<PAGE>
PROXY STATEMENT AND
NOTICE OF ANNUAL MEETING
APRIL 15, 1999
March [3], 1999
Dear NCR Stockholder:
I am pleased to invite you to attend NCR's 1999 Annual Meeting of
Stockholders on Thursday, April 15, 1999. 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.
This booklet includes the formal notice of the meeting and the proxy
statement. The proxy statement tells you more about the agenda and procedures
for the meeting. It also describes how the Board operates and gives personal
information about our director candidates. A form of proxy for voting at the
meeting and our 1998 annual report to stockholders are included with this
booklet.
Please note that management is requesting that you approve an important
item of business in addition to the election of directors and approval of the
appointment of our independent accountants. The Board unanimously recommends
that NCR's charter be amended to effect a reverse stock split followed
immediately by a forward stock split. This will cash out registered
stockholders holding fewer than 10 shares of NCR common stock. We describe
this transaction, which will benefit both small stockholders in the Company
and NCR, more fully in the proxy statement.
I look forward to sharing more information with you about NCR at the annual
meeting. 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 vote your proxy as soon as possible so that your stock
may be represented at the meeting.
Sincerely,
Lars Nyberg
Chairman of the Board and
Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF NCR CORPORATION
- - --------------------------------------------------------------------------------
Time:
9:30 a.m. local time
Date:
Thursday, April 15, 1999
Place:
Auditorium of Building B
NCR's Sugar Camp Education Center
101 W. Schantz Avenue
Dayton, Ohio 45479
Purpose:
. elect Class C directors to hold office for three-year terms;
. elect a Class B director to hold office for a two-year term;
. act on a proposal to amend the Company's charter to effect a reverse
stock split followed by a forward stock split of NCR's common stock;
. approve the appointment of PricewaterhouseCoopers LLP as independent
accountants for 1999;
. vote on a stockholder proposal regarding executive compensation; and
. transact such other business as may properly come before the meeting and
any adjournment or postponement of the meeting.
Other Important Information:
. Only registered stockholders of NCR common stock at the close of
business on February 8, 1999, may vote at the meeting.
. Your shares cannot be voted unless they are represented by proxy or you
make other arrangements to have them represented at the meeting. Please
vote your shares.
By order of the Board of Directors,
Laura K. Nyquist
Corporate Secretary
March [3], 1999
<PAGE>
YOUR VOTE IS IMPORTANT
Stockholders of record (also referred to as "registered stockholders") can
vote one of two ways:
<TABLE>
<S> <C>
(a) Via the Internet: Visit the web site listed on your proxy card to vote via the Internet.
(b) By Mail: Mark, sign, date, and mail your proxy card to our transfer agent, Boston
EquiServe, in the enclosed postage-paid envelope.
</TABLE>
If your shares are held in "street" name in the custody of a bank, broker
or other holder of record (referred to as a nominee), that means your shares
are registered in the name of the nominee. As a result, you will receive
voting instructions from your nominee. Some nominees, such as banks and
brokers, may offer telephone and/or Internet voting.
ELIMINATE DUPLICATE MAILINGS
The Securities and Exchange Commission's rules require us to provide an
annual report to stockholders who receive this proxy statement. If you are a
registered stockholder and have more than one account in your name or have the
same address as other registered stockholders, you may authorize NCR to
discontinue mailings of multiple annual reports. If you do this, not only will
you stop duplicate mailings, but you will also save the Company money. To
discontinue mailings of multiple annual reports, please mark the designated
box on the appropriate proxy card(s), or follow the prompts if you are a
registered stockholder voting via the Internet.
If you own your shares in record name and in street name, you may also
eliminate multiple mailings of annual reports by contacting your bank or
broker.
Most stockholders may also view future proxy statements and annual reports
over the Internet rather than receiving paper copies in the mail. Please see
the proxy statement and your proxy and voting instruction card or contact your
nominee for further information.
<PAGE>
NCR Corporation
1700 S. Patterson Blvd.
Dayton, Ohio 45479
PROXY STATEMENT
- - -------------------------------------------------------------------------------
GENERAL INFORMATION
We are delivering these proxy materials to solicit proxies on behalf of the
Board of Directors of NCR Corporation (which we refer to as "NCR," the
"Company," "we," or "us"), for the 1999 Annual Meeting of Stockholders,
including any adjournment or postponement. The meeting will be held on April
15, 1999, in Dayton, Ohio.
We are mailing this proxy statement, together with a form of proxy and
voting instruction card, and the Company's annual report for the year ended
December 31, 1998, starting March [3], 1999, to stockholders entitled to vote
at the meeting.
Stockholders Entitled to Vote at the Meeting
If you are a registered stockholder at the close of business on the record
date, February 8, 1999, you are entitled to receive this notice and to vote at
the meeting. There were [ ] shares of common stock outstanding on the
record date. You will have one vote for each share of NCR common stock you own
on each matter properly brought before the meeting.
How to Eliminate Duplicate Mailings
If you have 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. You may authorize us to discontinue mailing extra reports, by marking
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 through a nominee (such as a bank
or broker) and receive more than one NCR annual report, please consider giving
permission to your nominee to eliminate duplicate mailings.
Electronic Access to Proxy Materials and Annual Report
These proxy materials and NCR's 1998 annual report are available on an
Internet site at http://www.[ ]. Most stockholders can elect to view
future proxy statements and annual reports over the Internet instead of
receiving paper copies in the mail.
If you are a registered stockholder, you can choose this option and save
the Company the cost of producing and mailing these documents by following the
instructions provided on your proxy card or following the prompt if you choose
to vote over the Internet. If you hold your NCR stock in nominee name (such as
through a bank or broker), check the information provided by your nominee for
instructions on how to elect to view future proxy statements and annual
reports over the Internet.
If you are a registered stockholder and choose to view future proxy
statements and annual reports over the Internet, you will receive an e-mail
next year with instructions containing the Internet address of those
materials.
Most stockholders who hold their NCR stock through a nominee (such as a
bank or broker) and who elect electronic access will also receive an e-mail
next year containing the Internet address to use to access NCR's proxy
statement and annual report.
How to Vote Your Shares
Your vote is important. Your shares can be voted at the annual meeting only
if you are present in
1
<PAGE>
person or represented by proxy. Even if you plan to attend the meeting, we
urge you to vote. If you own your shares in record name, you may cast your
vote one of two ways:
. Vote by Internet: You can choose to vote your shares over the Internet
site listed on your proxy card. This site will give you the opportunity
to make your selections and confirm that your instructions have been
followed. We have designed our Internet voting procedures to authenticate
your identity by use of a unique control number found on the enclosed
proxy card. If you vote via the Internet, you do not need to return your
proxy card.
. Vote by Mail: If you choose to vote by mail, simply mark your proxy, and
then date, sign, and return it to Boston EquiServe in the postage-paid
envelope provided.
Stockholders who hold their shares beneficially in street name through a
nominee (such as a bank or broker) may be able to vote by telephone or the
Internet as well as by mail. You should follow the instructions you receive
from your nominee to vote these shares.
How to Revoke Your Proxy
You may revoke your proxy at any time before it is voted at the meeting by:
. properly executing and delivering a later-dated proxy;
. voting by ballot at the meeting; or
. sending a written notice of revocation to the inspectors of election in
care of the Corporate Secretary of the Company at the above address.
Voting at the Annual Meeting
The method by which you vote will in no way limit your right to vote at the
meeting if you later decide to attend in person. If you hold your shares in
street name, you must obtain a proxy executed in your favor from your nominee
(such as a bank or broker) to be able to vote at the meeting.
Your shares will be voted at the meeting as directed by the instructions on
your proxy card if: (1) you are entitled to vote, (2) your proxy was properly
executed, (3) we received your proxy prior to the annual meeting; and (4) you
did not revoke your proxy prior to the meeting.
The Board's Recommendations
If you send a properly executed proxy card without specific voting
instructions, we will vote your shares represented by that proxy as
recommended by the Board of Directors:
. FOR the election of the nominated slate of directors (see pages 5 to 9);
. FOR the approval of the amendment to NCR's charter to effect a reverse
split followed by a forward split of NCR's common stock (see pages 9 to
18);
. FOR the approval of the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for 1999 (see page 18); and
. AGAINST the stockholder proposal on executive compensation (see pages 19
to 20).
Voting Shares Held in Employee Savings Plans
If you are a participant in the NCR Savings Plan, your proxy includes any
NCR common stock allocated to your plan account. The trustee of this plan will
vote the number of shares allocated to your account according to your
instructions. If you do not return your proxy representing your allocated
shares in the NCR Savings Plan, the trustee will vote those shares in
accordance with the terms of the plan.
As you probably know, NCR was previously a wholly-owned subsidiary of AT&T
Corp. ("AT&T") from 1991 until the end of 1996. On December 31, 1996, AT&T
distributed all of its shares of NCR common stock to AT&T's stockholders and
NCR became a publicly-traded company. We refer to this transaction as the
"spinoff." In 1996 and 1997, AT&T also spun off Lucent Technologies Inc. and
sold AT&T Capital Corporation. As a result, you may hold shares of NCR common
stock through other savings plans. If so, you may receive separate voting
instructions from those plans' administrators and your shares will be voted in
accordance with the terms of each of those plans. Please sign and return those
instructions promptly to be sure those shares are represented at the annual
meeting.
2
<PAGE>
Votes Required to Approve Each Item
The presence at the meeting (in person or by proxy) of the holders of at
least a majority of the shares outstanding on the record date, February 8,
1999, is necessary to have a quorum allowing us to conduct business at the
meeting.
The following votes are required to approve each item of business at the
meeting:
. Election of Directors: A majority of the votes cast at the meeting (in
person or by proxy) is required to approve the election of the directors
(Item 1).
. Charter Amendment: Approval of the proposed amendment to the Company's
charter to effect the reverse stock split requires the affirmative vote
by the holders of a majority of the shares outstanding and entitled to
vote at the meeting (Item 2).
. Other Items: A majority of the votes cast at the meeting (in person or by
proxy) is required to approve the other items of business (Items 3 and 4
and any other business).
Broker "no-votes" and abstentions have no effect on the outcome of the vote
for the election of directors or any other items, except that they will have
the effect of a negative vote on the proposal to amend NCR's charter (Item 2).
Broker "no-votes" occur when a nominee (such as a bank or broker) returns a
proxy, but does not have the authority to vote on a particular proposal
because it has not received voting instructions from the beneficial owner.
Annual Meeting Admission
You may attend the meeting if you are a registered stockholder, a proxy for
a registered stockholder, or a beneficial owner of NCR common stock with
evidence of ownership. If you 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 booklet. If you are not a registered
stockholder, please include evidence of your ownership of NCR stock with the
form (such as an account statement showing you own NCR stock as of the record
date). If you do not have a reservation for the meeting, you may still attend
if we can verify your stock ownership at the meeting.
We will include the results of the meeting in NCR's next quarterly report
filed with the Securities and Exchange Commission ("SEC"). You may also find
information on how to obtain a full transcript of the meeting in that
quarterly report or by writing to NCR's Corporate Secretary at NCR
Corporation, 1700 South Patterson Blvd., Dayton, Ohio 45479.
3
<PAGE>
STOCK OWNERSHIP
- - -------------------------------------------------------------------------------
Ownership by Officers and Directors
This table shows the NCR stock beneficially owned by each executive officer
named in the Summary Compensation Table found on page and each non-employee
director as of December 31, 1998. No individual director or executive officer
beneficially owns 1% or more of NCR's stock, nor do the directors and
executive officers as a group.
<TABLE>
<CAPTION>
Shares Shares Covered Shares Covered
Beneficially by Exercisable by Restricted
Name Owned(1) Options(2) Stock Units(3)
- - ---- ------------ -------------- --------------
<S> <C> <C> <C>
Lars Nyberg, Director and Officer...
Mr. Eisenman, Officer...............
Anthony Fano, Officer...............
David R. Holmes, Director (4)....... 4,473
Linda Fayne Levinson, Director (4).. 4,473
James R. Long, Director (4).........
Per-Olof Loof, Officer..............
Ronald A. Mitsch, Director (4)...... 4,473
C.K. Prahalad, Director............. 4,473
James O. Robbins, Director (4)(5)... 4,473
William S. Stavropoulos, Director (4) 4,473
Hideaki Takahashi, Officer..........
Directors and Executive Officers as
a Group ([#] persons)(6)...........
</TABLE>
- - --------
(1) Some of NCR's executive officers and directors own fractional shares of
NCR stock. For purposes of this table, all fractional shares have been
rounded to the nearest whole number.
(2) This column shows those shares the officers and directors have the right
to acquire through stock option exercises within 60 days after December
31, 1998.
(3) This column shows those shares which may be acquired within 60 days of
December 31, 1998, pursuant to vested restricted stock units awarded under
NCR's employee incentive compensation plans.
(4) Upon election to the board, each director received an initial grant of NCR
common stock with a value of $60,000 at the time of grant and was given
the opportunity to defer immediate receipt of the grant. Of those
directors who elected to defer receipt of this grant, the table includes
1,795 units based on NCR common stock equivalents for each of Messrs.
Holmes, Mitsch, Robbins, and Stavropoulos and Ms. Levinson, and 1,928
units based on NCR common stock equivalents for Mr. Long. These units are
held in deferred stock accounts as set forth below under the caption
"Compensation of Directors." These deferred stock accounts are paid in
stock. In addition, some directors have also elected to receive some or
all of their annual retainer as deferred NCR common stock equivalents. As
a result of this election, these directors each received the following
number of stock units in deferred stock accounts: Mr. Holmes (1,658); Mr.
Long (181); Dr. Mitsch (1,658); Mr. Robbins (1,658); and Mr. Stavropoulos
(1,658). These deferred stock accounts are paid in either cash or stock,
as elected by the director. The table does not include the deferred
retainer amounts held in these deferred stock accounts.
(5) [Includes [ ] shares held by [ ] for which he disclaims
any beneficial interest.]
(6) [Includes [ ] shares held by [ ] of one of the executive officers
for which he disclaims any beneficial interest.]
4
<PAGE>
Largest Owners of NCR Stock
As of February , 1999, NCR knew that the following companies
beneficially owned more than 5% of the Company's outstanding stock. The
percentage of stock owned by such holders is based on the total outstanding
shares of stock as of December 31, 1998.
<TABLE>
<CAPTION>
Percent
Total Number of
Name and Address of Beneficial Owner of Shares Class
- - ------------------------------------ ------------ -------
<S> <C> <C>
[Dodge & Cox Incorporated.................................. (1) %]
One Sansome Street, 35th Floor
San Francisco, California 94104
Putnam Investments, Inc.(2)................................ 5,095,325(3) 5.00%
One Post Office Square
Boston, Massachusetts 02109
</TABLE>
- - --------
(1) [Based on the Schedule 13G filed by Dodge & Cox Incorporated with the SEC,
dated , 1999. According to the Schedule 13G filed by Dodge &
Cox, it has investment power over shares as an investment
adviser and shared voting power over shares held by institutional
clients.]
(2) Based on the Schedule 13G filed by Putnam Investments, Inc. ("Putnam")
with the SEC, dated [November 10, 1998], on behalf of itself and its
parent holding company, Marsh & McLennan Companies, Inc., and two of
Putnam's wholly-owned subsidiaries. The first subsidiary, Putnam
Investment Management, Inc., is a registered investment adviser that
manages accounts for the benefit of its mutual fund clients. The other
subsidiary, The Putnam Advisory Company, Inc., is a registered investment
adviser that manages accounts for its institutional clients.
(3) According to the Schedule 13G filed by Putnam, Putnam Investment
Management has investment power over 5,091,991 shares as an investment
adviser. The Schedule 13G also reports that Putnam Advisory Company has
investment power over 3,334 shares as an investment adviser and shared
voting power over 5,502 shares held by institutional clients.
- - -------------------------------------------------------------------------------
ELECTION OF THREE CLASS C DIRECTORS
AND ONE CLASS B DIRECTOR
(Item 1 on Proxy Card)
- - -------------------------------------------------------------------------------
The Board of Directors is currently divided into three classes of
directors. 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 is elected each year to succeed the
directors whose terms are expiring. Class C directors will be elected at the
annual meeting to serve for a term expiring at the annual meeting in the year
2002. The terms for the directors in Class A expire in 2000. The Class B
directors' terms will expire in 2001.
Proxies solicited by the board will be voted for the election of the
nominees, unless you withhold your vote on your proxy card. The board has no
reason to believe that these nominees will be unable to serve. However, if any
one of them should become unavailable, the board may reduce the size of the
board or designate a substitute nominee. If the board designates a substitute,
shares represented by proxies will be voted for the substitute nominee.
5
<PAGE>
The Board recommends that you vote FOR
each of the following nominees for election as directors:
Class C--Nominees for Terms Expiring in 2002:
NCR's Board of Directors has proposed the following nominees for election
as Class C directors at the annual meeting. Each of the nominees has consented
to serve a three-year term.
Ronald A. Mitsch, 64, was the Vice Chairman and Executive Vice President of
3M, a global, diversified manufacturing company from 1995 until November 1,
1998. Dr. Mitsch was also 3M's Executive Vice President, Industrial and
Consumer Markets and Corporate Services, from 1991 until November 1, 1998.
Dr. Mitsch will remain a director of 3M until May 1999. He is also a
director of Lubrizol Corporation and Shigematsu Works Inc., Tokyo, Japan.
He became a director of NCR on January 1, 1997.
C.K. Prahalad, 57, is a Professor of Business Administration at The
University of Michigan. Professor 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. and became a director of NCR on January 1, 1997.
William S. Stavropoulos, 59, 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, BellSouth
Corporation, and Chemical Financial Corporation. He became a director of
NCR on January 1, 1997.
Class B--Nominee for Term Expiring in 2001:
In October 1998, the Board of Directors increased the number of directors
on the board from seven to eight members. This action created a vacant board
position. The board then elected James R. Long as a Class B director to fill
this vacancy until the 1999 annual meeting. The board has nominated Mr. Long
for election as a Class B director at the annual meeting. Mr. Long has
consented to serve a two-year term expiring in 2001.
James R. Long, 56, has been Executive Vice President for Northern Telecom
Ltd. ("Nortel") and President of its Enterprise Networks business since
June 1991. Mr. Long has worldwide responsibility for development,
manufacturing, sales and marketing of Nortel's portfolio of voice
communication products and related solutions designed for enterprise
customers. Prior to 1991, he was president of Nortel World Trade, Group
Executive Asia, and Corporate Vice President of Quality. Before joining
Northern Telecom, Mr. Long spent 25 years with IBM Corporation in a variety
of sales, marketing and management capacities. Mr. Long is also a director
of Williams Communications Solutions and Matra Nortel Communications. He
became a director of NCR on October 16, 1998.
Directors Whose Terms of Office Continue
The individuals listed below are presently serving as directors.
Class A--Terms Expire in 2000:
Lars Nyberg, 47, 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.
David R. Holmes, 58, 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, in 1984 as Senior Vice President of its Computer Systems Division.
Prior to joining
6
<PAGE>
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.
James O. Robbins, 56, has served as President and Chief Executive Officer
of Cox Communications, Inc., a broadband communications company, since May
1994. Prior to that time, he was President of the Cable Division of Cox
Enterprises, Inc., from 1985 to 1994. 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.,
and is a representative on the Partnership Board managing Sprint Spectrum,
L.P. He became a director of NCR on January 1, 1997.
Class B--Term Expires in 2001:
Linda Fayne Levinson, 57, has been a principal with Global Retail Partners,
a private equity investment fund investing in start-up and early-stage
retail and electronic commerce companies since 1997. She is also 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.,
Administaff, Inc., and Jacobs Engineering Group Inc. Ms. Levinson became a
director of NCR on January 1, 1997.
The Board of Directors
The Board of Directors oversees the overall performance of the Company on
your behalf. Members of the board stay informed of the Company's business
through discussions with the Chairman and other members of management and
staff, by reviewing materials provided to them, and by participating in board
and committee meetings. The board met six times last year and held 14
committee meetings. On average, the directors attended 90% of the total board
and committee meetings held in 1998. Mr. Holmes attended less than 75% of the
aggregate of total board meetings and committee meetings for the committee on
which he served in 1998.
Committees of the Board
NCR's Board of Directors has four committees: the Audit and Finance
Committee, the Compensation Committee, the Committee on Directors, and the
Executive Committee.
Board Committee Membership
<TABLE>
<CAPTION>
Audit and
Executive Compensation Finance Committee on
Name Committee Committee Committee Directors
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lars Nyberg..................... X* X
David R. Holmes................. X
Linda Fayne Levinson............ X X*
James R. Long...................
Ronald A. Mitsch................ X X* X
C.K. Prahalad................... X X
James O. Robbins................ X
William S. Stavropoulos......... X X*
Number of meetings in 1998...... 0 7 4 3
</TABLE>
*Chair
7
<PAGE>
Audit and Finance Committee: This committee meets with management to review
the adequacy of the Company's financial, accounting, and reporting control
processes as well as the scope and results of audits performed by NCR's
independent accountants and internal auditors. In addition, the Audit and
Finance Committee:
. reviews treasury matters such as NCR's cash position and capital
structure, pension and profit sharing plans, and NCR's risk management
policies and practices
. reviews NCR's capital appropriation plans and other significant financial
matters affecting the Company
. recommends the appointment of the Company's independent accountants to
the board.
Compensation Committee: This committee reviews and approves NCR's
compensation philosophy and programs covering executive officers and key
management employees as well as the competitiveness of NCR's total executive
officer compensation practices. The committee also:
. reviews the performance levels of NCR's executive officers
. determines base salaries and equity and incentive awards for NCR's
executive officers
. makes recommendations to the board concerning the directors' compensation
. reviews NCR's executive compensation plans
. reviews management's proposals to make significant organizational changes
or significant changes to existing executive officer compensation plans
. oversees NCR's plans for management succession.
Committee on Directors: This committee establishes procedures for the
selection, retention, and performance evaluation of directors; reviews board
governance procedures; and reviews the Company's ethics and compliance program.
The committee also 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 on Directors
recommended this year's director nominations at its December 1998 meeting.
Executive Committee: This committee has the authority to exercise all powers
of the full Board of Directors, except that it does not have the power, among
other things, to declare dividends, issue stock, amend the Bylaws when the
Board is not in session, recommend to the stockholders any action that requires
stockholder approval, or approve any merger or share exchange which requires
stockholder approval. This committee will meet between regular board meetings
if urgent action is required.
Compensation of Directors
Mr. Nyberg does not receive any extra pay for serving as a director on NCR's
board. Each of NCR's non-employee directors receives an annual retainer of
$30,000. This retainer is payable for the year beginning on the date of NCR's
annual meeting and ending on the day before the next such meeting. The retainer
is payable quarterly in equal installments as long as the director is still
serving on NCR's board. If a director resigns or is terminated, he or she will
forfeit any future installments of the annual retainer.
The directors may elect to receive all or a portion of their annual retainer
in NCR stock instead of cash. In addition, the directors may choose to defer
receipt of this stock (a) until he or she resigns or is no longer a director,
(b) until five or ten years after it is payable, or (c) in one to five equal
annual installments, beginning either the year after the retainer is earned, or
the year following the date of termination as a director.
The Company maintains stock unit accounts based on NCR stock for deferred
stock payments. Dividend payments on NCR stock equivalents, if any, will be
reinvested in additional deferred stock units. Deferred stock payments may be
paid in cash or in stock. A 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.
Upon joining the board, each of the non-employee directors received an
initial grant of NCR common stock with a value equal to $60,000. These
directors had the option of receiving this stock
8
<PAGE>
immediately or deferring receipt in the same manner available for deferring
their annual retainer, however, these deferred stock accounts are paid only in
stock. If deferred, a stock unit account is maintained for each participating
director.
In addition, NCR also pays a pays a portion of director compensation in
stock options. Each non-employee director receives stock option grants
effective on the date of the annual meeting. The options have an exercise price
of the fair market value of the stock on the grant date and are fully vested on
the grant date. In 1998, the non-employee directors, except for Mr. Long,
received options for 2,023 shares of NCR common stock.
Section 16(a) Beneficial Ownership Reporting Compliance
All executive officers and directors of the Company timely filed the reports
required under Section 16(a) of the Securities Exchange Act of 1934, as
amended, during 1998; except that, due to administrative oversight, Mr.
Takahashi failed to file one Form 4 on a timely basis to report one
transaction. The transaction was reported immediately upon discovery of the
oversight.
- - --------------------------------------------------------------------------------
PROPOSAL TO AMEND THE COMPANY'S AMENDED AND RESTATED ARTICLES OF INCORPORATION
TO EFFECT A REVERSE STOCK SPLIT FOLLOWED BY A FORWARD STOCK SPLIT OF NCR'S
COMMON STOCK
(Item 2 on Proxy Card)
- - --------------------------------------------------------------------------------
Summary
The Board of Directors has authorized, and recommends for your approval, a
reverse 1-for-10 stock split followed immediately by a forward 10-for-1 stock
split of NCR's common stock. As permitted under Maryland state law, registered
stockholders whose shares of stock are converted into less than 1 share in the
reverse split will receive cash payments equal to the fair value of those
fractional interests. We refer to the reverse and forward stock splits,
together with the related cash payments to stockholders with small holdings, as
the "Transaction." We also refer to our record stockholders whose shares of NCR
stock are registered in their name as "registered stockholders."
If approved, the Transaction will take place on May [14], 1999. In order to
complete the Transaction, a majority of the stockholders entitled to vote at
the annual meeting must approve amendments to NCR's Amended and Restated
Articles of Incorporation (the "Charter"). We attach the proposed amendments to
NCR's Charter to this proxy statement as Appendix A.
The highlights of the Transaction are as follows.
Effect on Stockholders:
If approved at the annual meeting, the Transaction will affect NCR
stockholders as follows after completion:
<TABLE>
<CAPTION>
Net Effect After Transaction
Stockholder as of May [14], 1999 Completion
-----------------------------------------------------------------------------
<S> <C>
Registered stockholders holding 10 or None.
more shares of NCR stock in a record
account
-----------------------------------------------------------------------------
Registered stockholders holding fewer Shares will be cashed out at a price
than 10 shares of NCR stock in a based on the trading value of the
record account shares at that time (see
"Determination of Trading Value"
below). You will not have to pay any
commissions or other fees on this
cash-out. Holders of these shares
will not have any continuing equity
interest in NCR.
-----------------------------------------------------------------------------
Stockholders holding NCR stock in NCR does not intend for the
street name through a nominee (such Transaction to affect stockholders
as a bank or broker) holding NCR stock in street name
through a nominee (such as a bank or
broker). However, nominees may have
different procedures and NCR
stockholders holding NCR stock in
street name should contact their
nominees to determine whether they
will be affected by the Transaction.
</TABLE>
9
<PAGE>
Reasons for the Transaction:
The board recommends that the stockholders approve the Transaction for the
following reasons, among other things (as described in detail under
"Background and Purpose of the Transaction" below):
<TABLE>
<CAPTION>
Issue Solution
------------------------------------------------------------------------------
<S> <C>
As a result of the spinoff from AT&T, The Transaction will reduce the
NCR has an exceptionally large number number of registered stockholders
of small stockholders. Over 600,000 with small accounts and result in
registered stockholders hold fewer significant cost savings for NCR.
than 10 shares of NCR stock in their
record accounts. Continuing to
maintain accounts for these
stockholders will cost NCR over $2.5
million per year.
------------------------------------------------------------------------------
In many cases it is prohibitively The Transaction cashes out
expensive for stockholders with fewer stockholders with small record
than 10 shares to sell their shares accounts without transaction costs
on the open market. such as brokerage fees. However, if
these stockholders do not want to
cash-out their holdings of NCR stock,
they may purchase additional shares
on the open market to increase their
record account to at least 10 shares,
or, if applicable,
consolidate/transfer their record
accounts that are registered with the
transfer agent in the same way. In
addition, if beneficial owners of
fewer than 10 shares of stock want to
have those shares cashed out in the
Transaction, they should instruct
their nominee to transfer their
shares into a record account far
enough in advance so that the shares
are registered in their names by May
[14], 1999.
</TABLE>
Structure of the Transaction
The Transaction includes both a reverse stock split and a forward stock
split of NCR common stock. If this Transaction is approved and occurs, the
reverse split will occur at [6:00 p.m.] on May [14], 1999. All registered
stockholders on May [14], 1999 will receive 1 share of NCR common stock for
every 10 shares of NCR stock held in their record accounts at that time. Any
registered stockholder who holds fewer than 10 shares of NCR stock in a record
account at [6:00] p.m. on May [14], 1999 (also referred to as a "Cashed-Out
Stockholder"), will receive a cash payment instead of fractional shares. This
cash payment will be based on the trading value of the cashed-out shares at
the time. (See "Determination of Trading Value" below for a description of how
the trading value will be determined upon completion of the Transaction.)
Immediately following the reverse split, at [6:01] p.m. on May [14], 1999, all
registered stockholders who are not Cashed-Out Stockholders will receive 10
shares of NCR common stock for every 1 share of stock they received after the
reverse stock split. If a stockholder holds more than 10 shares in a record
account, any fractional share in the account will not be cashed out after the
reverse split and the total number of shares held in that account will not
change as a result of the Transaction.
10
<PAGE>
In general, the Transaction can be illustrated by the following examples:
<TABLE>
<CAPTION>
Hypothetical Scenario Result
------------------------------------------------------------------------------
<S> <C>
Ms. Smith is a registered stockholder Instead of receiving a fractional
who holds 9 shares of NCR stock in share ( 9/10 of a share) of NCR stock
her record account as of [6] p.m. on after the reverse split, Ms. Smith's
May [14], 1999. At that time, the 9 shares will be converted into the
trading value of 1 share of NCR stock right to receive cash. Using the
was $45 (see "Determination of hypothetical trading value of $45 per
Trading Value" below). share, Ms. Smith will receive $405.00
($45 x 9 shares).
Note: If Ms. Smith wants to continue
her investment in NCR, she can buy at
least 1 more share of NCR stock and
hold it in her record account. Ms.
Smith would have to act far enough in
advance of May [14], 1999 so that the
transfer is complete by the close of
business on that date.
------------------------------------------------------------------------------
Mrs. Jones has 2 record accounts. As Mrs. Jones will receive cash payments
of May [14], 1999, she holds 5 shares equal to the trading value of her
of NCR stock in one account and 7 shares of NCR stock in each record
shares of NCR stock in the other. All account instead of receiving
of her shares are registered in her fractional shares ( 1/2 share and
name only. 7/10 share). Assuming a hypothetical
trading value of NCR stock at $45 per
share, Mrs. Jones would receive two
checks totaling $540 (5 x $45 = $225;
7 x $45 = $315; $225 + $315 = $540).
Note: If Mrs. Jones wants to continue
her investment in NCR, she can
consolidate/transfer her two record
accounts prior to May [14], 1999. In
that case, her holdings will not be
cashed out in connection with the
Transaction because she will hold
more than 10 shares in one record
account. She would have to act far
enough in advance so that the
consolidation is complete by the
close of business on May [14], 1999.
------------------------------------------------------------------------------
Mr. Taylor holds 15.5 shares of NCR After the Transaction, Mr. Taylor
stock in his record account as of May will continue to hold all 15.5 shares
[14], 1999. of NCR stock.
------------------------------------------------------------------------------
Mr. Updike holds shares of NCR stock NCR does not intend for the
in a brokerage account as of May Transaction to affect stockholders
[14], 1999. holding NCR stock in street name
through a nominee (such as a bank or
broker). However, nominees may have
different procedures and NCR
stockholders holding NCR stock in
street name should contact their
nominees to determine whether they
will be affected by the Transaction.
Note: If Mr. Updike holds fewer than
10 shares and desires to have his
shares cashed out in the Transaction,
he should contact his broker to
transfer them to his record name
prior to May [14], 1999. He would
have to act far enough in advance so
that the transfer is complete by the
close of business on May [14], 1999.
</TABLE>
11
<PAGE>
Background and Purpose of the Transaction
NCR has an unusual stockholder base of approximately 1.5 million
stockholders, including almost 1 million registered stockholders. This
exceptionally large base is principally the result of the spinoff of NCR from
AT&T at the end of 1996, which was one of the most widely held public
companies. At the spinoff, each of the millions of AT&T registered
stockholders received one share of NCR stock for every 16 shares of their AT&T
common stock. Since that time, NCR has been able to reduce its total number of
stockholders by almost 800,000 by offering several programs that have allowed
stockholders with small accounts to sell their holdings cost-effectively.
However, the effect of AT&T's large stockholder base continues.
As of February 8, 1999, approximately [628,000] registered holders of NCR
common stock owned fewer than 10 shares of stock. At that time, these
stockholders represented approximately [65%] of the total number of registered
holders of NCR stock, but they owned less than [4]% of the total number of
outstanding shares of NCR's stock.
The Transaction will provide these registered stockholders with fewer than
10 shares with a cost-effective way to cash out their investments, because NCR
will pay all transaction costs such as brokerage or service fees in connection
with the Transaction. In most other cases, small stockholders would likely
incur brokerage fees disproportionately high relative to the market value of
their shares if they wanted to sell their stock. In addition, some small
stockholders might even have difficulty finding a broker willing to handle
such small transactions. The Transaction, however, eliminates these problems
for most small stockholders.
Moreover, NCR will benefit from substantial cost savings as a result of the
Transaction. The costs of administering each stockholder's account is the same
regardless of the number of shares held in each account. Therefore, NCR's
costs to maintain thousands of small accounts are disproportionately high when
compared to the total number of shares involved. In 1999, we expect that each
registered stockholder will cost the Company in excess of $2.70 for transfer
agent fees and the printing and postage costs to mail the proxy materials and
annual report [Confirm costs]. We expect that these costs will only increase
over time.
In light of these disproportionate costs, the board believes that it is in
the best interests of the Company and its stockholders as a whole to eliminate
the administrative burden and costs associated with approximately [628,000]
small accounts with fewer than 10 shares of NCR stock. We expect that we will
reduce the total direct cost of administering stockholder accounts by
approximately $ per year if we complete the Transaction.
NCR may in the future pursue alternative methods of reducing its
stockholder base, whether or not the Transaction is approved, including odd-
lot tender offers and programs to facilitate sales by stockholders of odd-lot
holdings. However, there can be no assurance that NCR will decide to engage in
any such transaction.
Effect of the Transaction on NCR Stockholders
Stockholders With a Record Account of Fewer Than 10 Shares:
If we complete the Transaction and you are a Cashed-Out Stockholder (i.e.,
a stockholder holding fewer than 10 shares of NCR common stock in a record
account immediately prior to the reverse stock split):
. You will not receive a fractional share of NCR stock as a result of the
reverse split.
. Instead of receiving a fractional share of NCR stock, you will receive
cash equal to the trading value of your affected shares. See
"Determination of Trading Value" below.
. After the reverse split, you will have no further interest in the Company
with respect to your cashed-out shares. These shares will no longer
entitle you to the right to vote as a stockholder or share in the
Company's assets, earnings, or profits. In other words, you will no
longer hold your cashed-out shares, you will just have the right to
receive cash for these shares.
. You will not have to pay any service charges or brokerage commissions in
connection with the Transaction.
. As soon as practicable after May [14], 1999, you will receive cash for
the NCR stock you held in your record account immediately prior to the
reverse split in accordance with the procedures described below.
Stockholders With Book-Entry Shares:
* Most of NCR's registered stockholders hold their shares of NCR stock in
book-entry form under the Direct Registration System for securities.
These stockholders do not have stock certificates evidencing their
ownership of NCR's stock. They are, however, provided with a statement
reflecting the number of shares registered in their account.
12
<PAGE>
* If you are a Cashed-Out Stockholder who holds registered shares in a
book-entry account, you do not need to take any action to receive your
cash payment. We will mail a check to you at your registered address as
soon as practicable after May [14], 1999. By signing and cashing this
check, you will warrant that you own the shares for which you receive a
cash payment.
Stockholders With Certificated Shares:
* If you are a Cashed-Out Stockholder with a stock certificate
representing your cashed-out shares you will receive a transmittal
letter from NCR as soon as practicable after May [14], 1999. The letter
of transmittal will contain instructions on how to surrender your
certificate(s) to the Company's transfer agent, Boston EquiServe, for
your cash payment. You will not receive your cash payment until you
surrender your outstanding certificate(s) to Boston EquiServe, together
with a completed and executed copy of the letter of transmittal. Please
do not send your certificates until you receive your letter of
transmittal. For further information, see "Stock Certificates" below.
. All amounts owed to you will be subject to applicable federal income tax
and state abandoned property laws.
. You will not receive any interest on cash payments owed to you as a
result of the Transaction.
NOTE: If you want to continue to hold NCR stock after the Transaction, you may
do so by taking either of the following actions far enough in advance so that
it is complete by May [14], 1999:
(1) purchase a sufficient number of shares of NCR stock on the open market and
have them registered in your name so that you hold at least 10 shares in
your record account immediately prior to the reverse split; or
(2) if applicable, consolidate your record accounts so that you hold at least
10 shares of NCR stock in one record account immediately prior to the
reverse split.
Registered Stockholders With 10 or More Shares:
If you are a registered stockholder with 10 or more shares of common stock
in your record account as of [6:00] p.m. on May [14], 1999, we will first
convert your shares into one tenth ( 1/10) of the number of shares you held
immediately prior to the reverse split. One minute after the reverse split, at
[6:01] p.m., we will reconvert your shares in the forward stock split into 10
times the number of shares you held after the reverse split, which is the same
number of shares you held before the reverse split. For example, if you were a
registered owner of 25 shares of NCR stock immediately prior to the reverse
split, your shares would be converted to 2.5 shares in the reverse split and
back to 25 shares in the forward split. As a result, the Transaction will not
affect the number of shares that you hold in record name if you hold 10 or
more shares of NCR stock in your record account immediately prior to the
reverse split.
Beneficial Owners of NCR Stock:
NCR does not intend for the Transaction to affect stockholders holding NCR
stock in street name through a nominee (such as a bank or broker). However,
nominees may have different procedures and NCR stockholders holding NCR stock
in street name should contact their nominees to determine whether they will be
affected by the Transaction.
NOTE: If you are a beneficial owner of fewer than 10 shares of NCR stock and
want to have your shares exchanged for cash in the Transaction, you should
instruct your nominee to transfer your shares into a record account in your
name in a timely manner so that you will be considered a holder of record
immediately prior to the reverse split.
Current and Former NCR Employees and Directors:
If you are an employee or director of NCR (or a former employee or
director), you may own NCR restricted stock and/or options to purchase NCR
stock through the NCR Management Stock Plan or options to purchase NCR stock
under the NCR WorldShares Plan. In addition, you may have purchased NCR stock
through the Employee Stock Purchase Plan or invested in NCR stock under the
NCR Savings Plan.
If you hold your NCR stock acquired under the NCR Employee Stock Purchase
Plan in nominee name (such as in an account with a bank or broker, including
Merrill Lynch), the Transaction will not
13
<PAGE>
affect your holdings. Similarly, if you have invested in NCR stock under the
NCR Savings Plan, the Transaction will not affect that investment. In addition,
the Transaction will not affect the number of options you hold to acquire NCR
stock under either of the Company's stock plans. If you hold fewer than 10
restricted shares of NCR stock in a registered account, those shares would be
converted into the right to receive cash under the Transaction; however, the
Company does not believe that there are any such accounts.
Determination of Trading Value
In order to avoid the expense and inconvenience of issuing fractional shares
to stockholders who hold fewer than 1 share in a registered account after the
reverse split, under Maryland state law, NCR may either arrange for the sale of
fractional shares or pay cash for the fair value of such shares. If
stockholders approve the Transaction at the annual meeting and the Transaction
is completed, the Board of Directors will elect either to arrange for NCR's
transfer agent to sell these fractional shares on the open market, or to have
NCR pay cash for the fractional shares based on the trading value of the NCR
common stock that is cashed out. The board will make this decision, in its sole
discretion, as soon as practicable after the annual meeting and will publicly
announce its decision in a press release and post it on our website at
. The details of each of the board's options and the
manner of determining trading value under each option are summarized in the
following chart:
<TABLE>
<CAPTION>
Option Determination of Trading Value
- - -----------------------------------------------------------------------------------------------------------
<S> <C>
Purchase of Fractional The Cashed-Out Stockholders will receive cash equal to the trading
Shares: NCR will value of the shares they held immediately prior to the reverse split in a
purchase the fractional registered account with fewer than 10 shares of NCR stock. The trading
shares from the Cashed- value of each outstanding share of NCR stock at that time will be based
Out Stockholders. on the average daily closing price per share of NCR common stock on
the New York Stock Exchange for the ten trading days immediately
before and including May [14], 1999, without interest.
Arrange for the Sale of As soon as practicable after May [14], 1999, the exchange agent will
Fractional Shares on the sell the aggregated fractional shares of the Cashed-Out Stockholders at the
Open Market: The prevailing prices on the open market. The sale will be executed on the
fractional shares of the New York Stock Exchange through one or more firms in round lots to
Cashed-Out Stockholders the extent practicable. NCR expects that the exchange agent will conduct the
will be aggregated and sale in an orderly fashion at a reasonable pace. Based on the average daily
sold by the Company's trading volume for NCR's stock on the New York Stock Exchange as of
transfer agent, Boston February 8, 1999, we expect that it will take at least [ ] business days to
EquiServe, acting as an sell all of the aggregated fractional shares. If the exchange agent attempts
exchange agent on behalf to sell these shares too quickly, it could hurt the sales price for the shares.
of the Cashed-Out There can be no assurance as to the sales price that the exchange agent
Stockholders. will receive for the aggregated fractional shares.
After completing the sale of all the aggregated fractional shares, the
exchange agent will make a cash payment (without interest) equal to
each Cashed-Out Stockholder's proportionate interest in the net proceeds
from the sale of the aggregated fractional shares. NCR will pay all of
the commissions, transfer taxes, and other out-of-pocket transaction
costs in connection with the sale. Until the proceeds of the sale have
been distributed, the transfer agent will hold the proceeds in trust for
the Cashed-Out Stockholders. As soon as practicable after the
determination of the amount of cash to be paid in place of fractional
shares, the transfer agent will pay the cash to the Cashed-Out Stockholders
as described above in "Effect of Transaction on NCR Stockholders."
</TABLE>
14
<PAGE>
Effect of the Transaction on NCR
The Transaction will not affect the public registration of NCR's common
stock with the SEC under the Securities Exchange Act of 1934, as amended.
Similarly, we do not expect that the Transaction will affect the Company's
application for continued listing of NCR common stock on the New York Stock
Exchange.
NCR's Charter currently authorizes the issuance of 500 million shares of
common stock. The number of authorized common stock will not change as a
result of the Transaction. On February 8, 1999, there were
shares of NCR common stock issued and outstanding. If the Board elects to
arrange for the sale of the Cashed-Out Stockholders' fractional shares on the
open market, there will be no effect on the number of issued and outstanding
shares of NCR stock. On the other hand, if the Board elects to purchase the
fractional shares of the Cashed-Out Stockholders, the total number of
outstanding shares of NCR common stock will be reduced by the number of shares
held by the Cashed-Out Stockholders immediately prior to the reverse split.
Under this second option, based on our best estimates if the Transaction had
taken place as of , 1999, the number of outstanding shares of NCR common
stock would have been reduced by the Transaction from to
or by approximately . In addition, the number of
registered holders of NCR common stock would have been reduced from
approximately to or by approximately
stockholders.
We have no current plans to issue common stock other than pursuant to the
Company's existing stock plans. However, if the number of additional
authorized but unissued shares was increased, the board would have more
flexibility in the management of the Company's capitalization and its ability
to provide stock-based incentives to its officers and other employees. Unless
legally required to do so, we will not seek further stockholder authorization
before issuing NCR stock. Stockholders will not have any preemptive or other
preferential rights to purchase any of NCR's stock that may be issued by the
Company in the future, unless such rights are specifically granted to the
stockholders.
If the Board of Directors opts to purchase the fractional shares from the
Cashed-Out Stockholders, the total number of shares that will be purchased and
the total cash to be paid by the Company are unknown. However, if the
Transaction had been completed as of February 8, 1999, when the average daily
closing price per share of NCR stock on the New York Stock Exchange for the
ten trading days immediately preceding and including such date was $ ,
then the cash payments that would have been issued to Cashed-Out Stockholders
instead of fractional shares would have been approximately
$ , with shares purchased by the Company.
The actual amounts will depend on the number of Cashed-Out Stockholders on May
[14], 1999, which will vary from the number of such stockholders on February
8, 1999. In addition, we do not know what the average daily closing price per
share of NCR stock on the New York Stock Exchange for the ten trading days
prior to and including May [14], 1999 will be or, if applicable, what the net
proceeds of the sale of the aggregate fractional shares by the exchange agent
will be.
The par value of NCR's common stock will remain at $.01 per share after the
Transaction under either option available to the board under Maryland law.
Stock Certificates
In connection with the Transaction, NCR's common stock will be identified
by a new CUSIP number. This new CUSIP number will appear on any stock
certificates representing shares of NCR common stock after May [14], 1999. The
Transaction will not affect any certificates representing shares of common
stock or the book-entry account records held by registered stockholders owning
10 or more shares immediately prior to the reverse split. Old certificates
held by any of these stockholders will continue to evidence ownership of the
same number of shares as is set forth on the face of the certificate. Any
stockholder with 10 or more shares immediately prior to the reverse split who
wants to receive a certificate bearing the new CUSIP number can do so at any
time by contacting NCR's transfer agent at 1-800-627-2303 for instructions on
how to surrender old certificates. After May [14], 1999, an old certificate
presented to an exchange agent in settlement of a trade will be exchanged for
a new certificate bearing the new CUSIP number.
As described above, any Cashed-Out Stockholder with share certificates will
receive a
15
<PAGE>
letter of transmittal after the Transaction is completed. These stockholders
must complete and sign the letter of transmittal and return it with their
stock certificate(s) to NCR's transfer agent before they can receive cash
payment for those shares.
Certain Federal Income Tax Consequences
We have summarized below certain federal income tax consequences to the
Company and stockholders resulting from the Transaction. This summary is based
on existing U.S. federal income tax law, which may change, even retroactively.
This summary does not discuss all aspects of federal income taxation which may
be important to you in light of your individual circumstances. Many
stockholders (such as financial institutions, insurance companies, broker-
dealers, tax-exempt organizations, and foreign persons) may be subject to
special tax rules. Other stockholders may also be subject to special tax
rules, including but not limited to: stockholders who received NCR stock as
compensation for services or pursuant to the exercise of an employee stock
option, or stockholders who have held, or will hold, stock as part of a
straddle, hedging, or conversion transaction for federal income tax purposes.
In addition, this summary does not discuss any state, local, foreign, or other
tax considerations. This summary assumes that you are a U.S. citizen and have
held, and will hold, your shares as capital assets for investment purposes
under the Internal Revenue Code of 1986, as amended. You should consult your
tax advisor as to the particular federal, state, local, foreign, and other tax
consequences, in light of your specific circumstances.
We believe that the Transaction will be treated as a tax-free
"recapitalization" for federal income tax purposes. This will result in no
material federal income tax consequences to the Company.
The federal income tax consequences to stockholders will depend in part on
whether the board chooses to arrange for the sale of the Cashed-Out
Stockholders' fractional shares on the open market, or to purchase these
fractional shares directly. See "Determination of Trading Value" above. The
tax consequences of these alternatives are discussed below.
Federal Income Tax Consequences to Stockholders
Who Are Not Cashed Out by the Transaction:
If you (1) continue to hold NCR stock immediately after the Transaction,
and (2) you receive no cash as a result of the Transaction, you will not
recognize any gain or loss in the Transaction and you will have the same
adjusted tax basis and holding period in your NCR stock as you had in such
stock immediately prior to the Transaction.
Federal Income Tax Consequences to Cashed-Out Stockholders:
1. NCR's Board Chooses to Arrange for Sale the Fractional Shares on the
Open Market.
If you receive cash as a result of the Transaction, you will recognize
capital gain or loss in an amount equal to the difference between the cash you
received in the Transaction and your aggregate adjusted tax basis in the
shares of NCR stock cashed out, provided you have held such stock for the
required period of time. See "Maximum Tax Rates Applicable to Capital Gain"
below.
2. NCR's Board Chooses to Purchase the Fractional Shares Directly.
If you receive cash as a result of the Transaction, your tax consequences
will depend on whether, in addition to receiving cash, you or a person or
entity related to you continues to hold NCR stock immediately after the
Transaction, as explained below.
a. Stockholders Who Exchange All of Their NCR Stock for Cash as a Result of
the Transaction.
If you (1) receive cash in exchange for a fractional share as a result of
the Transaction, (2) you do not continue to hold any NCR stock immediately
after the Transaction, and (3) you are not related to any person or entity
which holds NCR stock immediately after the Transaction, you will recognize
capital gain or loss. The amount of capital gain or loss you recognize will
equal the difference between the cash you receive for your cashed-out stock
and your aggregate adjusted tax basis in such stock.
If you are related to a person or entity who continues to hold NCR stock
immediately after the Transaction, you will recognize gain in the same
16
<PAGE>
manner as set forth in the previous paragraph, provided that your receipt of
cash either (1) is "not essentially equivalent to a dividend," or (2) is a
"substantially disproportionate redemption of stock," as described below.
. ""Not Essentially Equivalent to a Dividend." You will satisfy the "not
essentially equivalent to a dividend" test if the reduction in your
proportionate interest in the Company resulting from the Transaction is
considered a "meaningful reduction" given your particular facts and
circumstances. The Internal Revenue Service has ruled that a small
reduction by a minority stockholder whose relative stock interest is
minimal and who exercises no control over the affairs of the corporation
will meet this test.
. ""Substantially Disproportionate Redemption of Stock." The receipt of
cash in the Transaction will be a "substantially disproportionate
redemption of stock" for you if the percentage of the outstanding shares
of NCR stock owned by you immediately after the Transaction is less than
80% of the percentage of shares of NCR stock owned by you immediately
before the Transaction.
In applying these tests, you will be treated as owning shares actually or
constructively owned by certain individuals and entities related to you. If
the taxable amount is not treated as capital gain under any of the tests, it
will be treated first as ordinary dividend income to the extent of your
ratable share of the NCR's undistributed earnings and profits, then as a tax-
free return of capital to the extent of your aggregate adjusted tax basis in
your shares, and any remaining gain will be treated as capital gain. See
"Maximum Tax Rates Applicable to Capital Gain" below.
b. Stockholders Who Both Receive Cash and Continue to Hold NCR Stock
Immediately After the Transaction.
If you both receive cash as a result of the Transaction and continue to
hold NCR stock immediately after the Transaction, you generally will recognize
gain, but not loss, in an amount equal to the lesser of (1) the excess of the
sum of aggregate fair market value of your shares of NCR stock plus the cash
received over your adjusted tax basis in the shares, or (2) the amount of cash
received in the Transaction. In determining whether you continue to hold stock
immediately after the Transaction, you will be treated as owning shares
actually or constructively owned by certain individuals and entities related
to you. Your aggregate adjusted tax basis in your shares of NCR stock held
immediately after the Transaction will be equal to your aggregate adjusted tax
basis in your shares of NCR stock held immediately prior to the Transaction,
increased by any gain recognized in the Transaction, and decreased by the
amount of cash received in the Transaction.
Any gain recognized in the Transaction will be treated, for federal income
tax purposes, as capital gain, provided that your receipt of cash either (1)
is "not essentially equivalent to a dividend" with respect to you, or (2) is a
"substantially disproportionate redemption of stock" with respect to you.
(Each of the terms in quotation marks in the previous sentence is discussed
above under the heading "Stockholders Who Exchange All of Their NCR Stock for
Cash as a Result of the Transaction.") In applying these tests, you may
possibly take into account sales of shares of NCR stock that occur
substantially contemporaneously with the Transaction. If your gain is not
treated as capital gain under any of these tests, the gain will be treated as
ordinary dividend income to you to the extent of your ratable share of NCR's
undistributed earnings and profits, then as a tax-free return of capital to
the extent of your aggregate adjusted tax basis in your shares, and any
remaining gain will be treated as a capital gain.
Maximum Tax Rates Applicable to Capital Gain:
Under the Internal Revenue Service Restructuring and Reform Act of 1998,
your net capital gain (defined generally as your total capital gains in excess
of capital losses for the year) recognized upon the sale of capital assets
that have been held for more than 12 months generally will be subject to tax
at a rate not to exceed 20% for sales occurring in taxable years ending after
December 31, 1997. Net capital gain recognized from the sale of capital assets
that have been held for 12 months or less will continue to be subject to tax
at ordinary income tax rates. In addition, capital gain recognized by a
corporate taxpayer will continue to be subject to tax at the ordinary income
tax rates applicable to corporations.
17
<PAGE>
As explained above, the amounts paid to you as a result of the Transaction
may result in dividend income, capital gain income, or some combination of
dividend and capital gain income to you depending on your individual
circumstances. YOU SHOULD CONSULT YOUR TAX ADVISOR AS TO THE PARTICULAR
FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX CONSEQUENCES OF THE TRANSACTION,
IN LIGHT OF YOUR SPECIFIC CIRCUMSTANCES.
Appraisal Rights
Dissenting stockholders do not have appraisal rights under Maryland state
law or under the Company's Charter or bylaws in connection with the
Transaction.
Reservation of Rights
The Board of Directors reserves the right to abandon the Transaction
without further action by the stockholders at any time before the filing of
the Charter amendments with the Maryland Secretary of State, even if the
Transaction has been authorized by the stockholders at the annual meeting.
The board recommends that you vote FOR this proposal. Proxies solicited by
the Board of Directors will be voted FOR this proposal, unless you specify
otherwise in your proxy.
- - -------------------------------------------------------------------------------
DIRECTORS' PROPOSAL TO APPROVE THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP
AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR 1999
(Item 3 on Proxy Card)
- - -------------------------------------------------------------------------------
Upon the recommendation of the Audit and Finance Committee, which is
composed entirely of independent directors, the board appointed
PricewaterhouseCoopers LLP as NCR's independent accountants for 1999. The
board engaged PricewaterhouseCoopers to audit NCR's consolidated financial
statements and to perform certain other non-audit services.
PricewaterhouseCoopers has been the Company's independent accounting firm for
many years and is a leader in providing audit services to the high technology
industry. Given PricewaterhouseCoopers' experience, global presence, and
quality audit work in serving the Company, the board believes they are
qualified to serve as NCR's independent accountants. The board is asking you
to approve this appointment.
PricewaterhouseCoopers representatives will be at the annual meeting to
answer questions and they may also make a statement.
The board recommends that you vote FOR this proposal. If the stockholders
do not approve this proposal, the Audit and Finance Committee and the Board of
Directors may, but are not required to, reconsider the appointment. Proxies
solicited by the Board of Directors will be voted FOR this proposal, unless
you specify otherwise in your proxy.
18
<PAGE>
- - -------------------------------------------------------------------------------
STOCKHOLDER PROPOSAL
(Item 4 on Proxy Card)
- - -------------------------------------------------------------------------------
We expect the following stockholder proposal to be presented at the annual
meeting. Following SEC rules, we are reprinting the proposal and supporting
statement as they were submitted to NCR's Corporate Secretary. NCR takes no
responsibility for them. The board recommends that you vote AGAINST this
proposal for the reasons given after the proposal.
This proposal was submitted by Robert D. Morse, 212 Highland Avenue,
Moorestown, New Jersey 08057. Mr. Morse owned 163 shares of NCR stock in
record name as of December 31, 1998.
Mr. Morse's Proposal
I propose that the Officers and Directors consider the discontinuance of
all bonuses immediately, and options, rights, SAR's, etc., after termination
of any existing programs for top management.
This does not include any programs for employees.
Reasons:
Management and Directors are compensated enough to buy on open market,
just as you and I, if they are motivated.
Management is already well paid with base pay, life insurance,
retirement plans, paid vacations, free use of vehicles, etc.
Options, rights, SAR;s [sic] etc. are available elsewhere, and a higher
offer would induce transfers, not necessarily "hold and retain'
qualified persons.
Compensation with "peer groups', [other similar companies] pay is
unfair, as other management could be better or worse. Would they also
accept the mistakes of others?
"Align management with shareowners' is a repeated ploy or "line' to
lull us as to continually increasing their take of our assets. Do we
get any purchase options at previous rates?
Please vote YES for this proposal and place an "X-Against All', for #1
proposal on line for "except' directors nominees, until they stop this
practice.
If officers filled out a daily work sheet, what would the output show?
NCR's Response
Your directors recommend a vote AGAINST this stockholder proposal. In order
to attract, retain and motivate qualified managers, NCR must offer a
competitive compensation package. Every day NCR competes against other
companies on a worldwide basis for customers and skilled employees, including
managers and officers. Without competitive compensation, we could not attract
and retain the talent that the Company needs to compete in other areas. For
this reason, we consider what other companies offer their employees.
According to studies conducted by Hewitt Associates, an independent
benefits consulting firm, over 95% of major U.S. corporations pay bonuses and
grant some form of stock-based awards to executives. All of the companies used
by the board's Compensation Committee as the "peer group" for evaluating NCR's
executive compensation offer bonus and stock awards. Therefore, in determining
management compensation, NCR strives for a balance between cash compensation
(base pay) and bonuses and stock-based compensation (both of which are
performance-based).
The board believes that both NCR and you, our stockholders, benefit from
the use of stock options and performance-based bonuses because they better
match employee interests with your interests. For an employee to value a stock
option, the market price of the stock must increase. As a result, top
management is motivated to manage the business in a manner that increases
stockholder value. Similarly, performance-based bonuses are not paid if the
Company does not perform.
The proponent offers no reason to discontinue bonuses and stock-based
compensation solely for top management, while leaving them in place for other
employees. To do so could result in top management receiving fixed amounts of
compensation regardless
19
<PAGE>
of the Company's performance, while other employees would lose portions of
their compensation if NCR performed poorly. Not having a performance component
would reward equally mediocrity and exemplary performance. Such an outcome
would be highly unfair and contrary to the Company's and your interests.
The board opposes this proposal because it believes the Company's
compensation program is structured appropriately and that elimination of
bonuses and stock-based compensation for top management is not in the best
interests of NCR or its stockholders.
The board recommends that you vote AGAINST this proposal. Proxies solicited
by the Board of Directors will be voted AGAINST this proposal, unless you
specify otherwise in your proxy.
The following performance graph and report of the board's Compensation
Committee shall not be deemed filed or incorporated by reference into any
other Company filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent we specifically incorporate this
information by reference into such filing.
PERFORMANCE GRAPH
- - -------------------------------------------------------------------------------
The following graph compares the relative investment performance of NCR
stock, the Standard & Poor's 500 Stock Index, and the Standard & Poor's
Technology Sector Index. This graph covers the period of time from the spinoff
of NCR from AT&T on December 31, 1996, through December 31, 1998.
[PERFORMANCE CHART APPEARS HERE]
<TABLE>
<CAPTION>
12/31/96 3/31/97 6/30/97 9/30/97 12/31/97 3/31/98 6/30/98 9/30/98 12/31/98
-------- ------- ------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NCR..................... $100.00 $104.46 $ 88.10 $103.72 $ 82.71 $ 98.33 $ 96.65 $ 85.50 $124.16
S&P 500................. $100.00 $102.68 $120.61 $129.64 $133.37 $151.97 $156.99 $141.37 $171.48
S&P Technology Sector... $100.00 $100.64 $122.75 $143.55 $126.04 $151.34 $163.88 $161.52 $216.31
</TABLE>
- - --------
(1) In each case, assumes a $100 investment on December 31, 1996, and
reinvestment of all dividends, if any.
(2) Upon the spinoff of NCR from AT&T on December 31, 1996, NCR's stock was
trading on the New York Stock Exchange on a when-issued basis. On January
2, 1997, NCR stock began open public trading on the New York Stock
Exchange.
20
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
- - -------------------------------------------------------------------------------
The Compensation Committee of the Board of Directors, which consists
entirely of independent outside directors (the "Committee"), reviews and
approves the Company's total compensation philosophy and programs covering
executive officers and key management employees. The Committee reviews the
performance levels of executive officers and determines the annual base
salaries and both cash and equity incentive awards to be paid.
Guiding Principles
The Company's compensation and benefit programs are designed to attract and
retain the best people in the industry. These programs are also intended to
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.
Compensation Philosophy
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. To form a basis of comparison, NCR selects the
Peer Group under an outside consulting firm's counsel. The Peer Group consists
of corporations with similar size and performance characteristics, including
industry and technology emphasis. Some of these companies are also included in
the S&P Technology Section Index found under the caption "Performance Graph,"
above.
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.
The Committee will also review the Company's longer term performance as
compared to the average performance of the Peer Group, and take such relative
performance into account in determining future compensation levels where
appropriate.
The key components of the compensation program for executive officers are
base salary, annual incentive compensation, and long-term incentives.
Base Salary
Salaries for executive officers are determined by the Committee annually,
based on review of each executive's level of responsibility, experience,
expertise, and sustained corporate, business unit and ongoing performance.
Based on competitive market data supplied by an independent consultant,
executive salaries approximate the Peer Group median level.
Annual Incentive Compensation
Executive officers participate in the NCR Management Incentive Plan for
Executive Officers and are eligible to receive annual cash incentive awards if
certain specified objectives are met. Awards for 1998 were based on financial
measures of net income, operating margin, and revenue growth, as well as
discretionary objectives that varied by work groups. These measures were
weighted depending upon the executive officer's area of responsibility. On
balance, compensation objectives were slightly below target for 1998.
Beginning in 1999, operating margin is replaced by a new profit measure,
Operating Income After Capital Charge. The new measure refines the measurement
of profits to take into account the effective management of assets, which
emphasizes total return more effectively than when profit is measured in
isolation from other factors.
Long-Term Incentives
Long-term incentives for 1998 consisted of stock option grants under the
NCR Management Stock Plan. The Committee believes that this type of incentive
compensation aligns management's interests with the interests of stockholders.
Each executive officer is eligible to receive an annual grant of stock
options with an exercise price equal to the fair market value of the stock on
the grant date. These awards are granted as a part of the executive's total
compensation and reviewed accordingly with our Peer Group market results. The
executive stock option awards were determined to be slightly below the 50th
percentile of the Peer Group.
21
<PAGE>
Compensation of Chairman and Chief Executive Officer
Mr. Nyberg participates in the same executive compensation plans that cover
the other executive officers, determined according to the same compensation
philosophy and principles. For 1998, Mr. Nyberg's annual incentive award under
NCR's Management Incentive Plan was based on NCR's performance against the
following measures: net income and revenue growth, with a discretionary
component. Mr. Nyberg's 1998 award under this plan was based on the Company
meeting its compensation objectives for profit but missing its objective for
revenue growth. Mr. Nyberg's stock option award was established based on
existing contractual commitments and a review of competitive market data.
Mr. Nyberg also has a letter established by AT&T pre-spinoff, defining
selected parts of his compensation. Pursuant to commitments made prior to the
spinoff, Mr. Nyberg received the following in 1998: a completion bonus
installment payment and a special hiring bonus installment payment.
Policy on 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, the Company
reserves the right to authorize the payment of nondeductible compensation if
it deems that is appropriate.
Dated: February 18, 1999
The Compensation Committee:
Ronald A. Mitsch, Chair
David R. Holmes
Linda Fayne Levinson
22
<PAGE>
EXECUTIVE COMPENSATION
- - -------------------------------------------------------------------------------
The following tables present certain compensation information for our
Chairman and Chief Executive Officer and the Company's most highly compensated
executives for the year ended December 31, 1998. Each of these five
individuals is sometimes referred to as a "Named Executive."
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
-----------------------------------------------------------------------
Awards(1) Payouts
------------------------------------------------
Other Securities All
Annual Restricted Underlying Other
Name and Compen- Stock Options/ LTIP Compen-
Principal Salary Bonus sation Awards SARs Payouts sation
Position Year ($) ($) $(2) $(3) #(4) $(5) $(6)
- - ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lars Nyberg
Chairman of
the Board, 1998 [ ] [ ] [ ] 0(3a) [ ](4a) -- [ ]
Chief 1997 873,862 129,500 98,581 129,500(3b) 254,296(4b) -- 536,252
Executive 5,000,000(3c)
Officer, and
President
1996 647,658 772,915 129,472 705,206(3d) 0(4c) 489,127 2,327,921
98,852(3e)
- - ------------------------------------------------------------------------------------------
William 1998 [ ] [ ] [ ] [ ](3a) [ ](4a) -- [ ]
Eisenman
Senior Vice 1997 [ ] [ ] [ ] [ ](3b) [ ](4b) -- [ ]
President
Worldwide 1996 [ ] [ ] [ ] [ ](3d) [ ](4c) -- [ ]
Customer
Services
- - ------------------------------------------------------------------------------------------
Tony Fano 1998 [ ] [ ] [ ] 0(3a) [ ](4a) -- [ ]
Senior Vice 1997 308,659 10,850 12,369 21,700(3b) 53,026(4b) -- 6,044
President
Retail 1996 303,009 171,084 26,241 153,318(3d) 17,742(4c) 0 5,625
Solutions
Group
- - ------------------------------------------------------------------------------------------
Per-Olof 1998 [ ] [ ] -- 0(3a) [ ](4a) -- --
Loof(7)
Senior Vice 1997 340,065 45,449 45,383 23,620(3b) 53,026(4b) -- 27
President
Financial 44,779(3e)
Solutions
Group 1996 339,174 192,780 -- 155,762(3d) 17,742(4c) 0 0
- - ------------------------------------------------------------------------------------------
Hideaki 1998 [ ] [ ] [ ] 0(3a) [ ](4a) -- [ ]
Takahashi(8)
Chairman, 1997 375,823 11,932 42,771 24,397(3b) 53,026(4b) -- 38,327
NCR Japan,
Ltd.
Senior Vice 1996 327,706 196,627 -- 206,288(3d) 14,206(4c) 0 0
President, 61,153(3e)
NCR
</TABLE>
(1) Prior to 1997, all awards were based on AT&T common stock. On January 2,
1997, all outstanding awards of AT&T stock options and restricted stock
units (except for certain AT&T restricted stock units that Mr. Nyberg
received from AT&T in 1995) were replaced with comparable awards based on
NCR stock. These replacement awards were converted from AT&T to NCR stock
under a conversion formula to preserve the economic value of the awards at
the time of NCR's spinoff from AT&T on December 31, 1996. The amounts shown
in the column "Restricted Stock Awards" represent the dollar value of such
awards on the date originally granted. These amounts did not change when
they were replaced after the spinoff from AT&T. The amounts shown for stock
options represent the number of shares of NCR c ommon stock underlying
such options.
(2) The amounts shown include (a) dividend equivalents paid with respect to
long-term restricted stock units and 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, and (d) relocation
reimbursements. In accordance with SEC rules, perquisites and personal
benefits have been omitted when such compensation is less than $50,000 or
10% of the Named Executive's salary and bonus for that year.
23
<PAGE>
(3) The amounts shown represent the dollar value of restricted stock awards on
the date of grant. Awards shown for 1996 and 1997 were granted under (i)
the NCR Long Term Incentive Program (the "LTIP"), a program offered under
the NCR Management Stock Plan, (ii) the 1987 AT&T Long Term Incentive
Plan, and (iii) other NCR restricted stock award programs. Any awards
granted under the AT&T plan were converted to awards based on NCR stock
upon the spinoff. No restricted stock awards were granted for performance
in 1998.
On December 31, 1998, the aggregate value of the unvested restricted stock
awards granted to each of the Named Executives (including any NCR
replacement awards for AT&T restricted stock awards that were converted at
spinoff) was as follows:
<TABLE>
<CAPTION>
Restricted
Stock Awards
-------------
Number
Dollar of
Value Shares
------ ------
<S> <C> <C>
Mr. Nyberg.................................................. [ ] [ ]
Mr. Eisenman................................................ [ ] [ ]
Mr. Fano.................................................... [ ] [ ]
Mr. Loof.................................................... [ ] [ ]
Mr. Takahashi............................................... [ ] [ ]
</TABLE>
These amounts are based on a stock price of $41.75 per share as of the
close of business on December 31, 1998. The restricted stock awards are
described in further detail in notes 3(a) through 3(e) below.
(a) In December 1997, the Compensation Committee discontinued NCR's LTIP.
Therefore, no restricted stock awards were made under this plan for
performance in 1998.
(b) In February 1998, NCR's Compensation Committee granted performance-based
awards of NCR restricted stock units under the LTIP. These awards were
based on performance objectives in 1997 (which were generally not met) and
payable after a three-year cycle ending in 1999. The Named Executives each
received the following number of shares of restricted stock: Mr. Nyberg--
[ ], Mr. Eisenman--[ ], Mr. Fano--[ ], Mr. Loof--[ ], and Mr.
Takahashi--[ ].
The awards under NCR's LTIP for the 1997-1999 performance cycle (as well as
the 1996-1998 performance cycle awards under the LTIP and the replacement
award granted to Mr. Nyberg for the 1996-1998 performance cycle, both of
which are described in note 4(d) below) will vest in one installment at the
end of the respective cycle and be payable in the first quarter following
the end of that three-year cycle, with certain exceptions in the case of
death, disability, or retirement. For example, awards granted under the
1997-1999 cycle will vest in one installment at the end of 1999 and be
payable in the first quarter of 2000 if the officer remains employed by NCR
for the three full years ending December 31, 1999. Awards are distributed as
common stock, or as cash equal to the value of the underlying shares, or
partly in common stock and partly in cash. Dividend equivalents, if any, on
these awards are paid in cash.
(c) In January 1997, NCR granted Mr. Nyberg a special award of 149,533
restricted shares of NCR stock under a letter agreement with AT&T, dated
June 7, 1996. This award will become fully vested (i) in September 1999,
provided Mr. Nyberg is still employed by NCR as of that date, or (ii)
prior to that date if he dies, becomes disabled, is involuntarily
terminated other than for cause, or voluntarily terminates following
certain specified occurrences. Dividends, if any, are reinvested in
additional shares of restricted stock and are subject to the same
provisions as the original award.
(d) In January 1997, the Compensation Committee granted performance-based
awards of NCR restricted stock units under the LTIP. These awards were
based on performance in 1996 and payable at the end of a three-year cycle
in 1998. Each of the Named Executives (except Mr. Nyberg) received the
following number of shares of restricted stock under this grant: Mr.
Eisenman--[ ], Mr. Fano--4,327, Mr. Loof--4,396, and Mr. Takahashi--
5,822.
In addition, in January 1997, the Compensation Committee granted awards of
NCR restricted stock units, to replace AT&T stock awards previously granted
by AT&T to the Named Executives, as follows. First,
24
<PAGE>
performance share awards granted to the Named Executives (except Mr. Nyberg)
under the AT&T Long Term Incentive Plan were replaced. Second, NCR replaced
an award granted to Mr. Nyberg without performance criteria by the AT&T
Compensation Committee under AT&T's Long Term Incentive Plan for the 1996-
1998 cycle. Finally, other outstanding AT&T restricted stock awards granted
to Mr. Nyberg under AT&T's plans were replaced, except for one award of AT&T
restricted stock that he received in 1995.
(e) In 1997, Mr. Loof received 1,587 restricted shares of NCR common stock
under the Officer Plan II (as defined below under the caption "Pension
Plans"). In 1996, Messrs. Nyberg and Takahashi received restricted shares
of AT&T common stock under such plan. These awards were replaced with
awards of NCR restricted stock on January 2, 1997. The replacement awards
were 2,519 shares for Mr. Nyberg and 1,558 shares for Mr. Takahashi.
Dividends, if any, on any shares granted under the Officer Plan II are
reinvested in additional shares of restricted stock. The value of such
awards at the date of grant is reflected in the table. These awards vest
at age 55 provided the officer is still employed by NCR as of that date,
and become freely transferable at age 62.
(4) For 1997 and 1998, amounts shown represent the number of shares of NCR
common stock underlying the options on the date originally granted. For
1996, amounts shown represent the number of shares of NCR common stock
that would have been underlying the original AT&T stock option grants on
the date originally granted based on a conversion formula representing the
economic value of such grants at the time of the spinoff.
(a) On February 18, 1998, NCR's Compensation Committee granted the Named
Executives management stock options under the NCR Management Stock Plan.
In addition, on December 17, 1998, this committee also granted Mr. Nyberg
options for 75,000 shares of NCR stock under the NCR Management Stock
Plan.
(b) On January 2, 1997, the Compensation Committee granted the Named
Executives options under three different programs. First, these executives
received special turnaround spinoff grants under the NCR Management Stock
Plan. Second, the Named Executives received management stock option grants
for NCR common stock under the NCR Management Stock Plan. Third, each
Named Executive received options under the NCR WorldShares Plan as part of
a company-wide grant to employees in connection with the achievement of
certain performance goals in 1996. The aggregate number of shares of NCR
common stock underlying the turnaround, management, and WorldShares
options is listed in the table for 1997.
(c) In addition, on January 2, 1997, the Compensation Committee granted the
Named Executives replacement awards for those options granted under the
AT&T Long Term Incentive Plan that were unexercised at the spinoff. These
grants replaced options for AT&T common stock that expired by their terms
upon the spinoff because the Named Executives were no longer employed by
AT&T after December 31, 1996. The unexercised AT&T options were replaced
with options for NCR common stock based on a conversion formula to
preserve the economic value of such awards at the time of the spinoff. The
expiration date and vesting schedule of the original grants were not
changed in the replacement option grants.
(5) For 1996, this column shows payment to Mr. Nyberg under the AT&T Long Term
Incentive Plan of performance units for the 1993-1995 cycle. Awards made
under NCR's LTIP are not included in this column because awards of
restricted stock units under this plan are listed at the date of grant in
the "Restricted Stock Awards" column.
(6) The Company provides the Named Executives with certain group life, health,
medical, and other non-cash benefits generally available to all salaried
employees and not included in this column in accordance with the SEC's
rules. The amounts shown in this column include the following:
. Payments to Mr. Nyberg under certain letter agreements between Mr. Nyberg
and AT&T. For a summary of the letter agreements with Mr. Nyberg, see the
caption "Employment Agreements and Change in Control Arrangements" below.
In 1998, Mr. Nyberg received (i) [ ] for a lump-sum completion bonus
under a June 7, 1996 letter agreement with AT&T, and (ii) [ ] for a
special hiring bonus under a July 13, 1995 letter agreement with AT&T.
. Insurance premium payments to Mr. Nyberg for a split-dollar life
insurance policy. In 1998, this payment was [ ].
25
<PAGE>
. Matching contributions by the Company to the NCR Savings Plan for
participating Named Executives. In 1998, NCR's matching contributions
were [ ], [ ], and [ ] for Messrs. Nyberg, Eisenman, and Fano,
respectively.
. For Mr. Takahashi, payment of $ in 1998 for his expatriate
assignment to the United States.
(7) Salary, bonus, and all other annual compensation paid to Mr. Loof is
reported in U.S. dollars although it is paid in U.K. pound sterling. The
values listed above are based on the following currency conversion rates:
$1.6595 (1998), $1.6508 (1997), and $1.713 (1996) per U.K. pound sterling.
The conversion rates used were those rates published by Reuters News
Service on the last day of December of each year.
(8) Mr. Takahashi is currently Senior Vice President, NCR, and Chairman of NCR
Japan, Ltd. From June 1, 1998 to January 1, 1999, Mr. Takahashi was also
the Senior Vice President, Worldwide Field Organization, for NCR. Salary,
bonus, and all other compensation paid to Mr. Takahashi is reported in
U.S. dollars although it is paid in Japanese yen and, for part of 1997, in
Singapore dollars. The values listed above are based on the following
currency conversion rates: $.008814 (1998), $.007659 (1997), and $.008624
(1996) per Japanese yen, and $.594354 (1997) per Singapore dollar. The
conversion rates used were those rates published by Reuters News Service
on the last day of December of each year.
Option Grants In 1998
<TABLE>
<CAPTION>
Individual Grants (1)
---------------------------------------------------
Number of Percent of Grant
Shares Total Date
Underlying Options Exercise Present
Options Granted to Price Expiration Value
Name Granted (#) Employees ($/Share) Date ($)(2)
- - ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lars Nyberg [ ] [ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ] [ ]
- - ------------------------------------------------------------------------
William Eisenman [ ] [ ] [ ] [ ] [ ]
- - ------------------------------------------------------------------------
Tony Fano [ ] [ ] [ ] [ ] [ ]
- - ------------------------------------------------------------------------
Per-Olof Loof [ ] [ ] [ ] [ ] [ ]
- - ------------------------------------------------------------------------
Hideaki Takahashi [ ] [ ] [ ] [ ] [ ]
</TABLE>
(1) This column shows management options under the NCR Management Stock Plan.
These options become exercisable in 33 1/3% increments over three years,
provided the officer is still employed by NCR, with certain exceptions in
the case of death, disability, or retirement.
(2) In accordance with SEC rules, we chose the Black-Scholes option pricing
model to estimate the present value of the options on the grant date.
NCR's use of this model should not be construed as an endorsement of its
accuracy at valuing options. All stock option valuation models, including
the Black-Scholes model, require certain assumptions to be made. The
following assumptions were made for purposes of calculating the present
values of the options listed above: volatility at [ ]%, dividend yield
at [ ]%, an expected term of [ ] years, and interest rate of [ ]%.
The real value of the options in this table depends upon the actual
performance of the NCR stock underlying the options during the applicable
period. The value of Mr. Nyberg's option for [ ] shares of NCR stock
assumed an interest rate of 4.36% with all other assumptions the same as
above.
26
<PAGE>
Aggregated Option Exercises in 1998 and Year-End Values
<TABLE>
<CAPTION>
Value of
Unexercised In-the-Money
Options at Year Options at
End (#) Year End ($)
-----------------------------
Shares
Acquired
on Value Exercisable/ Exercisable/
Exercise Realized Unexercisable Unexercisable
Name(1) (#) ($) (2) (3)
- - --------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lars Nyberg [ ] [ ]
[ ] [ ]
- - --------------------------------------------------------------------
William Eisenman [ ] [ ]
[ ] [ ]
- - --------------------------------------------------------------------
Tony Fano [ ] [ ]
[ ] [ ]
- - --------------------------------------------------------------------
Per-Olof Loof [ ] [ ]
[ ] [ ]
- - --------------------------------------------------------------------
Hideaki Takahashi [ ] [ ] [ ] [ ]
[ ] [ ]
</TABLE>
(1) None of the individuals in this table has stock appreciation rights.
(2) This column includes both options granted before and after the spinoff
from AT&T. Options granted before the spinoff were granted with respect to
AT&T common stock. To the extent these options were outstanding on
December 31, 1996, they were replaced on January 2, 1997, with options for
shares of NCR stock to preserve the economic value of the options at the
time of the spinoff.
(3) The value of in-the-money options assumes the closing market price of NCR
stock underlying the NCR stock options as of December 31, 1998 ($41.75).
----------------
Pension Plans
The Company maintains a number of pension plans as part of the compensation
and benefits it provides to its employees and executive officers. The plans
covering NCR's Named Executives are summarized below.
If Messrs. Nyberg, Eisenman, Fano, Loof and Takahashi continue in their
current positions and retire at age 62, the estimated annual pensions payable
to them from NCR's pension plans would be $910,835, $324,000, $367,200,
$346,015, and $270,453, respectively. These amounts are straight-life annuity
amounts although other optional forms of payment, some with reduced pensions,
are available.
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. In addition, except for the Officer Plan II, benefits under NCR's
pension plans are not subject to reductions for social security benefits or
other offset amounts.
The NCR Pension Plan:
The Company has a non-contributory pension plan called the NCR Pension Plan
which covers all employees based in the U.S., including Messrs. Nyberg,
Eisenman and Fano. The NCR Pension Plan pays a monthly pension benefit and a
PensionPlus benefit. These benefits vest after five years of service or
reaching age 65. The monthly pension benefit begins at age 62, or may be
started between age 55 and 62 in a reduced amount. The PensionPlus benefit may
be taken as a lump sum after termination of employment, or may be used to
increase the monthly pension.
The monthly pension benefit is computed by multiplying the following three
items: (1) the participant's years of service with the Company, (2) a factor
between 1.4% and 1.7%, depending on the participant's total years of service,
and (3) the participant's modified average pay. Modified average pay is the
average annual base pay and bonus received during a participant's career, with
an
27
<PAGE>
adjustment to update pay for earlier years when earnings typically were less.
The PensionPlus benefit is computed as an account balance, although the
account is for bookkeeping purposes only. The plan credits a participant's
account with 1 1/2% of base pay and bonus, as well as interest credits on the
account balance.
The NCR Nonqualified Excess Plan:
Federal laws limit the amount of pay that may be considered under the NCR
Pension Plan. The Company makes up the difference for senior managers with the
NCR Nonqualified Excess Plan. The excess plan pays the additional pension
benefits that would be paid under the NCR Pension Plan if the federal pay
limits were not in effect. Messrs. Loof, Eisenman, and Fano are covered by the
excess plan.
NCR Mid-Career Hire Supplemental Pension Plan:
NCR also maintains the NCR Mid-Career Hire Supplemental Pension Plan. This
plan covers employees, including Mr. Loof, who are hired by NCR for the first
time at age 35 or over at specified management levels, and who terminate with
at least five years service at specified levels. The benefit is 1% of annual
pay for each year worked for NCR, up to a maximum equal to the number of years
between age 30 and the age on the date of hire with NCR.
International Plans:
Mr. Takahashi is covered by the NCR Japan Directors Pension Plan, which is
a non-contributory retirement plan for directors of NCR Japan, Ltd., a wholly-
owned subsidiary of the Company. Generally, benefits under this plan consist
of a lump sum amount for each year as a director, computed by multiplying
monthly base pay by a specific multiplier. The multiplier for Mr. Takahashi's
benefit is 4.2. Each year's amount is added to the previous total, and the
total is increased by a specified interest rate. Mr. Takahashi's benefit is
fully vested.
Mr. Loof is covered by the NCR (Scotland) Pension Plan, which covers
employees of NCR Financial Solutions Group Ltd., a wholly-owned subsidiary of
the Company. This plan is made up of three parts. The first is a non-
contributory pension plan paying a monthly pension of 1% of final average pay
for each year of service while covered by the plan. The second part is a money
purchase plan containing employee contributions of 3%, 4% or 5% of earnings,
as selected by the employee, and company matching contributions of 50% of the
employee contributions. The third part is a death benefit plan that pays a
lump sum death benefit, spouse's pension and children's pension if a
participant dies before age 65. The plan uses only the first (Pounds)84,000 of
Mr. Loof's pay to compute his benefits. Mr. Loof's benefits are fully vested.
Supplemental Retirement Plans:
The Company also has two supplemental retirement plans for senior managers.
The NCR Senior Executive Retirement, Death & Disability Plan (the "Officer
Plan I") covers officers appointed before November 30, 1988, and covers
Messrs. Eisenman and Fano. The Retirement Plan for Officers of NCR (the
"Officer Plan II") covers senior managers appointed to specified executive
levels after November 30, 1988, and covers Messrs. Nyberg, Loof and Takahashi.
The Officer Plan I pays monthly benefits of 4% of the final average monthly
pay per year of a participant's service with the Company (up to a maximum of
15 years). Final average monthly pay is the participant's highest consecutive
36 months of pay in the last six years of employment, including salary, annual
bonus, and 50% of certain long-term incentive awards. The pension begins at
age 62, or may be started between age 55 and 62 in a reduced amount. The
benefit is offset by the participant's Social Security primary insurance
amount and any retirement or disability benefits paid under other NCR plans.
The plan also pays disability and death benefits.
Before January 1, 1997, the Officer Plan I 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. Eisenman and Fano
are entitled to benefits under the Officer Plan I that are enhanced by this
change-in-control provision. The enhancement includes an additional five years
of service, a guaranteed minimum pay for computing the pension, and the
ability to begin receiving the pension at any time after age 50, with a more
favorable reduction for early retirement.
The Officer Plan II pays monthly benefits of 2.5% of career average monthly
pay for service after
28
<PAGE>
becoming a plan participant. The pension begins at age 62, or may be started
between age 55 and 62 in a reduced amount. The benefit is offset by the
participant's retirement or disability benefits paid under other NCR plans
except for the NCR Mid-Career Hire Supplemental Pension Plan. No benefit is
payable if a participant terminates employment during the first year covered
by the plan. No benefit is payable if a participant terminates employment
before age 55, other than by death, with less than 10 years of NCR service.
However, a participant will be entitled to plan benefits if employment is
terminated after a change-in-control, as described in the NCR change-in-
control severance plans (see the description of those plans under "Employment
Agreements and Change in Control Arrangements"). The Officer Plan II also pays
death benefits. Prior to 1997, participants in the Officer Plan II received
annual awards of NCR restricted stock with a face value equal to 15% of base
salary. The restricted stock vests at age 55, if the participant is employed
with NCR until then, and becomes freely transferable at age 62.
Employment and Termination of Employment Agreements and Change in Control
Arrangements
Letter Agreements with Messrs. Nyberg and Takahashi:
When NCR spunoff from AT&T at the end of 1996, the Company assumed
liability under three letter agreements already in effect between Mr. Nyberg
and AT&T. The first agreement, dated April 18, 1995, covered Mr. Nyberg's
employment with NCR prior to the spinoff. This agreement included Mr. Nyberg's
base salary, a 1995 incentive award, performance unit awards under the AT&T
Long Term Incentive Plan, and options to purchase shares of AT&T common stock.
On January 2, 1997, the outstanding AT&T performance units were replaced with
30,525 restricted stock unit awards based on NCR common stock under the NCR
Management Stock Plan. These replacement awards were intended to preserve the
economic value of the original awards at the time of the spinoff.
Under the second agreement, dated July 13, 1995, Mr. Nyberg was offered a
special hiring bonus of $118,000. NCR paid this bonus to Mr. Nyberg in three
equal installments on June 1 of each of year from 1996 through 1998. NCR
conditioned these payments on Mr. Nyberg's continued employment with NCR as of
each payment date. Under the third agreement, dated June 7, 1996, Mr. Nyberg
received an annual retention bonus of $375,000. NCR paid this bonus on June 1
of each year from 1996 through 1998. Payment was conditioned only upon Mr.
Nyberg's continued employment with NCR as of each payment date. Mr. Nyberg is
also entitled to receive a bonus of $3,875,000 from NCR on June 1, 1999, if he
is still employed by NCR on that date. If his employment is terminated as a
result of death, disability, involuntary termination other than for cause, or
termination for good reason, Mr. Nyberg or his heirs will receive a one-time
payment of $5,000,000, less any retention bonus payments already received. The
1996 agreement also provides for a bonus of $2,000,000 to be paid to Mr.
Nyberg on or after June 1, 1999, if NCR and Mr. Nyberg agree to an employment
contract for an additional two-year period beyond June 1, 1999. As required by
its 1996 agreement with Mr. Nyberg, prior to the spinoff, NCR established a
rabbi trust with assets sufficient to fund the portion of the bonuses which
Mr. Nyberg may receive in 1999.
As required under the terms of the third agreement, on January 2, 1997, NCR
granted Mr. Nyberg (1) options to purchase 149,533 shares of NCR stock (valued
at $5,000,000 on the date of grant), and (2) 149,533 restricted shares of NCR
stock (valued at $5,000,000 on the date of grant.) These options and
restricted shares will become exercisable or vest, as applicable, in September
1999.
In addition, the Company entered into a letter agreement with Mr. Takahashi
effective December 17, 1998, in connection with his return to Japan for
personal reasons. The letter describes his duties in Japan until his
termination of employment on March 31, 1999, for which he will continue to
receive his current salary. The letter also describes payments to him as
required under NCR policies and benefit plans, including relocation and
expatriate support, annual incentive award, stock awards, and pension
benefits.
Under the letter, Mr. Takahashi agreed to resign as Chairman of NCR Japan
at the next regularly scheduled NCR Japan shareholders' meeting. He agreed to
continue serving as an outside director and advisor to the Chairman for
approximately one year, for which NCR will pay him an annual fee.
Mr. Takahashi agreed not to compete with NCR after his termination of
employment and made other
29
<PAGE>
future promises to NCR. In exchange, NCR will pay Mr. Takahashi $175,000 on
September 1, 1999, which Mr. Takahashi will refund to NCR if he violates the
agreement between September 1, 1999, and December 31, 1999.
Change in Control Agreements:
NCR has a Change in Control Severance Plan for Executive Officers. This
plan, which terminates December 31, 2000, provides that executives officers
may receive severance benefits if their employment with NCR is terminated as a
result of involuntary termination without cause, or voluntary termination for
good reason during the three years following certain events (such as an
acquisition, merger or liquidation of the Company). These events are called
"triggering events." An executive officer may also receive these benefits upon
voluntary termination for any reason during the thirteenth month following the
month in which the triggering event occurs. The severance benefits include (a)
severance pay equal to base pay for three years, (b) payment of the target
bonus under the Management Incentive Plan for those three years, (c)
reimbursement for any excise tax liability for the severance benefits under
Internal Revenue Code Section 4999, (d) continued medical insurance coverage
for the officer and eligible dependents and continued life insurance coverage
for the officer, (e) outplacement services, and (f) 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. The officer will
no longer receive the severance pay if he or she becomes employed by 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.
NCR also has a change in control agreement with Mr. Nyberg that contains
the same terms as the change in control plan for the executive officers.
However, the severance payments for Mr. Nyberg also include payment of target
long-term incentive bonuses for the severance pay period. Mr. Nyberg's change
in control agreement terminates December 31, 2000.
OTHER MATTERS
- - -------------------------------------------------------------------------------
The Board of Directors does not know of any matters which will be brought
before the annual meeting other than those listed in the notice of meeting. If
any other matters are properly introduced at the meeting for consideration,
including consideration of a motion to adjourn the meeting to another time or
place, the individuals named on the enclosed form of proxy will have
discretion to vote in accordance with their best judgment.
ADDITIONAL INFORMATION
- - -------------------------------------------------------------------------------
Cost of Proxy Solicitation
We will pay the expenses of soliciting proxies in connection with the
annual meeting. Proxies may be solicited on our behalf through the mail, in
person, by telephone, electronic transmission, or facsimile transmission. We
have hired 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 SEC and the New York Stock Exchange rules, NCR will
also reimburse brokerage houses and other custodians, nominees, and
fiduciaries for their expenses of sending proxies and proxy materials to the
beneficial owners of NCR common stock.
Procedures for Stockholder Proposals and Nominations
Under NCR's Bylaws, nominations for director may be made only by (1) the
Board of Directors or a committee of the board, or (2) a stockholder entitled
to vote who has delivered notice to the Company within 90-120 days before the
first anniversary of last year's annual meeting.
Our Bylaws also provide that business may not be brought before an annual
meeting unless it is (1) specified in the notice of meeting (which includes
stockholder proposals that the Company is required to include in its proxy
statement under SEC Rule 14a-8), (2) brought before the meeting by or at the
30
<PAGE>
direction of the board, or (3) brought by a stockholder entitled to vote who
has delivered notice to the Company (containing certain information specified
in the Bylaws) within 90-120 days before the first anniversary of last year's
annual meeting. In addition, you must comply with SEC Rule 14a-8 to have your
proposal included in the Company's proxy statement.
A copy of the full text of the Company's Bylaws may be obtained upon written
request to the Corporate Secretary at the address provided above.
Stockholder Proposals for 2000 Annual Meeting
Stockholders interested in presenting a proposal for consideration at NCR's
annual meeting of stockholders in 2000 must follow the procedures found in SEC
Rule 14a-8 and the Company's Bylaws. To be eligible for inclusion in the
Company's 2000 proxy materials, all qualified proposals must be received by
NCR's Corporate Secretary no later than November[4], 1999.
The above notice and proxy statement are sent by order of the Board of
Directors.
Laura K. Nyquist
Corporate Secretary
Dated: March [3], 1999
31
<PAGE>
Appendix A
NCR CORPORATION
ARTICLES OF AMENDMENT
NCR CORPORATION, a Maryland corporation, having its principal office in
Montgomery County, Maryland (which is hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of
Maryland that:
First: The Corporation hereby effects a reverse stock split by changing and
reclassifying each 10 shares of Common Stock, par value $.01 per share, of the
Corporation, which is issued and outstanding at [6:00] p.m. on the effective
date of this amendment, into one share of such Common Stock, par value $.01
per share.
Fractional shares held by record stockholders who as a result of the
reverse split hold less than one share will be converted into the right to
receive the fair value of such fractional interests as determined by the Board
of Directors of the Corporation.
Second: The amendment does not increase the authorized stock of the
Corporation.
Third: The foregoing amendment to the Charter and reduction in the stated
capital of the Corporation has been advised by the Board of Directors and
approved by the stockholders of the Corporation.
Fourth: The foregoing amendment to the Charter will become effective at
[6:00] p.m. on May [14], 1999.
In Witness Whereof, NCR Corporation has caused these presents to be signed
in its name and on its behalf by its President and witnessed by its Secretary
on , 1999.
Witness: NCR Corporation
- - ------------------------------------ By: ___________________________________
Secretary President
The Undersigned, President of NCR Corporation, who executed on behalf of
the Corporation the foregoing Articles of Amendment of which this certificate
is made a part, hereby acknowledges in the name and on behalf of said
Corporation the foregoing Articles of Amendment to be the corporate act of
said Corporation and hereby certifies that to the best of his knowledge,
information, and belief the matters and facts set forth therein with respect
to the authorization and approval thereof are true in all material respects
under the penalties of perjury.
---------------------------------------
President
<PAGE>
NCR CORPORATION
ARTICLES OF AMENDMENT
NCR Corporation, a Maryland corporation, having its principal office in
Montgomery County, Maryland (which is hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of
Maryland that:
First: The Corporation hereby effects a forward stock split by changing and
reclassifying each 1 share of Common Stock, par value $.01 per share, of the
Corporation, which is issued and outstanding at [6:01] p.m. on the effective
date of this amendment, into ten shares of such Common Stock, par value $.01
per share.
Second: The amendment does not increase the authorized stock of the
Corporation.
Third: The foregoing amendment to the Charter and increase in the stated
capital of the Corporation has been advised by the Board of Directors and
approved by the stockholders of the Corporation.
Fourth: The foregoing amendment to the Charter will become effective at
[6:01] p.m. on [May 14], 1999.
In Witness Whereof, NCR Corporation has caused these presents to be signed
in its name and on its behalf by its President and witnessed by its Secretary
on , 1999.
Witness: NCR Corporation
____________________________________ By: ___________________________________
Secretary President
The Undersigned, President of NCR Corporation, who executed on behalf of
the Corporation the foregoing Articles of Amendment of which this certificate
is made a part, hereby acknowledges in the name and on behalf of said
Corporation the foregoing Articles of Amendment to be the corporate act of
said Corporation and hereby certifies that to the best of his knowledge,
information, and belief the matters and facts set forth therein with respect
to the authorization and approval thereof are true in all material respects
under the penalties of perjury.
_______________________________________
President
<PAGE>
Detach Here
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
1999 ANNUAL STOCKHOLDERS MEETING
RESERVATION REQUEST FORM
If you plan to attend the 1999 Annual Stockholders Meeting of NCR Corporation,
please complete the following information and return to Laura K. Nyquist,
Corporate Secretary, NCR Corporation, 1700 South Patterson Blvd., Dayton, Ohio
45479.
Your name and address: ---------------------------------
---------------------------------
---------------------------------
Number of shares of NCR common stock you hold:
---------------------------------
If the shares listed above are not registered in your name, identify the
name of the registered stockholder below and include evidence that you
beneficially own the shares.
Registered stockholder: ---------------------------------
(name of your bank, broker,
or other nominee)
THIS IS NOT A PROXY CARD
<PAGE>
[NCR LOGO APPEARS HERE] NCR Corporation
1700 South Patterson Boulevard
Dayton, OH 45478-0001
c/o BankBoston
P.O. 9398
Boston, MA 02205-9398
Instructions for Voting Your Proxy
- - ----------------------------------
NCR is offering its stockholders two ways of voting: either by mail or via the
Internet. Your Internet vote authorizes the named proxies to vote your shares in
the same manner as if you marked, signed, and returned your proxy card. NCR
encourages you to use this cost-effective and convenient way of voting.
INTERNET VOTING
. Visit our Internet voting website at xxx.xxxx.com, 24 hours a day,
7 days a week.
. Enter the Control Number above your name and follow the instructions on
your computer screen.
. Your vote will be confirmed and cast as you directed.
. There may be Internet charges (usage or server fees) that must be paid
by the stockholder.
VOTING BY MAIL
. Simply mark, sign, and date your proxy card and return it in the
postage-paid envelope.
. If you are voting via the Internet, please do not mail your proxy card.
Electronic Distribution
- - -----------------------
If you would like to receive NCR's future proxy statements and annual
reports electronically, please visit http://www.xxx.xxx.com
NCR's Annual Meeting of Stockholders will be held at 9:30 a.m. on April 15,
1999, at 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.
PLEASE DETACH PROXY CARD HERE
- - --------------------------------------------------------------------------------
- - --- Please mark
X votes as in
- - --- this example.
NCR's Board of Directors recommend a vote "FOR" proposals 1, 2, and 3,
and "AGAINST" proposal 4.
- - --------------------------------------------------------------------------------
WITHHOLD
1. Election of Class C Directors: (page 6) FOR ALL FROM ALL
(01) Ronald A. Mitsch, nominees nominees
(02) C.K. Prahalad, [_] [_]
(03) William S. Stavropoulos
Election of Class B Director: (page 6)
(04) James R. Long
FOR ALL EXCEPT the following nominee(s):
---------------------------------------
2. Amend the Company's amended and restated FOR AGAINST ABSTAIN
articles of incorporation to effect a [_] [_] [_]
reverse stock split followed by a
forward stock split of NCR's common
stock (page 9).
3. Approval of the appointment of FOR AGAINST ABSTAIN
PricewaterhouseCoopers as the Company's [_] [_] [_]
independent accountants for 1999
(page 18).
4. Stockholder Proposal--Discontinue FOR AGAINST ABSTAIN
Executive Incentive Programs [_] [_] [_]
(page 19).
- - --------------------------------------------------------------------------------
Discontinue Annual Report Duplicate Account [_]
Vote Limitations on Other Side of Card [_]
- - -------------------------------------------------
If you attend the meeting and decide to vote by ballot, your ballot 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
-------------------------------------- ------------------------
Signature Date
-------------------------------------- ------------------------
Please Sign This Proxy as Name(s) Appear Above.
<PAGE>
- - --------------------------------------------------------------------------------
[NCR LOGO APPEARS HERE] 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 15, 1999.
The undersigned stockholder of NCR Corporation, a Maryland corporation ("NCR"),
hereby appoints Lars Nyberg, David Bearman, 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
that the undersigned is entitled to vote at NCR's Annual Meeting of Stockholders
to be held in Dayton, Ohio, on April 15, 1999, and at any postponement or
adjournment thereof, upon any matter that may properly come before the meeting,
or any postponement or adjournment thereof, including the matters described in
the accompanying proxy statement. This proxy also provides voting instructions
to the trustee of the NCR Savings Plan and to the trustees and administrators of
the benefit plans of Lucent Technologies, Inc., AT&T Capital Corporation, or
other companies, with respect to shares of NCR common stock the undersigned may
hold under such plans for which the undersigned is entitled to vote at said
meeting to the extent permitted by such plans and their trustees and
administrators.
THE PROXIES OR THE TRUSTEES AND ADMINISTRATORS 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 AN NCR SAVINGS PLAN
OR OTHER BENEFIT PLAN PARTICIPANT ENTITLED TO VOTE AT THE 1999 ANNUAL MEETING OF
STOCKHOLDERS AND DO NOT INDICATE YOUR CHOICES ON THIS CARD, THOSE SHARES WILL BE
VOTED BY THE TRUSTEES OF SUCH PLANS.
