committee, be necessary or desirable in
order to recognize differences in local law or tax policy. The Committee also
may impose conditions on the exercise or vesting of Awards in order to minimize
the Company's obligation with respect to tax equalization for Employees on
assignments outside their home country.
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13.16 TERM OF THE PLAN. No award shall be granted pursuant to the Plan
after 10 years from the Effective Date, but any Award theretofore granted may
extend beyond that date.
13.17 EFFECTIVE DATE. The Plan shall be effective on January 1, 1997.
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ARTICLE 14
CHANGE IN CONTROL PROVISIONS
14.1 DEFINITIONS.
(a) "CHANGE IN CONTROL" means the happening of any of the following
events:
(i) An acquisition by any individual, entity or group (within
the meaning of Article 13(d)(3) or 14(d)(2) of the Exchange Act) (an "Entity")
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (A) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (B) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); excluding, however, the following: (1) any
acquisition, directly from the Company, other than an acquisition by virtue of
the exercise of a conversion privilege unless the security being so converted
was itself acquired directly from the Company, (2) any acquisition by the
Company, (3) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company, or (4) any acquisition by any corporation pursuant to a transaction
which complies with clauses (A), (B) and (C) of Subsection (iii) below.
(ii) A change in the composition of the Board such that the
individuals who, as of the Effective Date, constitute the Board (such Board
shall he hereinafter referred to as the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided, however, that for
purposes of this definition, that any individual who becomes a member of the
Board subsequent to the Effective Date, whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least a
majority of those individuals who are members of the Board and who were also
members of the Incumbent Board (or deemed to be such pursuant to this provision)
shall be considered as though such individual were a member of the Incumbent
Board; and provided, further however, that any such individual whose initial
assumption of office occurs as a result of or in connection with either an
actual or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of an Entity other than the
Board shall not be so considered as a member of the Incumbent Board; or
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(iii) The approval by the stockholders of the Company of a
merger, reorganization or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (each, a "Corporate Transaction")
or, if consummation of such Corporate Transaction is subject, at the time of
such approval by stockholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or implicitly by
consummation); excluding however, such a Corporate Transaction pursuant to which
(A) all or substantially all of the individuals and entities who are the
beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Corporate
Transaction will beneficially own, directly or indirectly, more than 60% of,
respectively, the outstanding shares of common stock, and the combined voting
power of the then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation resulting from
such Corporate Transaction (including, without limitation, a corporation or
other Person which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries (a "Parent Company")) in substantially the same proportions as
their ownership, immediately prior to such Corporate Transaction, of the
Outstanding Company Common Stock and Outstanding Company voting Securities, as
the case may be, (B) no Entity (other than the Company, any employee benefit
plan (or related trust) of the Company, such corporation resulting from such
Corporate Transaction or, if reference was made to equity ownership of any
Parent Company for purposes of determining whether clause (A) above is satisfied
in connection with the applicable Corporate Transaction, such Parent Company)
will beneficially own, directly or indirectly, 20% or more of, respectively, the
outstanding shares of common stock of the Corporation resulting from such
Corporate Transaction or the combined voting power of the outstanding voting
securities of such corporation entitled to vote generally in the election of
directors unless such ownership resulted solely from ownership of securities of
the Company prior to the Corporate Transaction, and (C) individuals who were
members of the incumbent Board will immediately after the consummation of the
Corporate Transaction constitute at least a majority of the members of the board
of directors of the corporation resulting from such Corporate Transaction (or,
if reference was made to equity ownership of any Parent Company for purposes of
determining whether clause (A) above is satisfied in connection with the
applicable Corporate Transaction, of the Parent Company); or
(iv) The approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.
(b) "CHANGE IN CONTROL PRICE" means the higher of (A) the highest
reported sales price, regular way, of a Share in any transaction reported on the
New York Stock Exchange Composite Tape or other national exchange on which
Shares are listed or on NASDAQ during the 60-day period prior to and including
the date of a Change in Control or (B) if the Change in Control is the result of
a tender or exchange offer or a Corporate Transaction, the highest price per
Share paid in such tender or exchange offer or Corporate
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Transaction; provided however, that in the case of Incentive Stock Options and
Stock Appreciation Rights relating to Incentive Stock Options, the Change in
Control Price shall be in all cases the Fair Market Value of a Share on the date
such Incentive Stock Option or Stock Appreciation Right is exercised or deemed
exercised. To the extent that the consideration paid in any such transaction
described above consists all or in part of securities or other noncash
consideration, the value of such securities or other noncash consideration shall
be determined in the sole discretion of the Board.
14.2 IMPACT OF EVENT. Notwithstanding any other provision of the Plan
to the contrary, unless the Committee shall determine otherwise at the time of
grant with respect to a particular Award, in the event of a Change in Control:
(i) Any Options and Stock Appreciation Rights
outstanding as of the date such Change in Control is determined to have
occurred, and which are not then exercisable and vested, shall become fully
exercisable and vested to the full extent of the original grant.
(ii) The restrictions and deferral limitations
applicable to any Restricted Stock shall lapse, and such Restricted Stock shall
become free of all restrictions and limitations and become fully vested and
transferable to the full extent of the original grant.
(iii) All Performance Awards shall be considered to
be earned and payable in full, and any deferral or other restriction shall lapse
and such Performance Awards shall be immediately settled or distributed.
(iv) The restrictions and deferral limitations and
other conditions applicable to any Other Stock Awards or any other Awards shall
lapse, and such Other Stock Awards or such other Awards shall become free of all
restrictions, limitations or conditions and become fully vested and transferable
to the full extent of the original grant.
14.3 CHANGE IN CONTROL CASH-OUT. Notwithstanding any other provision of
the Plan, during the 60-day period from and after a Change in Control (the
"Exercise Period"), if the Committee shall determine at, or at any time after,
the time of grant, a Participant holding an option shall have the right, whether
or not the option is fully exercisable and in lieu of the payment of the
purchase price for the Shares being purchased under the Option and by giving
notice to the Company, to elect (within the Exercise Period) to surrender all or
part of the Option to the Company and to receive cash, within 30 days of such
notice, in an amount equal to the amount by which the Change in Control Price
per Share on the date of such election shall exceed the purchase price per Share
under the option (the "Spread") multiplied by the number of Shares granted under
the Option as to which the right granted under this Section 14.3 shall have been
exercised.
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14.4 POOLING-OF-INTERESTS. Notwithstanding any other provision of this
Plan, if any right granted pursuant to this Plan would make a Change in Control
transaction ineligible for pooling-of-interests accounting under APB No. 16 that
(after giving effect to any other actions taken to cause such transaction to be
eligible for such pooling-of-interests accounting treatment) but for the nature
of such grant would otherwise be eligible for such accounting treatment, the
Committee shall have the ability to substitute for the cash payable pursuant to
such right Shares with a Fair Market Value equal to the cash that would
otherwise be payable pursuant thereto.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed on
this 20th day of December, 1996.
FOR NCR CORPORATION
By: /s/ Richard H. Evans
---------------------------------------------
Richard H. Evans
Senior Vice President, Global Human Resources
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