<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
American President Companies, Ltd.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
[LOGO]
--------------------------------------------------------------------------------
AMERICAN PRESIDENT COMPANIES, LTD.
--------------------------------------------------------------------------------
1111 Broadway
Oakland, California
94607 U.S.A.
NOTICE OF 1995 ANNUAL MEETING
AND PROXY STATEMENT
Annual Meeting of Stockholders
May 2, 1995
<PAGE>
AMERICAN PRESIDENT COMPANIES, LTD.
1111 BROADWAY
OAKLAND, CA 94607
March 31, 1995
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
American President Companies, Ltd., which will be held on Tuesday, May 2, 1995,
beginning at 10:00 A.M., at the Company's headquarters, 1111 Broadway, Oakland,
California.
The formal notice of the Annual Meeting and the Proxy Statement have been
made a part of this invitation.
After reading the Proxy Statement, please mark, sign, date and return, at an
early date, the enclosed proxy in the enclosed prepaid envelope to ensure that
your shares will be represented.
A copy of the Company's 1994 Annual Report to Stockholders is also enclosed.
The Board of Directors and management look forward to seeing you at the
meeting.
Sincerely,
John M. Lillie
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
<PAGE>
AMERICAN PRESIDENT COMPANIES, LTD.
1111 BROADWAY
OAKLAND, CA 94607
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 2, 1995
The Annual Meeting of Stockholders of American President Companies, Ltd.
(the "Company") will be held at the Company's headquarters, 1111 Broadway,
Oakland, California, on Tuesday, May 2, 1995, beginning at 10:00 A.M., for the
following purposes:
1. To elect three Class III directors to hold office until 1998.
2. To approve an amendment to the Company's Certificate of Incorporation to
provide that the number of directors shall be determined by the Board of
Directors, subject to the requirement that there be at least five
directors and to any other limitations provided in the bylaws.
3. To approve the adoption of the 1995 Stock Bonus Plan.
4. To ratify the selection of Arthur Andersen LLP as the Company's
independent auditors for fiscal year 1995.
5. To transact such other business as may properly come before the meeting
and any adjournment thereof.
The Board of Directors has fixed the close of business on March 1, 1995, as
the record date for determining the stockholders entitled to notice of, and to
vote at, the Annual Meeting and any adjournment thereof. A complete list of
stockholders entitled to vote at the meeting will be available for inspection at
the time and place of the Annual Meeting and, during the ten days prior to the
meeting, at the Company's executive offices at 1111 Broadway, Oakland,
California.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. EVEN IF YOU
PLAN TO ATTEND THE MEETING, WE HOPE THAT YOU WILL PROMPTLY MARK, SIGN, DATE AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. THIS WILL NOT LIMIT YOUR
RIGHT TO ATTEND OR VOTE AT THE MEETING.
Maryellen B. Cattani
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
March 31, 1995
<PAGE>
AMERICAN PRESIDENT COMPANIES, LTD.
1111 BROADWAY
OAKLAND, CA 94607
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of American President Companies, Ltd., a Delaware corporation
(the "Company"), of proxies in the accompanying form to be used at the Annual
Meeting of Stockholders of the Company to be held on May 2, 1995, and any
adjournment thereof. The shares represented by the proxies received pursuant to
this solicitation and not revoked will be voted at the Annual Meeting. A
stockholder who has given a proxy may revoke it by voting in person at the
meeting, by giving written notice of revocation to the Secretary of the Company
or by giving a later dated proxy at any time before voting. On the matters
coming before the meeting as to which a choice has been specified by a
stockholder by means of the ballot on the proxy, the shares will be voted
accordingly. If no choice is so specified, the shares will be voted FOR the
election of the three nominees for director listed in this Proxy Statement and
FOR the proposals referred to in items 2, 3 and 4 in the Notice of Annual
Meeting of Stockholders and described in this Proxy Statement.
Holders of the Company's Common Stock and 9% Series C Cumulative Convertible
Preferred Stock, par value $.01 per share ("Series C Preferred Stock"), of
record at the close of business on March 1, 1995, will be entitled to notice of
and to vote on all matters presented at the Annual Meeting. On such date, the
Company had outstanding 27,323,728 shares of Common Stock and 1,500,000 shares
of Series C Preferred Stock. Each outstanding share of Common Stock is entitled
to one vote and each outstanding share of Series C Preferred Stock is entitled
to approximately 2.641 votes. The Common Stock and Series C Preferred Stock will
vote together with respect to all matters submitted to the stockholders at the
Annual Meeting. See "Certain Beneficial Ownership of Securities--Voting of
Shares by Certain Stockholders" for additional information concerning the voting
of the shares of Series C Preferred Stock.
Directors are elected by a plurality vote. The approval of the proposed
amendment to the Company's Certificate of Incorporation will require the
affirmative vote of at least 75% of the shares entitled to vote in the election
of directors, voting as one class. The other matters submitted for stockholder
approval at this Annual Meeting will be decided by the affirmative vote of a
majority of shares present in person or represented by proxy and entitled to
vote on each such matter. Abstentions with respect to any matter are treated as
shares present or represented and entitled to vote on that matter and thus have
the same effect as negative votes. Broker non-votes and other circumstances in
which proxy authority has been withheld will have the same effect as negative
votes on the proposed amendment to the Company's Certificate of Incorporation
but will have no effect on the approval of any other matter submitted for
stockholder approval at the Annual Meeting.
The Company will bear the cost of printing and mailing proxy materials,
including the reasonable expenses of brokerage firms and others for forwarding
the proxy materials to beneficial owners of Common Stock. In addition to
solicitation by mail, solicitation may be made by certain directors, officers
and other employees of the Company in person, by telephone or by other means. No
additional compensation will be paid for such solicitation. Morrow & Co., Inc.
has been retained to assist in the solicitation of proxies for a fee of
approximately $6,500 plus expenses.
This Proxy Statement and a form of proxy are being mailed to stockholders
commencing on or about March 31, 1995. A copy of the Company's Annual Report to
Stockholders containing financial statements for the fiscal year ended December
30, 1994 accompanies this Proxy Statement.
<PAGE>
ELECTION OF DIRECTORS
The Company has three classes of directors with staggered three-year terms.
Class I consists of three directors, Class II consists of five directors and
Class III currently consists of four directors. Three Class III directors are to
be elected at the Annual Meeting for terms which continue until the 1998 Annual
Meeting of Stockholders and until their respective successors are duly elected
and qualified or until retirement in accordance with the Retirement Plan for
Directors (as described below). Subject to stockholder approval of the proposed
amendment to the Company's Certificate of Incorporation (item 2 in the Notice of
Annual Meeting), the number of directors constituting the Board of Directors of
the Company will be reduced to eleven.
All three Class III nominees have been recommended by the Board of Directors
for election as directors. All of the Class III nominees are presently members
of the Board of Directors of the Company. The Board of Directors knows of no
reason why any of the nominees will be unable to serve. In the event that any
nominee becomes unable or declines to serve, the proxies may be voted for the
balance of those named and for such other nominee or nominees as the Board may
select.
INFORMATION WITH RESPECT TO NOMINEES AND DIRECTORS
Set forth below are the names and ages of the nominees for Class III
director and the continuing directors of Class I and Class II, their principal
occupations at present and for the past five years and certain directorships
held by each. The terms of the continuing Class I and the Class II directors
expire in 1996 and 1997, respectively. Mr. Will M. Storey has advised the Board
that he intends to retire from the Company during 1995 and does not wish to be
nominated for re-election to the Board as a Class III director. The Company
presently intends to reduce the number of directors who are employees of the
Company as current employee directors retire or otherwise leave the Board.
CLASS III--NOMINEES FOR DIRECTOR
[PHOTO] JOHN H. BARR (AGE 65). Mr. Barr became a director of the
Company in July 1983. He is a real estate developer of
industrial parks.(a)
[PHOTO] JOHN M. LILLIE (AGE 58). Mr. Lillie became Chairman of the
Board and Chief Executive Officer of the Company in January
1992. He became a director in January 1990 and President of
the Company in August 1990. He was also Chief Operating
Officer from August 1990 to January 1992. From May 1989 to
August 1990 he was a general partner of Sequoia Associates,
a private investment firm. From April 1985 to April 1986 he
was President and Chief Executive Officer and from April
1986 to April 1989 Chief Executive Officer and Chairman of
the Board of Lucky Stores, Inc. Mr. Lillie is also a
director of The Gap, Inc., Vons Inc., and a trustee of
Stanford University.(b)
2
<PAGE>
[PHOTO] TONI REMBE (AGE 58). Ms. Rembe has been a director of the
Company since October 1993. She has been a partner in the
law firm of Pillsbury Madison & Sutro since 1971, where she
is managing partner of the firm's Tax Group and a former
member of the Executive Committee. She is also a director of
Pacific Telesis Group, Potlatch Corporation and Transamerica
Corporation, and a Trustee of Van Loben Sels Foundation and
the American Conservatory Theater.(c)(d)
CLASS I--DIRECTORS
[PHOTO] TULLY M. FRIEDMAN (AGE 53). Mr. Friedman was elected as a
director of the Company in April 1994. Mr. Friedman has been
a general partner of Hellman & Friedman, a San Francisco-
based investment firm, since 1984. Mr. Friedman is also a
director of Levi Strauss Associates, Inc., Mattel, Inc.,
McKesson Corporation, Falcon Cable TV, Inc., MobileMedia,
and Western Wireless Corporation.(c)
[PHOTO] JOJI HAYASHI (AGE 55). Mr. Hayashi has been President and
Chief Executive Officer of American President Lines, Ltd.
since May 1990. He served as Vice Chairman of the Board of
the Company from January 1989 to May 1990. Prior to that, he
was Executive Vice President and Chief Operating Officer of
the Company from January 1987 to January 1989. He has been a
director of the Company since July 1983.
[PHOTO] G. CRAIG SULLIVAN (AGE 54). Mr. Sullivan was elected as a
director of the Company in April 1994. Mr. Sullivan has been
the Chairman of the Board and Chief Executive Officer of The
Clorox Company since July 1, 1992. Prior to that, he was The
Clorox Company's Vice Chairman and Chief Executive Officer
(May-June, 1992); Group Vice President (1989-1992); Vice
President-Household Products (1984-1989); and Vice
President-Food Service Products Division (1981-1984). He
joined The Clorox Company in 1971.(a)
3
<PAGE>
CLASS II--DIRECTORS
[PHOTO] CHARLES S. ARLEDGE (AGE 59). Mr. Arledge became a director
of the Company in July 1983. Mr. Arledge is a partner of
Signal Ventures, a private investment firm. He was Vice
President, Strategic Planning of Aerojet-General Corporation
from 1986 to 1989. From 1983 to 1986, Mr. Arledge was Senior
Vice President, Corporate Development and Planning of The
Signal Companies, Inc. He is also a director of Wahlco
Environmental Systems, Inc.(c)(d)
[PHOTO] F. WARREN HELLMAN (AGE 60). Mr. Hellman became a director
of the Company in November 1988. He is a general partner of
Hellman & Friedman, a San Francisco-based investment firm.
Mr. Hellman is also a director of Williams-Sonoma, Inc.,
Levi Strauss Associates, Inc., Great American Management and
Investment, Inc., Eagle Industries, Inc., Franklin
Resources, Inc., Falcon Building Products, Inc. and numerous
private companies.(a)(b)
[PHOTO] TIMOTHY J. RHEIN (AGE 53). Mr. Rhein has been a director of
the Company since July 1990. He has been President and Chief
Executive Officer of APL Land Transport Services, Inc. since
May 1990. Mr. Rhein served as President and Chief Operating
Officer of American President Lines, Ltd. from January 1987
to May 1990.
[PHOTO] FORREST N. SHUMWAY (AGE 68). Mr. Shumway became a director
of the Company in August 1987. He retired as Vice Chairman
of the Board of Allied-Signal Inc. in December 1987, a
position he had held since 1985. He was Chief Executive
Officer and Chairman of the Board of The Signal Companies,
Inc. from 1968 and 1980, respectively, until the 1985 merger
of The Signal Companies, Inc. into Allied-Signal Inc. Mr.
Shumway is also a director of First Interstate Bancorp,
Transamerica Corporation, The Clorox Company and Aluminum
Company of America.(a)(b)(d)
4
<PAGE>
[PHOTO] BARRY L. WILLIAMS (AGE 50). Mr. Williams became a director
of the Company in July 1983. He is President of Williams
Pacific Ventures Inc., a venture capital and real estate
investment and consulting firm. He was President of C. N.
Flagg Power Inc., a construction services company, until its
sale in July 1992, and was a Managing Principal of Bechtel
Investments, Inc. until May 1987. He is also a director of
Pacific Gas and Electric Company, Technology MLP I
Corporation, Teknekron Communications Systems, Inc. and
Simpson Manufacturing Company, Inc.(c)(d)
------------------------
(a) Member of the Compensation Committee
(b) Member of the Executive Committee
(c) Member of the Audit Committee
(d) Member of the Nominating Committee
CERTAIN COMMITTEES OF THE BOARD OF DIRECTORS; MEETINGS
The Company has standing audit, compensation, executive and nominating
committees of the Board of Directors.
The Audit Committee assists the Board in matters relating to accounting. The
Audit Committee receives from, and reviews with, the Company's independent
auditors the annual report of such auditors; reviews with the independent
auditors the scope of the succeeding annual audit; nominates the independent
auditors to be selected each year by the Board; reviews consulting services
rendered by the Company's independent auditors and evaluates the possible effect
on the auditors' independence of performing such services; ascertains the
existence of adequate internal accounting and control systems; and reviews with
management and the Company's independent auditors current and emerging
accounting and financial reporting requirements and practices affecting the
Company. The Audit Committee held five meetings during 1994.
The Compensation Committee determines or reviews and passes upon
management's recommendations with respect to executive compensation, bonuses,
incentive stock awards and stock option grants and other compensation plans. The
Compensation Committee held five meetings during 1994.
The Executive Committee, subject to the ultimate direction and control of
the Board of Directors, exercises all of the powers of the Board in the
management of the business and affairs of the Company during the intervals
between meetings of the Board. The Executive Committee held no meetings during
1994.
The Nominating Committee makes recommendations to the Board with respect to
the number of directors to serve on the Board, reviews potential candidates for
director and recommends nominees for election as director. The Nominating
Committee held one meeting during 1994. Any stockholder may recommend director
nominees to the Nominating Committee by writing to the Secretary of the Company
not less than 30 nor more than 60 days prior to any stockholders' meeting called
for the election of directors. Submissions should include the full name, age,
business and residence addresses of the proposed nominee and a statement of the
nominee's qualifications, including the nominee's principal occupation and
employment during the last five years, and the number of shares of the Company's
Common Stock owned by the nominee.
Seven meetings of the Board of Directors were held during 1994. During 1994,
each of the directors, except Mr. Sullivan, attended 75% or more of the
aggregate number of meetings of the Board and of the committees on which such
director served which were held during the period of such director's service.
5
<PAGE>
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of December 31, 1994, the number of
shares of Common Stock and Series C Preferred Stock beneficially owned by the
directors and nominees named above, the executive officers listed in the Summary
Compensation Table and the directors and executive officers of the Company as a
group. Except as otherwise indicated, and subject to applicable community
property laws, each person has sole investment and voting power with respect to
the shares shown. Ownership information is based upon information furnished by
the respective individuals and contained in the Company's records.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
CLASS OF BENEFICIALLY PERCENT OF VOTING
NAME STOCK OWNED(1) CLASS(2) SECURITIES(2)
------------------------------------------------------------ --------- ------------------- ----------- --------------
<S> <C> <C> <C> <C>
Joji Hayashi................................................ Common 40,899 * *
John M. Lillie.............................................. Common 419,376(3) 1.5% 1.3%
James S. Marston............................................ Common 34,243 * *
Timothy J. Rhein............................................ Common 16,321 * *
Will M. Storey.............................................. Common 60,000 * *
Charles S. Arledge.......................................... Common 11,450 * *
John H. Barr................................................ Common 37,332 * *
Tully M. Friedman........................................... Common 67,200(4) *
Series C 12.9%
Preferred 1,500,000(4) 100%
F. Warren Hellman........................................... Common 74,532(4) *
Series C 12.9%
Preferred 1,500,000(4) 100%
Toni Rembe.................................................. Common 4,333 * *
Forrest N. Shumway.......................................... Common 13,332 * *
G. Craig Sullivan........................................... Common 1,000 * *
Barry L. Williams........................................... Common 666 * *
All directors and executive officers as a group
Common 848,414 3.1%
(17 persons including the 13 named above)..................
Series C
Preferred 1,500,000 100% 15.4%
<FN>
* Less than 1%.
------------------------
(1) Includes shares of Common Stock which may be acquired pursuant to the
exercise of options exercisable on December 31, 1994 or within 60 days
thereafter, as follows: Mr. Hayashi, 33,084; Mr. Lillie, 403,376; Mr.
Marston, 19,760; Mr. Rhein, 10,167; Mr. Storey, 60,000; Mr. Arledge,
7,332; Mr. Barr, 7,332; Mr. Hellman, 7,332; Ms. Rembe, 3,333; Mr. Shumway,
7,332; Mr. Williams, 666; and all directors and executive officers as a
group, 689,346. Also includes shares attributable to accounts under the
Company's SMART Plan as of December 31, 1994, as follows: Mr. Hayashi,
1,661; Mr. Marston, 957; and all directors and executive officers as a
group, 4,145.
(2) Each share of Series C Preferred Stock is entitled to approximately 2.641
votes. All percentages are given as of March 1, 1995, based on 27,323,728
shares of Common Stock and 1,500,000 shares of Series C Preferred Stock
outstanding.
</TABLE>
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
6
<PAGE>
<TABLE>
<S> <C>
(CONTINUED FROM PREVIOUS PAGE)
(3) Includes 6,000 shares owned by Mr. Lillie's two adult children. Mr. Lillie
disclaims beneficial ownership of such shares.
(4) Includes an aggregate of 67,200 shares of Common Stock held by Hellman &
Friedman Capital Partners, a California Limited Partnership, Hellman &
Friedman Capital Partners International (BVI) and H&F Redwood Partners,
L.P. and an aggregate of 1,500,000 shares of Series C Preferred Stock
beneficially owned by Hellman & Friedman Capital Partners, a California
Limited Partnership, Hellman & Friedman Capital Partners International
(BVI), APC Partners, L.P., and H&F Redwood Partners, L.P. Messrs. Hellman
and Friedman are directors and officers of each of the corporate general
partners of such partnerships. Messrs. Hellman and Friedman each
beneficially owns 50% of the stock of each such corporation and share
investment and voting power with respect to the shares of Common Stock and
Series C Preferred Stock held by the above-named partnerships. At the
Annual Meeting, the Series C Preferred Stock will vote together with the
Common Stock on all matters submitted to the stockholders. Each share of
Series C Preferred Stock is entitled to approximately 2.641 votes. See
"Certain Beneficial Ownership of Securities--Voting of Shares by Certain
Stockholders." Messrs. Hellman and Friedman disclaim beneficial ownership
of these shares. Messrs. Hellman's and Friedman's address is c/o Hellman &
Friedman, One Maritime Plaza, 12th Floor, San Francisco, CA 94111.
</TABLE>
7
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Information is set forth below as to the compensation awarded to, earned by
or paid to the Chief Executive Officer of the Company, each of the four most
highly compensated executive officers of the Company, other than the Chief
Executive Officer, and the Company's directors for services rendered to the
Company and its subsidiaries during the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------------------
PAYOUTS
ANNUAL COMPENSATION AWARDS(1) ----------------
--------------------------------- --------------------- LONG-TERM
NAME AND PRINCIPAL OTHER ANNUAL SECURITIES UNDERLYING INCENTIVE ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION OPTIONS PLAN PAYOUTS(2) COMPENSATION(3)
------------------------- ---- -------- -------- ------------- --------------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Joji Hayashi ............ 1994 $365,040 $177,382 $12,220 32,000 $ 0 $22,977
President and Chief 1993 $351,000 $243,252 $ 2,302 63,250 $73,440 $22,430
Executive Officer of 1992 $337,500 $240,469 $ 1,114 15,250 $ 0 $21,119
American President
Lines, Ltd.
John M. Lillie .......... 1994 $575,950 $294,598 $ 2,248 44,000 $ 0 $34,557
Chairman of the Board, 1993 $553,800 $403,997 $ 294 85,870 $75,000 $33,867
President and Chief 1992 $532,500 $399,375 $ 127 19,870 $ 0 $31,950
Executive Officer
James S. Marston ........ 1994 $291,200 $134,050 $12,961 22,000 $ 0 $19,170
Senior Vice President 1993 $280,000 $183,834 $ 1,761 43,620 $61,200 $18,587
and Chief Information 1992 $269,000 $181,575 $ 1,868 10,620 $94,500 $17,389
Officer
Timothy J. Rhein ........ 1994 $365,040 $177,382 $13,809 32,000 $ 0 $22,847
President and Chief 1993 $351,000 $243,252 $ 2,073 63,250 $73,440 $22,313
Executive Officer of 1992 $337,500 $240,469 $ 845 15,250 $30,000 $21,006
APL Land Transport
Services, Inc.
Will M. Storey .......... 1994 $365,040 $177,382 $ 767 0 $ 0 $21,902
Executive Vice 1993 $351,000 $243,252 $ 81 48,000 $ 0 $21,465
President,
Chief Financial Officer 1992 $337,500 $240,469 $ 14 0 $ 0 $20,250
and Treasurer
<FN>
------------------------
(1) No restricted stock awards were made in the last three fiscal years.
(2) Amounts shown with respect to 1993 represent payments under the 1990 bonus
program, which contained a provision allowing current employees to earn all
or a portion of their annual target bonuses that were not paid with respect
to 1990, if the Company achieved certain cumulative net income targets for
fiscal years 1991 through 1993. Amounts shown with respect to 1992
represent cash settlements of vested stock units awarded in 1987 under the
Company's 1987 Contingent Management Incentive Plan.
</TABLE>
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
8
<PAGE>
<TABLE>
<S> <C>
(CONTINUED FROM PREVIOUS PAGE)
(3) During fiscal year 1994, the Company paid premiums on life insurance for
Messrs. Hayashi, Marston and Rhein in the amount of $1,075, $1,698 and
$945, respectively; made matching contributions under the Company's SMART
Plan for Messrs. Lillie, Rhein and Storey of $9,000, $9,000 and $9,000,
respectively; and made matching contributions under the Company's 1988
Deferred Compensation Plan for Messrs. Hayashi, Lillie, Marston, Rhein and
Storey of $21,902, $25,557, $17,472, $12,902, and $12,902, respectively.
</TABLE>
Information is provided below with respect to all stock option grants to and
exercises by the five executive officers named in the Summary Compensation Table
during fiscal year 1994.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS EMPLOYEES EXERCISE PRICE EXPIRATION PRESENT
NAME GRANTED(1) IN FISCAL YEAR PER SHARE(1) DATE VALUE(2)
--------------------------------------------- ----------- -------------- -------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Joji Hayashi................................. 32,000(3) 2.4% $22.375 7/26/03 $358,400
John M. Lillie............................... 44,000(3) 3.2% $22.375 7/26/03 $492,800
James S. Marston............................. 22,000(3) 1.6% $22.375 7/26/03 $246,400
Timothy J. Rhein............................. 32,000(3) 2.4% $22.375 7/26/03 $358,400
Will M. Storey............................... 0 -- -- -- --
<FN>
------------------------
(1) All options were granted with an exercise price above fair market value.
During fiscal year 1994, no stock appreciation rights were awarded to any
executive officer.
(2) "Grant Date Present Values" were determined based upon the Black-Scholes
option pricing model. These are estimated values based upon the following
arbitrary assumptions: stock price volatility calculated using daily stock
prices for the 18-month period prior to the grant date; a risk-free rate of
return equivalent to the interbank borrowing rate applicable to borrowings
having a term equal to the remaining term of the option; exercise on the
option expiration date; and a future dividend yield of 1.8%. The actual
value, if any, that an executive ultimately realizes upon the exercise of
an option will be the difference between the market price of the underlying
shares and the option exercise price on the date of exercise.
(3) These options become exercisable in installments after July 27, 1995, based
upon achievement of specified targets for appreciation in the value of the
Company's Common Stock. See "Compensation Committee Report on Executive
Compensation." On July 27, 1998, the options will vest as to 60% of the
covered shares if not otherwise vested, and on July 27, 2002, the options
will vest as to the remaining 40% if not otherwise vested. In addition, the
options will vest in full upon a "change in control" with respect to the
Company. As defined in the 1989 Stock Incentive Plan, the term "change in
control" means that (a) any change in control occurs which would have to be
disclosed in the Company's proxy statement under the rules of the
Securities and Exchange Commission, (b) any person is or becomes the
beneficial owner, directly or indirectly, of at least 20% of the combined
voting power of the Company's outstanding securities, except by reason of a
repurchase by the Company of its own securities, or (c) a change in the
composition of the Board of Directors occurs as a result of which fewer
than two-thirds of the incumbent directors are directors who either had
been directors of the Company 24 months prior to such change or were
elected or nominated for election to the Board with the approval of at
least a majority of the directors who had been directors of the Company 24
months prior to such change and who were still in office at the time of the
election or nomination.
</TABLE>
9
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT
SHARES YEAR-END FISCAL YEAR-END
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
---------------------------------- ------------ ---------- ----------------- ----------------
<S> <C> <C> <C> <C>
Joji Hayashi...................... 0 $ 0 22,917/ $ 234,971/
95,251 $ 331,674
John M. Lillie.................... 59,740 $1,206,378 390,129/ $5,675,807/
129,871 $ 448,724
James S. Marston.................. 0 $ 0 12,680/ $ 137,595/
65,620 $ 228,925
Timothy J. Rhein.................. 37,385 $ 694,700 0/ $ 0/
95,251 $ 331,674
Will M. Storey.................... 40,000 $ 772,640 60,000/ $ 866,250/
48,000 $ 138,000
</TABLE>
PENSION PLAN TABLE
The following table illustrates the approximate retirement income (including
the supplemental benefit under the Company's Excess-Benefit Plan) which may
become payable under the American President Companies, Ltd. Retirement Plan (the
"Retirement Plan") to an employee credited with the number of years of service
shown, assuming that benefits commence at age 65 and are payable in the normal
form (generally a joint and 50% survivor benefit).
ANNUAL RETIREMENT INCOME
<TABLE>
<CAPTION>
YEARS OF SERVICE
5-YEAR AVERAGE ----------------------------------------------------
ANNUAL COMPENSATION 15 20 25 30 35
------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$400,000 $120,000 $160,000 $180,000 $200,000 $200,000
$500,000 $150,000 $200,000 $225,000 $250,000 $250,000
$600,000 $180,000 $240,000 $270,000 $300,000 $300,000
$700,000 $210,000 $280,000 $315,000 $350,000 $350,000
$800,000 $240,000 $320,000 $360,000 $400,000 $400,000
$900,000 $270,000 $360,000 $405,000 $450,000 $450,000
$1,000,000 $300,000 $400,000 $450,000 $500,000 $500,000
$1,100,000 $330,000 $440,000 $495,000 $550,000 $550,000
$1,200,000 $360,000 $480,000 $540,000 $600,000 $600,000
</TABLE>
The amounts shown in the table are subject to adjustment for Social Security
benefits. The credited years of service of the executive officers of the Company
named in the Summary Compensation Table are as follows: Mr. Hayashi, 26 years;
Mr. Lillie, 4 years; Mr. Marston, 7 years; Mr. Rhein, 27 years; and Mr. Storey,
4 years. The compensation covered by the Retirement Plan and Excess-Benefit Plan
was $428,904, $677,319, $340,034, $428,904 and $421,560, for Messrs. Hayashi,
Lillie, Marston, Rhein and Storey, respectively, during 1994. Covered
compensation for any year is equal to the sum of the employee's annual salary
rate on June 1 and any cash bonus that the employee receives or defers during
the year. However, the compensation on which retirement income would be
determined is different from such amount because benefits are based upon a
five-year average of the employee's compensation. See also "Employment
Contracts, Termination of Employment and Change-in-Control Arrangements and
Certain Transactions."
10
<PAGE>
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive an annual retainer of
$24,000, a fee of $1,000 per meeting when attending Board or stockholder
meetings and an additional fee of $850 for each committee meeting attended. The
Chairpersons of the Company's Audit and Compensation Committees each receive an
annual retainer of $3,000. All directors are reimbursed for their reasonable
expenses incurred in connection with the Company's business. Under a deferred
compensation plan, a director can elect to defer receipt of compensation earned
as a director. Deferred amounts, together with interest, become payable over a
period of up to 10 years commencing at the time specified by the director when
the election to defer compensation is made.
Under the Retirement Plan for Directors of American President Companies,
Ltd. (the "Retirement Plan for Directors"), directors who have never been
employees of the Company are eligible to receive an unfunded benefit if they
complete five years of service as a director or if they attain age 70 or become
permanently and totally disabled while serving as a director. The benefit is
equal to the amount of the annual retainer paid by the Company to its directors,
as adjusted during the period that the retired director is receiving the
benefit, and is paid for a period equal to the lesser of 10 years or one year
for each full or partial year of service as a director. A reduced benefit for a
director's surviving spouse is provided in the event that the director dies
before retirement or dies after retirement but before expiration of his or her
benefit. In addition, the Retirement Plan for Directors provides for mandatory
retirement of a director not later than the date of the annual meeting of
stockholders of the Company coinciding with or next following his or her 70th
birthday (72nd birthday for individuals who were directors on September 15,
1992).
Under the 1992 Directors' Stock Option Plan, directors who have never been
Company employees receive options to purchase 10,000 shares of Common Stock upon
election or appointment to the Board of Directors, and all non-employee
directors receive annual grants of options to purchase 2,000 shares of Common
Stock. These options have exercise prices equal to the fair market value of the
Company's Common Stock on the grant date. They vest in three equal annual
installments and, if held for at least six months, vest in full upon the
non-employee director's retirement, death or disability or a change in control
of the Company. (The term "change in control" has the same definition in this
plan as in the 1989 Stock Incentive Plan (see above).) As provided in the plan,
Messrs. Arledge, Barr, Hellman, Shumway and Williams, and Ms. Rembe, each
received options to purchase 2,000 shares, and Messrs. Friedman and Sullivan
each received options to purchase 10,000 shares, of Common Stock in fiscal year
1994.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS AND CERTAIN TRANSACTIONS
Mr. Lillie is employed at an annual salary of not less than $575,950 under
an employment agreement that expires when he reaches age 62. The agreement may
be terminated by the Company for cause upon 30 days' notice or for any reason
upon six months' notice. The agreement may be terminated by Mr. Lillie for any
reason upon six months' notice. While the agreement remains in effect, Mr.
Lillie is entitled to receive his salary and to participate in the employee
benefit and compensation plans maintained by the Company. If the Company
terminates Mr. Lillie's employment without cause, 150% of his base salary and
participation in all insurance and similar plans will continue for three years
(but not beyond age 62), and this period will be counted as employment with the
Company for purposes of determining the termination date of options, vesting
under the Company's executive compensation programs, including the 1989 Stock
Incentive Plan, and calculation of a supplemental retirement benefit.
The agreement with Mr. Lillie also provides that he will receive a minimum
pension upon retirement at age 62 equal to 40% of his highest five-year average
annual compensation (subject to adjustment for Social Security benefits). Any
difference between this amount and Mr. Lillie's benefit under the Company's
retirement program will be made up on an unfunded basis. If he retires before
age 62, this minimum pension will be proportionately reduced.
In the event of a change in control with respect to the Company (as defined
below), Mr. Lillie's contract provides that he may resign within one year after
such change and may elect to receive either the continuation of 150% of base
salary and
11
<PAGE>
benefits as described above for three years (but not beyond age 62) or a lump
sum severance benefit equal to 150% of his annual base salary at its most recent
rate times three (or the number of years remaining to age 62, if less). If Mr.
Lillie's employment is terminated for any reason at any time following a change
in control, or if he resigns within one year after being removed as Chief
Executive Officer or any other material change in his responsibilities or the
relocation of his place of employment by over 20 miles, he may also elect to
receive either the lump sum severance benefit or the continuation of 150% of
base salary and other benefits as described above for three years (but not
beyond age 62). (150% of base salary is utilized because bonuses and other forms
of supplemental compensation are not taken into account in computing the amount
of the severance benefit.) Currently, if Mr. Lillie's employment terminated
after a change in control, or if he elected to resign under the circumstances
specified above, the value of the lump sum severance benefit would be
approximately $2,591,775. Alternatively, he could elect to continue receiving
150% of his base salary, plus insurance and similar benefits with an annual
value of approximately $12,771 and vesting under executive compensation programs
for three years, and to receive a supplemental retirement benefit upon
retirement of $8,060 payable monthly for life, and a reduced benefit for his
surviving spouse. Any stock options or other incentive awards that Mr. Lillie
holds at the time of a change in control will immediately become vested.
If the Company terminates Mr. Lillie's active employment because he becomes
disabled, he will receive a supplemental disability benefit until age 62 equal
to 67% of his base salary, reduced by any other disability benefits (including
statutory benefits) to which he is entitled. The agreement with Mr. Lillie also
provides that the Company will compensate him for any amounts that he does not
receive as a result of any provision in any plan or agreement limiting payments
which are nondeductible by the Company for federal income tax purposes on
account of Internal Revenue Code provisions relating to golden parachute
payments.
For purposes of Mr. Lillie's employment agreement, the term "change in
control" is defined as the occurrence of any of the following events: (a) a
change in control occurs which is required to be reported in the Company's next
proxy statement under the rules of the Securities and Exchange Commission; (b)
any person is or becomes the beneficial owner, directly or indirectly, of at
least 20% of the combined voting power of the Company's outstanding securities,
except by reason of a repurchase by the Company of its securities; or (c) a
change in the composition of the Company's Board of Directors occurs as a result
of which fewer than two-thirds of the incumbent directors are directors who
either had been directors of the Company 24 months prior to such change or were
elected or nominated with the approval of at least a majority of the directors
who had been directors of the Company 24 months prior to such change and who
were still in office at the time of the election or nomination.
Messrs. Hayashi, Marston, Rhein and Storey are employed at annual salaries
of not less than $365,040, $291,200, $365,040 and $365,040, respectively, under
employment agreements that expire when they attain age 65. These agreements may
be terminated by either party for any reason upon 30 days' notice. While the
agreements remain in effect, these individuals are entitled to receive their
salaries and to participate in the employee benefit and compensation plans
maintained by the Company. If the Company terminates their employment without
cause, 147.5% of their base salaries (145% for Mr. Marston) and participation in
all insurance and similar plans will continue for three years (but not beyond
age 65) and the applicable period will be counted as employment with the Company
for purposes of determining the termination date of options, vesting under the
Company's executive compensation programs, including the 1989 Stock Incentive
Plan, and calculation of a supplemental retirement benefit. In the event of such
termination, Mr. Hayashi would also be credited with service for purposes of
calculating the supplemental retirement benefit for a period during which he was
employed by the Company in a seagoing position.
The agreements with Messrs. Hayashi, Marston, Rhein and Storey also provide
that the Company will compensate them for any amounts that they do not receive
as a result of any provision in any plan or agreement limiting payments which
are nondeductible by the Company for federal income tax purposes on account of
Internal Revenue Code provisions relating to golden parachute payments.
12
<PAGE>
In addition, Mr. Storey's agreement provides that, if his employment with
the Company terminates before he has sufficient service to vest in a benefit
under the Company's Retirement Plan, he will receive an unfunded pension benefit
based upon his service and the benefit formula of such plan. In addition, upon
termination of his employment with the Company, Mr. Storey will be provided with
health insurance coverage comparable to the coverage provided to the Company's
retirees as of March 1991 and will contribute to the cost of such coverage on
the same basis as retirees are contributing at the time he is receiving such
coverage.
Provisions in the agreements with Messrs. Hayashi, Marston, Rhein and Storey
relating to termination of employment following a change in control are similar
to the terms of Mr. Lillie's employment agreement, except that they may resign
and receive a lump sum severance benefit or continuation of salary and other
benefits as described above if such resignation occurs as a result of any
material change in responsibilities or relocation of place of employment by over
20 miles within one year after the change in control or for any reason within a
30-day period commencing one year after the change in control. Currently, if the
employment of Messrs. Hayashi, Marston, Rhein and Storey terminated after a
change in control, the value of their lump sum severance benefits would be
approximately $1,615,302, $1,266,720, $1,615,302 and $717,733, respectively.
Alternatively, they could elect to continue receiving 147.5% of their base
salaries (145% for Mr. Marston), plus insurance and similar benefits with annual
values of approximately $10,254, $4,739, $10,842 and $7,708, respectively, and
vesting under executive compensation programs for the applicable periods, and to
receive supplemental retirement benefits upon retirement of $2,920, $1,895,
$3,621 and $3,999, respectively, payable monthly for life, and reduced benefits
for their surviving spouses.
Pursuant to the terms of the Preferred Stock Purchase Agreement between the
Company and Hellman & Friedman Capital Partners ("HFCP") and Hellman & Friedman
Capital Partners International (BVI) ("BVI") (HFCP and BVI being referred to
together as "H&F"), dated August 3, 1988, as amended, whereby H&F acquired an
aggregate of 1,500,000 shares of the Company's Series C Preferred Stock (see
"Certain Beneficial Ownership of Securities"), H&F have the right to designate
two persons for nomination as members of the Board of Directors. The Company is
obligated to use its best efforts to cause such designees to become nominated
for election by the stockholders as members of the Board of Directors and to
vote all shares for which the Company's management or the Board holds proxies,
or is otherwise entitled to vote, in favor of the election of such designees.
Messrs. Tully M. Friedman and F. Warren Hellman have been nominated by H&F and
elected by the stockholders to the Board of Directors.
Pillsbury Madison & Sutro, of which Ms. Rembe is a partner, provides legal
services to the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation of the Company's senior management is determined by the
Compensation Committee of the Board of Directors, which is comprised of four
non-employee directors. The Committee believes that the Company's executive
compensation program should attract and retain highly qualified personnel and
provide meaningful incentives for superior performance. The Company seeks to
link executives' interests with those of the Company's stockholders by rewarding
the achievement of short- and long-term performance goals, as measured by
improvements in the Company's earnings and return on equity. The Company intends
that certain compensation paid to its senior management in 1995, including stock
options, be exempt from the limitations on deductibility under Section 162(m) of
the Internal Revenue Code. The Committee has from time to time retained an
independent compensation consultant to provide advice with respect to the
Company's compensation plans and programs. In January 1994, the consultant
provided the Committee with an analysis of the competitiveness of the Company's
executive compensation program.
The Compensation Committee determined 1994 base salaries on the basis of its
review of recommended increases for the senior executives (other than the Chief
Executive Officer) developed by the management of the Company on the basis of
national salary survey data for comparably sized industrial companies,
performance evaluations and expected future contributions of the individual
executives. Comparative salary data was derived from annual executive
compensation surveys conducted by two consulting firms. Salary survey data
utilized by the Company included information on S&P
13
<PAGE>
Transportation Index companies of comparable size to the Company participating
in the survey. Cash compensation (salary plus bonus) is generally targeted at
the median of the companies surveyed. The Committee determined the base salary
of the Chief Executive Officer based upon similar competitive data, the
Committee's assessment of his past performance and its expectations as to his
future contributions. With respect to Mr. Lillie's compensation for 1994, based
upon the foregoing factors, the Compensation Committee determined that a 4%
increase in base salary was appropriate.
In December 1993, the Compensation Committee approved a bonus program for
1994. Return on equity targets were established based upon anticipated results
for 1993 and the outlook for 1994, and bonus pools ranging from 50% to 150% of
target bonuses were established to correspond to levels of return on equity. The
annual bonus program was recommended by the management of the Company and
approved by the Committee. Following the end of the year, the Committee
authorized a bonus pool of 102.3% of target bonuses, consistent with the
performance target achieved for the year, fixed the bonus of Mr. Lillie at
102.3% of his target bonus, and reviewed and acted upon recommendations of the
management of the Company with respect to bonuses for the Company's other senior
executives. Individual bonus awards were based upon the individual's annual
salary and target bonus and an evaluation of the individual's contribution to
the Company's performance.
In 1993, the Compensation Committee approved a new long-term incentive
program, intended to replace annual option grants for five years. Under the
program, performance options were granted to each eligible employee in an
aggregate amount of approximately five times the employee's 1993 annual grant.
In addition, eligibility for grants under the program was extended to employees
at lower salary grades, nearly doubling the number of employees receiving
options. Utilizing shares already authorized under the Company's 1989 Stock
Incentive Plan, the Committee granted each eligible employee options for 60% of
the specified shares in July 1993. In April 1994, following stockholder approval
of an amendment of the 1989 Stock Incentive Plan increasing the number of shares
available under the plan by 2,000,000 shares, the Committee completed
implementation of the program by granting options for the remaining 40% of the
specified shares. Mr. Lillie was granted options for 44,000 shares at that time.
In 1994, the Committee also granted options to certain newly hired or promoted
employees. Each of the performance options has a term expiring July 26, 2003 and
an exercise price equal to the greater of the fair market value of the Company's
Common Stock at the time of the grant or $22.375, which was the stock's fair
market value when the initial grant of performance options was made in July
1993. Vesting of the options will occur between July 27, 1995 and July 27, 2002
depending upon the Company's achievement of certain stock price targets. See
table entitled "Long-Term Incentive Program" below.
The Compensation Committee believes that the long-term incentive program
will meet key strategic objectives of linking the interests of employees with
the interests of stockholders in stock price appreciation, creating a high level
of employee focus and motivation, enhancing employee ownership of the Company's
stock and promoting employee retention. The Committee also believes that the
grant levels are within reasonable competitive limits and will not result in
unacceptable stockholder dilution.
The Compensation Committee believes that the total compensation provided to
the Company's executive officers is competitive with the compensation provided
by employers of comparable size and that the annual bonus and stock option
programs have successfully focused the Company's senior management on increasing
profitability and stockholder value and reducing costs.
F. Warren Hellman, Chairman
John H. Barr
Forrest N. Shumway
G. Craig Sullivan
14
<PAGE>
LONG-TERM INCENTIVE PROGRAM
The performance stock options discussed above will vest based upon the
Company's achievement of the stock price targets set forth below.
<TABLE>
<CAPTION>
VESTED PERCENTAGE
OF ORIGINAL
TIME PERIOD STOCK PRICE TARGET OPTION
------------------ ------------------------------------------------------------------------------ -----------------
<S> <C> <C>
July 27, 1993 to not applicable 0%
July 26, 1995
July 27, 1995 to $31.325 33 1/3%
July 26, 1996 $35.800 66 2/3%
$39.156 100%
July 27, 1996 to $33.563 33 1/3%
July 26, 1997 $36.919 66 2/3%
$42.513 100%
July 27, 1997 to $35.800 33 1/3%
July 26, 1998 $38.038 66 2/3%
$42.513 100%
July 27, 1998 none 60%
July 27, 1998 to Total return on the Company's Common Stock (appreciation plus dividends) since 100%
July 26, 2002 date of grant is at least 100% of total return of median company in S&P 500
Index for same period.
July 27, 2002 none 100%
</TABLE>
15
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Company's
Common Stock with a comparable return on the indicated indices for the last five
fiscal years. The total return on the Company's Common Stock is determined based
on the change in the price of the Common Stock and assumes reinvestment of all
dividends and an original investment of $100. The total returns on the indicated
indices also assume reinvestment of dividends and an original investment in each
index of $100 on December 29, 1989.
TOTAL RETURN TO STOCKHOLDERS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INDEXED \ CUMULATIVE RETURNS
BASE
PERIOD RETURN RETURN RETURN RETURN RETURN
COMPANY \ INDEX NAME 12/29/89 12/28/90 12/27/91 12/24/92 12/31/93 12/30/94
--------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
AMERICAN PRESIDENT COS LTD 100 58.72 140.57 146.09 220.54 197.62
S&P 500 INDEX 100 96.44 123.05 137.14 149.51 151.48
S&P TRANSPORTATION 100 86.2 123.58 140.29 166.16 139.31
</TABLE>
16
<PAGE>
CERTAIN BENEFICIAL OWNERSHIP OF SECURITIES
Each of the following stockholders has advised the Company under the rules
of the Securities and Exchange Commission that it is the beneficial owner of
more than 5% of the class of the Company's capital stock indicated below. The
following information is furnished as of December 31, 1994 with respect to any
person known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of the Common Stock or Series C Preferred Stock of the
Company. Except as otherwise indicated, the named beneficial owner has sole
voting and investment power with respect to the shares shown.
<TABLE>
<CAPTION>
PERCENT OF
NAME AND ADDRESS NUMBER OF SHARES CLASS OF PERCENT OF VOTING
OF BENEFICIAL OWNER BENEFICIALLY OWNED STOCK CLASS(1) SECURITIES(1)
----------------------------- ------------------ --------- ---------- -----------------
<S> <C> <C> <C> <C>
Hellman & Friedman 919,327 Series C 61.3%
Capital Partners(2) Preferred 8.0%
61,824 Common *
Hellman & Friedman 49,645 Series C 3.3%
Capital Partners Preferred *
3,308 Common *
International (BVI)(2)
APC Partners, L.P.(2) 500,000 Series C 33.3% 4.2%
Preferred
H&F Redwood Partners, L.P.(2) 31,028 Series C 2.1% *
Preferred
2,068 Common *
FMR Corp. 1,945,300 Common 7.1% 6.2%
82 Devonshire Street
Boston, MA 02109
Franklin Resources, Inc. 2,190,514 Common 8.0% 7.0%
777 Mariners Island Blvd.
San Mateo, CA 94404
Heine Securities Corporation 2,376,000 Common 8.7% 7.6%
51 J.F.K. Parkway
Short Hills, NJ 07078
Trimark Investment 2,640,000 Common 9.7% 8.4%
Management Inc.
Scotia Plaza, Suite 5200
40 King Street West
Toronto, Ontario M5H 3Z3
<FN>
* Less than 1%
</TABLE>
(SEE FOOTNOTES ON FOLLOWING PAGE)
17
<PAGE>
<TABLE>
<S> <C>
------------------------
(1) Each share of Series C Preferred Stock is entitled to approximately 2.641
votes. All percentages are given as of March 1, 1995, based on 27,323,728
shares of Common Stock and 1,500,000 shares of Series C Preferred Stock
outstanding.
(2) The voting and dispositive powers with respect to the shares of Series C
Preferred Stock held by each of the holders of the Series C Preferred Stock
(the "Series C Investors") are indirectly controlled by Hellman & Friedman
Capital Management, Inc., H&F Capital Management International, Inc., APC
Administrators, Inc. and H&F Redwood Investors, Inc., respectively. A trust
of which Mr. F. Warren Hellman is a trustee and a beneficiary and a trust
of which Mr. Tully M. Friedman is a trustee and a beneficiary each owns 50%
of the stock of each such corporation. As a result, Messrs. Hellman and
Friedman could be deemed to beneficially own 100% of the 1,500,000 shares
of Series C Preferred Stock of the Company issued and outstanding and the
aggregate of 67,200 shares of the Common Stock of the Company owned by
Hellman & Friedman Capital Partners, Hellman & Friedman Capital Partners
International (BVI) and H&F Redwood Partners, L.P. Messrs. Hellman and
Friedman disclaim such beneficial ownership. The address of each of the
Series C Investors is c/o Hellman & Friedman, One Maritime Plaza, 12th
Floor, San Francisco, CA 94111.
</TABLE>
VOTING OF SHARES BY CERTAIN STOCKHOLDERS
The Series C Investors have agreed with the Company to vote all voting
securities of the Company owned by them in accordance with the recommendation of
the Board of Directors when voting together as a single class with the holders
of shares of Common Stock. As of March 1, 1995, the Series C Investors were
entitled to 4,028,700 votes at the Annual Meeting, which at March 1, 1995
represented approximately 12.9% of the voting power of the Company. The Board of
Directors has established a committee of independent directors composed of
Messrs. Arledge and Williams to determine the voting of the shares held by the
Series C Investors at the 1995 Annual Meeting of Stockholders. The committee has
determined that all of such votes will be cast for the election of the three
nominees for director listed in this Proxy Statement and for the proposals
referred to in items 2, 3 and 4 in the Notice of Annual Meeting of Stockholders
and described in this Proxy Statement.
PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
GENERAL
In order to provide the Company with sufficient flexibility to staff its
Board of Directors with the appropriate number of persons having the
qualifications necessary to effectively manage the Company's affairs, the Board
of Directors has unanimously approved the amendment of the Company's Certificate
of Incorporation to provide that the number of directors comprising the
Company's Board of Directors shall be determined from time to time by the Board
of Directors, subject to a minimum of five directors and to any other
limitations imposed by the Company's bylaws. The Certificate of Incorporation,
as so amended, will continue to provide that no decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director.
DESCRIPTION OF AMENDMENT
Presently, paragraph A of Article Fifth of the Company's Certificate of
Incorporation provides that "The authorized number of Directors shall be not
less than twelve (12) nor more than fifteen (15) and the Board of Directors of
this
18
<PAGE>
Corporation may, within the limits specified by this Article Fifth, increase or
decrease the exact number of Directors from time to time by resolution duly
adopted by such Board." It is proposed that paragraph A of Article Fifth of the
Company's Certificate of Incorporation be amended to read in full as follows:
"A. NUMBER OF DIRECTORS. THE AUTHORIZED NUMBER OF DIRECTORS
OF THIS CORPORATION SHALL BE DETERMINED FROM TIME TO TIME BY
RESOLUTION ADOPTED BY THE AFFIRMATIVE VOTE OF A MAJORITY OF THE
ENTIRE BOARD OF DIRECTORS AT ANY REGULAR OR SPECIAL MEETING OF
SAID BOARD, WITHIN ANY LIMITS PRESCRIBED IN THE BY-LAWS OF THIS
CORPORATION; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL THE NUMBER
OF DIRECTORS BE LESS THAN FIVE."
Subject to approval by the stockholders of such amendment to the Company's
Certificate of Incorporation, the Company's bylaws will be amended to provide
that the Board of Directors, from time to time, shall fix the exact number of
directors that shall comprise the Company's Board of Directors, subject to a
minimum of five directors. The Board of Directors has voted to fix the
authorized number of directors at eleven upon the effectiveness of the proposed
amendment to the Certificate of Incorporation.
VOTE REQUIRED
The affirmative vote of the holders of at least 75% of the aggregate
outstanding shares of the Company's Common Stock and Series C Preferred Stock,
voting as one class, is required to approve the proposed amendment to the
Company's Certificate of Incorporation. If approved by the stockholders, the
proposed amendment will become effective upon the filing of a certificate of
amendment with the Secretary of State of Delaware amending the Company's
Certificate of Incorporation, which is expected to be accomplished on May 2,
1995, or as soon thereafter as practicable.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
THE PROPOSAL TO AMEND PARAGRAPH A OF ARTICLE FIFTH
OF THE COMPANY'S CERTIFICATE OF INCORPORATION.
PROPOSAL TO APPROVE THE 1995 STOCK BONUS PLAN
GENERAL
On January 31, 1995, the Board of Directors adopted the Company's 1995 Stock
Bonus Plan (the "Plan"), subject to the approval of the Company's stockholders
at the 1995 Annual Meeting. The following summary of the principal features of
the Plan is qualified by reference to the terms of the Plan, a copy of which is
available without charge from Maryellen B. Cattani, Executive Vice President,
General Counsel and Secretary, American President Companies, Ltd., 1111
Broadway, Oakland, CA 94607.
PURPOSE OF THE PLAN
The Plan is intended to encourage the Company's directors and management to
increase their ownership of Common Stock. It permits non-employee directors to
receive all or part of their annual retainers or meeting fees, or both, in the
form of shares of the Company's Common Stock or in the form of phantom shares of
Common Stock. The Plan also permits executives and key employees who have been
selected by the Compensation Committee to receive all or part of their bonuses
in the form of shares of Common Stock or phantom shares. ("Phantom shares" are
unfunded contractual rights entitling the holder to receive an equal number of
shares of Common Stock at a later date.) Participants who elect to receive
directors' fees or bonuses in the form of Common Stock or phantom shares will
receive a premium in the form of additional shares equal to 17.6% of the shares
representing their fees or bonuses. (In other words, the fees or bonuses may be
used to acquire Common Stock or phantom shares at a 15% discount.)
19
<PAGE>
EFFECTIVE DATE AND DURATION
The Plan will first apply to amounts payable in 1996. It is subject to
amendment by the Board of Directors at any time, subject to stockholder approval
to the extent required by applicable laws or regulations. The Plan will remain
in effect until it is terminated by the Board of Directors.
NUMBER OF RESERVED SHARES
Four hundred thousand (400,000) shares of Common Stock will be available for
issuance under the Plan. This number is subject to adjustment to reflect changes
in capitalization, including stock dividends, stock splits and similar changes.
In the event that any shares issued under the Plan are forfeited, such shares
will again become available for issuance under the Plan.
CONVERSION OF FEES OR BONUSES INTO SHARES
Directors' fees and bonuses are converted into shares of Common Stock or
phantom shares based on the Common Stock's closing price on the trading day
immediately preceding the day these amounts become payable.
In the case of participants who elect to have their directors' fees or
bonuses converted into shares of Common Stock, the shares will be issued as soon
as practicable after such fees or bonuses become payable. In the case of
participants who elect to have their directors' fees or bonuses converted into
phantom shares, the phantom shares will be settled at the time elected by the
participants, with three exceptions. First, if a participant's service has
terminated for any reason other than death or retirement, then settlement occurs
no later than the beginning of the quarter after the date of termination.
Second, if a participant's service has not yet terminated, then settlement
cannot occur less than two years after the fees or bonuses became payable.
Third, somewhat different rules apply in the event of a participant's death.
Phantom shares are settled by issuing an equal number of shares of Common Stock.
Participants may elect, subject to applicable regulations, to pay any income
or withholding taxes related to distributions under the Plan by causing the
Company to reduce the number of shares of Common Stock that otherwise would be
issued.
PREMIUM SHARES
Participants who elect to receive all or part of their directors' fees or
bonuses in the form of Common Stock or phantom shares will receive a premium.
The premium is equal to 17.6% of the shares representing their fees or bonuses.
(In other words, the fees or bonuses may be used to acquire Common Stock or
phantom shares at a 15% discount.) If the fees or bonuses are immediately
converted into shares of Common Stock, then the premium shares also take the
form of shares of Common Stock. If the fees or bonuses are initially converted
into phantom shares, then the premium shares take the form of phantom shares as
well.
If the premium takes the form of Common Stock, the premium shares are
forfeited if, within two years, the participant's service terminates or the
participant transfers the Common Stock received in lieu of director's fees or a
bonus (except to a trust with the prior approval of the committee of
disinterested directors which administers the Plan). The premium shares,
however, vest immediately in the event that the Company is subject to a change
in control (as defined below) or in the event of the participant's death or
total and permanent disability.
If the premium takes the form of phantom shares, they are forfeited if,
within two years, the participant's service terminates. The premium phantom
shares, however, vest immediately in the event that the Company is subject to a
change in control or in the event of the participant's death or total and
permanent disability. The phantom shares received as a premium will be settled
at the time elected by the participant for his or her other phantom shares
(i.e., not less than two years after the fees or the bonus became payable). The
premium phantom shares are settled by issuing an equal number of shares of
Common Stock.
20
<PAGE>
For purposes of the Plan, the term "change in control" means that (a) any
change in control occurs which would have to be disclosed in the Company's proxy
statement under the rules of the Securities and Exchange Commission, (b) any
person is or becomes the beneficial owner, directly or indirectly, of at least
20% of the combined voting power of the Company's outstanding securities, except
by reason of a repurchase by the Company of its own securities, or (c) a change
in the composition of the Board of Directors occurs as a result of which fewer
than two-thirds of the incumbent directors are directors who either had been
directors of the Company 24 months prior to such change or were elected or
nominated for election to the Board with the approval of at least a majority of
the directors who had been directors of the Company 24 months prior to such
change and who were still in office at the time of the election or nomination.
DIVIDENDS AND DIVIDEND EQUIVALENTS
Shares of Common Stock issued under the Plan, including premium shares that
remain subject to forfeiture, carry full voting and dividend rights. All holders
of phantom shares, including phantom shares that remain subject to forfeiture,
receive amounts equal to the dividends received by the holders of an equal
number of shares of Common Stock. These amounts are converted into additional
phantom shares which vest immediately and are settled in the same manner as the
other phantom shares. Phantom shares have no voting rights.
SHARES ISSUED TO INDIVIDUAL PARTICIPANTS
To date, no shares of Common Stock or phantom shares have been issued under
the Plan. The number of shares to be issued to individual participants in the
future cannot be determined, since such number depends on the elections to be
made by the participants.
VOTE REQUIRED
Approval of the Plan requires the affirmative vote of the holders of a
majority of the voting power represented by the shares of stock of the Company
entitled to vote thereon and represented at the meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE COMPANY'S 1995 STOCK BONUS PLAN.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Arthur Andersen LLP to serve as the
Company's independent auditors for fiscal year 1995. Arthur Andersen LLP have
served as the Company's independent auditors since 1983. While it is not
required to do so, the Board of Directors is submitting the selection of that
firm to the stockholders for ratification in order to ascertain the
stockholders' views. If ratification is not provided, the Board of Directors
will reconsider its selection.
Representatives of Arthur Andersen LLP are expected to be present at the
meeting and available to respond to appropriate questions. Such representatives
will have the opportunity to make a statement if they desire to do so.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
RATIFICATION OF THE SELECTION OF ARTHUR ANDERSEN LLP.
21
<PAGE>
STOCKHOLDER PROPOSALS
To be considered for presentation at the 1996 Annual Meeting of
Stockholders, a stockholder proposal must be received at the offices of the
Company not later than December 2, 1995.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented to
the meeting. If any other business is properly brought before the meeting, it is
intended that proxies in the enclosed form will be voted in respect thereof in
accordance with the judgment of the persons voting the proxies.
Whether you intend to be present at this meeting or not, you are urged to
return your proxy promptly.
By order of the Board of Directors,
Maryellen B. Cattani
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
22
<PAGE>
NOTES
<PAGE>
PLEASE MARK
/X/ VOTES AS IN
THIS EXAMPLE.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NOT
OTHERWISE DIRECTED, FOR THE ELECTION OF DIRECTORS
AND FOR PROPOSALS 2, 3 AND 4.
1. TO ELECT DIRECTORS.
NOMINEES: JOHN H. BARR
JOHN M. LILLIE
TONI REMBE
/ / FOR ALL NOMINEES / / WITHHELD FROM ALL NOMINEES
/ / __________________________________________________________
FOR ALL NOMINEES EXCEPT AS NOTED ABOVE.
2. TO APPROVE THE AMENDMENT OF THE COMPANY'S CERTIFICATE
OF INCORPORATION.
/ / FOR / / AGAINST / / ABSTAIN
3. TO APPROVE THE ADOPTION OF THE COMPANY'S 1995 STOCK BONUS PLAN.
/ / FOR / / AGAINST / / ABSTAIN
4. TO RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP AS
INDEPENDENT AUDITORS.
/ / FOR / / AGAINST / / ABSTAIN
5. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE ON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE SAID MEETING.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
PLEASE MARK, SIGN, DATE AND RETURN
(SIGN NAME EXACTLY AS IMPRINTED HEREON. IF SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN GIVE FULL TITLE AS
SUCH. IF SIGNER IS A CORPORATION, GIVE FULL CORPORATE NAME AND
HAVE SIGNED BY DULY AUTHORIZED OFFICER SHOWING THE OFFICER'S
TITLE.)
SIGNATURE: ____________________________ DATE _____________
SIGNATURE: ____________________________ DATE _____________
<PAGE>
APPENDIX
(description of photographs)
Headshot of John H. Barr, a Class III nominee for director of
the Company. (Page 2)
Headshot of John M. Lillie, a Class III nominee for director of
the Company. (Page 2)
Headshot of Toni Rembe, a Class III nominee for director of
the Company. (Page 3)
Headshot of Tully M. Friedman, current director of the Company.
(Page 3)
Headshot of Joji Hayashi, current director of the Company.
(Page 3)
Headshot of G. Craig Sullivan, current director of the Company.
(Page 3)
Headshot of Charles S. Arledge, current director of the Company.
(Page 4)
Headshot of F. Warren Hellman, current director of the Company.
(Page 4)
Headshot of Timothy J. Rhein, current director of the Company.
(Page 4)
Headshot of Forrest N. Shumway, current director of the Company.
(Page 4)
Headshot of Barry L. Williams, current director of the Company.
(Page 5)
<PAGE>
AMERICAN PRESIDENT COMPANIES, LTD. 1995 STOCK BONUS PLAN
(as adopted effective January 1, 1996)
<PAGE>
TABLE OF CONTENTS
-----------------
Page
ARTICLE 1. HISTORY AND PURPOSE OF THE PLAN. . . . . . . . . 1
ARTICLE 2. ADMINISTRATION OF THE PLAN . . . . . . . . . . . 1
2.1 The Committee . . . . . . . . . . . . . . . . . . . 1
2.2 Disinterested Directors . . . . . . . . . . . . . . 1
2.3 Committee Responsibilities . . . . . . . . . . . . 1
ARTICLE 3. LIMITATION ON AWARDS . . . . . . . . . . . . . . 1
ARTICLE 4. ELIGIBILITY . . . . . . . . . . . . . . . . . . 2
ARTICLE 5. FORMS OF DISTRIBUTION . . . . . . . . . . . . . 2
5.1 Available Forms . . . . . . . . . . . . . . . . . . 2
5.2 Shares of Stock . . . . . . . . . . . . . . . . . . 2
5.3 Phantom Shares . . . . . . . . . . . . . . . . . . 2
5.4 Conversion . . . . . . . . . . . . . . . . . . . . 2
5.5 Elections Under Old Rule 16b-3 . . . . . . . . . . 3
5.6 Elections Under New Rule 16b-3 . . . . . . . . . . 3
ARTICLE 6. PREMIUM SHARES . . . . . . . . . . . . . . . . . 3
6.1 Amount of Premium . . . . . . . . . . . . . . . . . 3
6.2 Shares of Stock . . . . . . . . . . . . . . . . . . 3
6.3 Exempt Dispositions . . . . . . . . . . . . . . . . 4
6.4 Phantom Shares . . . . . . . . . . . . . . . . . . 4
ARTICLE 7. DEATH OF PARTICIPANT . . . . . . . . . . . . . . 5
7.1 Beneficiary Designation . . . . . . . . . . . . . . 5
7.2 Restricted Stock . . . . . . . . . . . . . . . . . 5
7.3 Phantom Shares . . . . . . . . . . . . . . . . . . 5
-i-
<PAGE>
ARTICLE 8. WITHHOLDING TAXES . . . . . . . . . . . . . . . 5
8.1 General . . . . . . . . . . . . . . . . . . . . . . 5
8.2 Share Withholding . . . . . . . . . . . . . . . . . 6
ARTICLE 9. VOTING RIGHTS AND DIVIDENDS . . . . . . . . . . 6
9.1 Restricted Stock . . . . . . . . . . . . . . . . . 6
9.2 Phantom Shares . . . . . . . . . . . . . . . . . . 6
ARTICLE 10. ASSIGNMENT OR TRANSFER OF SHARES . . . . . . . 6
ARTICLE 11. PROTECTION AGAINST DILUTION . . . . . . . . . . 7
11.1 General . . . . . . . . . . . . . . . . . . . . . 7
11.2 Reorganizations . . . . . . . . . . . . . . . . . 7
11.3 Reservation of Rights . . . . . . . . . . . . . . 7
ARTICLE 12. GENERAL PROVISIONS . . . . . . . . . . . . . . 7
12.1 Employment Rights . . . . . . . . . . . . . . . . 7
12.2 Creditors' Rights . . . . . . . . . . . . . . . . 7
12.3 Government Regulations . . . . . . . . . . . . . . 8
12.4 Choice of Law . . . . . . . . . . . . . . . . . . 8
ARTICLE 13. FUTURE OF THE PLAN . . . . . . . . . . . . . . 8
13.1 Term of the Plan . . . . . . . . . . . . . . . . 8
13.2 Amendment or Termination . . . . . . . . . . . . 8
ARTICLE 14. DEFINITIONS . . . . . . . . . . . . . . . . . . 8
ARTICLE 15. EXECUTION . . . . . . . . . . . . . . . . . . . 11
-ii-
<PAGE>
AMERICAN PRESIDENT COMPANIES, LTD. 1995 STOCK BONUS PLAN
ARTICLE 1. HISTORY AND PURPOSE OF THE PLAN.
--------- -------------------------------
The Plan was adopted by the Company's Board of Directors on
January 31, 1995, subject to approval by the Company's stock-
holders at the annual meeting held on May 2, 1995. The Plan
shall be effective on January 1, 1996.
The purpose of the Plan is to encourage Non-Employee Direc-
tors and Executives of the Company to increase their ownership
of the Company's Stock. The Plan permits Non-Employee Directors
and Executives to receive Fees and Bonuses, respectively, in the
form of Stock. The Plan also provides that Participants will
receive additional shares of Stock as Premiums.
ARTICLE 2. ADMINISTRATION OF THE PLAN.
--------- ---------------------------
2.1 THE COMMITTEE. The Plan shall be administered by a
committee consisting of two or more disinterested members of the
Board of Directors. The members of the Committee shall be
appointed by the Board of Directors.
2.2 DISINTERESTED DIRECTORS. A member of the Board of
Directors shall be deemed to be "disinterested" only if he or
she satisfies such requirements as the Securities and Exchange
Commission may establish for disinterested administrators acting
under plans intended to qualify for exemption under Rule 16b-3
(or its successor) under the Exchange Act.
2.3 COMMITTEE RESPONSIBILITIES. The Committee shall
select the common-law employees of the Company and its
Subsidiaries who may participate in the Plan as Executives,
shall interpret the Plan and shall make all other decisions
relating to the operation of the Plan. The Committee may adopt
such rules or guidelines as it deems appropriate to implement
the Plan. The Committee's determinations under the Plan shall
be final and binding on all persons.
ARTICLE 3. LIMITATION ON AWARDS.
--------- ---------------------
The aggregate number of shares of Stock issued under the
Plan shall not exceed 400,000. If any shares of Stock issued
under the Plan as Premiums are forfeited, then such shares shall
again become available for issuance under the Plan. Phantom
Shares credited under the Plan shall not be subtracted from the
number of shares of Stock available for issuance until such
Phantom Shares are converted into shares of Stock and issued to
Participants or beneficiaries. The limitation of this Article 3
shall be subject to adjustment pursuant to Article 11. Any
-1-
<PAGE>
shares of Stock issued pursuant to the Plan may be authorized
but unissued shares or treasury shares.
ARTICLE 4. ELIGIBILITY.
---------- ------------
All Non-Employee Directors may participate in the Plan.
Common-law employees of the Company or a Subsidiary may
participate in the Plan only if they have been designated as
Executives by the Committee and only during periods in which
such a designation is in effect.
ARTICLE 5. FORMS OF DISTRIBUTION.
---------- ----------------------
5.1 AVAILABLE FORMS. A Participant may elect to have all
or part of a Fee or Bonus distributed in the form of shares of
Stock under Section 5.2 or in the form of Phantom Shares under
Section 5.3. The election shall be made pursuant to Section 5.5
or 5.6.
5.2 SHARES OF STOCK. If a Participant elects to have all
or part of a Fee or Bonus distributed in the form of shares of
Stock, such shares shall be issued to the Participant as soon as
reasonably practicable after such Fee or Bonus would have been
payable in cash absent such an election.
5.3 PHANTOM SHARES. If a Participant elects to have all
or part of a Fee or Bonus distributed in the form of Phantom
Shares, such Phantom Shares shall be credited to the Participant
as of the date when such Fee or Bonus would have been payable in
cash absent such an election. The Phantom Shares shall be
settled at the time designated by the Participant in his or her
initial election, subject to the following conditions:
(a) If a Participant has separated from Service for
reasons other than death or Retirement, then his or her
Phantom Shares shall in no event be settled later than the
first day of the calendar quarter next following the date
of separation; and
(b) If a Participant has remained in Service, then
his or her Phantom Shares shall in no event be settled
earlier than two years after the date when the Fee or Bonus
would have been payable in cash absent the election.
A Participant's designation of the time of settlement shall not
be revocable by such Participant. At the time of settlement, a
number of shares of Stock equal to the number of Phantom Shares
shall be issued to the Participant and the Phantom Shares shall
be cancelled.
5.4 CONVERSION. The number of shares of Stock to be
issued under Section 5.2 or the number of Phantom Shares to be
-2-
<PAGE>
credited under Section 5.3 shall be determined by dividing the
amount of the Fee or Bonus by the closing price of a share of
Stock on the trading day immediately preceding the date when
such Fee or Bonus would have been payable in cash, as stated in
the New York Stock Exchange composite transactions report.
5.5 ELECTIONS UNDER OLD RULE 16b-3. This Section 5.5
shall apply as long as the Company elects to comply with
Rule 16b-3 under the Exchange Act as such Rule was in effect
prior to May 1, 1991. A Non-Employee Director or Executive who
wishes to participate in the Plan shall file an election with
the Company on the prescribed form. Such election shall apply
only to Fees or Bonuses payable after the close of the calendar
year in which it has been filed. Once filed, an election shall
be irrevocable with respect to Fees or Bonuses payable in all
calendar years to which it applies. An election shall remain in
effect for future years until it is revoked or modified by the
Participant. Any revocation or modification of an election
shall be filed with the Company on the prescribed form and shall
apply to all Fees or Bonuses payable in calendar years
commencing after it has been filed.
5.6 ELECTIONS UNDER NEW RULE 16b-3. This Section 5.6
shall become applicable when the Company elects or is required
to comply with Rule 16b-3 under the Exchange Act as such Rule is
in effect from time to time after April 30, 1991. A Non-
Employee Director or Executive who wishes to participate in the
Plan shall file an election with the Company on the prescribed
form. Such election shall apply only to Fees or Bonuses payable
(a) after the close of the calendar year in which it has been
filed and (b) not less than six months after it has been filed.
Once filed, an election shall be irrevocable with respect to
Fees or Bonuses payable in all periods to which it applies. An
election shall remain in effect for future periods until it is
revoked or modified by the Participant. Any revocation or
modification of an election shall be filed with the Company on
the prescribed form and shall apply to all Fees or Bonuses
payable (a) after the close of the calendar year in which it has
been filed and (b) at least six months after it has been filed.
ARTICLE 6. PREMIUM SHARES.
---------- ---------------
6.1 AMOUNT OF PREMIUM. Each Participant shall receive a
Premium equal to 17.6% of the shares of Stock or Phantom Shares
issued or credited to the Participant under Article 5. A
Premium awarded with respect to shares of Stock shall be in the
form of shares of Stock, as described in Section 6.2. A Premium
awarded with respect to Phantom Shares shall be in the form of
Phantom Shares, as described in Section 6.4.
6.2 SHARES OF STOCK. Shares of Stock issued as a Premium
shall vest on the earliest of the following dates:
-3-
<PAGE>
(a) The date two years after the date when the Fee or
Bonus would have been payable in cash absent the election
to receive shares of Stock;
(b) The date when the Participant's Service
terminates because of his or her Total and Permanent
Disability;
(c) The date of the Participant's Death; or
(d) The date when the Company is subject to a Change
in Control.
Nonvested shares of Stock issued as a Premium shall be forfeited
in the event that the Participant's Service terminates for any
reason not described in Subsection (b) or (c) above or in the
event that the Participant disposes of the shares of Stock
issued under Article 5 with respect to which the Premium was
awarded. Forfeited shares of Stock shall revert to the Company
without the payment of any consideration.
6.3 EXEMPT DISPOSITIONS. For purposes of Section 6.2, a
Participant shall not be deemed to dispose of the shares of
Stock issued under Article 5 with respect to which the Premium
was awarded solely because he or she transfers or assigns such
shares to:
(a) The trustee of a trust that is revocable by such
Participant alone, both at the time of the transfer or
assignment and at all times thereafter prior to such
Participant's death; or
(b) The trustee of any other trust to the extent
approved in advance by the Committee in writing.
A transfer or assignment of shares of Stock from such trustee to
any person other than such Participant shall be disregarded only
to the extent approved in advance by the Committee in writing.
6.4 PHANTOM SHARES. Phantom Shares credited as a Premium
shall vest on the earliest of the following dates:
(a) The date two years after the date when the Fee or
Bonus would have been payable in cash absent the election
to receive Phantom Shares;
(b) The date when the Participant's Service
terminates because of his or her Total and Permanent
Disability;
(c) The date of the Participant's Death; or
-4-
<PAGE>
(d) The date when the Company is subject to a Change
in Control.
Nonvested Phantom Shares credited as a Premium shall be for-
feited in the event that the Participant's Service terminates
for any reason not described in Subsection (b) or (c) above.
Forfeited Phantom Shares shall be cancelled without the payment
of any consideration. Phantom Shares credited as a Premium
shall be settled at the same time as the Phantom Shares with
respect to which such Premium was awarded. At the time of
settlement, a number of shares of Stock equal to the number of
Phantom Shares shall be issued to the Participant and the
Phantom Shares shall be cancelled.
ARTICLE 7. DEATH OF PARTICIPANT.
---------- --------------------
7.1 BENEFICIARY DESIGNATION. Each Participant shall des-
ignate one or more beneficiaries under the Plan by filing the
prescribed form with the Company. A beneficiary designation may
be changed by filing the prescribed form with the Company at any
time before the Participant's death. If no beneficiary was des-
ignated or if no designated beneficiary survives the Partici-
pant, then the Participant's estate shall be the beneficiary.
7.2 RESTRICTED STOCK. Any shares of Stock which were
awarded as a Premium and which vest as the result of a Partici-
pant's death shall be issued to such Participant's beneficiary
or beneficiaries.
7.3 PHANTOM SHARES. If a Participant dies before becoming
eligible for Retirement, then any Phantom Shares credited to him
or her shall be settled on the first day of the calendar quarter
next following the date of death. If a Participant dies after
becoming eligible for Retirement, then any Phantom Shares
credited to him or her shall be settled at the time designated
by the Participant in his or her initial election. The Commit-
tee, however, may determine in its sole discretion that settle-
ment shall be made at an earlier date than the time designated
by the Participant. At the time of settlement, a number of
shares of Stock equal to the number of Phantom Shares shall be
issued to the Participant's beneficiary or beneficiaries and the
Phantom Shares shall be cancelled.
ARTICLE 8. WITHHOLDING TAXES.
--------- -----------------
8.1 GENERAL. If withholding tax obligations arise under
federal, state, local or foreign law in connection with any
transaction under the Plan, then the Participant, beneficiary or
other person who is subject to such obligations shall make
arrangements satisfactory to the Company to meet such obliga-
tions. The Company shall not be required to issue any Stock
under the Plan until such obligations are satisfied.
-5-
<PAGE>
8.2 SHARE WITHHOLDING. The Committee may permit a Parti-
cipant, beneficiary or other person who is subject to withhold-
ing or income tax obligations in connection with any transaction
under the Plan to satisfy all or part of such obligations by
having the Company withhold a portion of any Stock that other-
wise would be issued to him or her or by surrendering a portion
of any Stock that previously was issued to him or her. Such
Stock shall be valued at its fair market value on the date when
taxes otherwise would have been withheld in cash. Any payment
of taxes by assigning Stock to the Company may be subject to re-
strictions, including any restrictions required by rules of the
Securities and Exchange Commission.
ARTICLE 9. VOTING RIGHTS AND DIVIDENDS.
--------- ----------------------------
9.1 RESTRICTED STOCK. Participants who hold nonvested
shares of Stock awarded as a Premium shall have the same voting,
dividend and other rights as the other holders of Stock.
9.2 PHANTOM SHARES. Participants who hold Phantom Shares
shall have no voting rights. Prior to settlement or forfeiture,
any Phantom Share awarded under the Plan shall carry with it a
right to dividend equivalents. Such right entitles the Partici-
pant to be credited with an amount equal to all cash dividends
paid on one share of Stock while the Phantom Share is outstand-
ing. Dividend equivalents shall immediately be converted into
additional Phantom Shares and shall be settled at the same time
as the Phantom Shares with respect to which they were credited.
Dividend equivalents, including dividend equivalents credited
with respect to Premiums, shall not be subject to forfeiture.
ARTICLE 10. ASSIGNMENT OR TRANSFER OF SHARES.
---------- ---------------------------------
Phantom Shares and nonvested shares of Stock issued under
the Plan shall not be anticipated, assigned, attached,
garnished, optioned, transferred or made subject to any
creditor's process, whether voluntarily, involuntarily or by
operation of law. Any act in violation of this Article 10 shall
be void. However, this Article 10 shall not preclude a
Participant from designating a beneficiary under Section 7.1,
nor shall it preclude a transfer by will or by the laws of
descent and distribution. In addition, neither this Article 10
nor any other provision of the Plan shall preclude a Participant
from transferring or assigning nonvested shares of Stock to:
(a) The trustee of a trust that is revocable by such
Participant alone, both at the time of the transfer or
assignment and at all times thereafter prior to such
Participant's death; or
(b) The trustee of any other trust to the extent
approved in advance by the Committee in writing.
-6-
<PAGE>
A transfer or assignment of nonvested shares of Stock from such
trustee to any person other than such Participant shall be
permitted only to the extent approved in advance by the Commit-
tee in writing, and nonvested shares of Stock held by such
trustee shall be subject to all of the conditions and restric-
tions set forth in the Plan.
ARTICLE 11. PROTECTION AGAINST DILUTION.
---------- ----------------------------
11.1 GENERAL. In the event of a subdivision of the out-
standing Stock, a declaration of a dividend payable in Stock, a
declaration of a dividend payable in a form other than Stock in
an amount that has a material effect on the price of Stock, a
spinoff, a combination or consolidation of the outstanding Stock
(by reclassification or otherwise) into a lesser number of
shares, a recapitalization or a similar occurrence, the Commit-
tee shall make appropriate adjustments in one or both of (a) the
number of shares of Stock available for issuance under Article 3
or (b) the number of Phantom Shares then credited to any
Participant under the Plan.
11.2 REORGANIZATIONS. In the event that the Company is a
party to a merger or other reorganization, outstanding Phantom
Shares shall be subject to the agreement of merger or reorgani-
zation. Such agreement may provide, without limitation, for the
assumption of outstanding Phantom Shares by the surviving corpo-
ration or its parent, for their continuation by the Company (if
the Company is a surviving corporation) or for immediate
settlement in Stock or cash.
11.3 RESERVATION OF RIGHTS. Except as provided in this
Article 11, a Participant shall have no rights by reason of any
subdivision or consolidation of shares of stock of any class,
the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class. The
Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations
or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or
any part of its business or assets.
ARTICLE 12. GENERAL PROVISIONS.
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12.1 EMPLOYMENT RIGHTS. The Plan shall not be deemed to
give any individual a right to remain employed by the Company or
a Subsidiary. The Company and its Subsidiaries reserve the
right to terminate the employment of any employee at any time,
with or without cause, subject only to a written employment
agreement (if any).
12.2 CREDITORS' RIGHTS. A holder of Phantom Shares shall
have no rights other than those of a general creditor of the
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Company. Phantom Shares represent an unfunded and unsecured
obligation of the Company, subject to the terms and conditions
of the Plan and the applicable election.
12.3 GOVERNMENT REGULATIONS. Any other provision of the
Plan notwithstanding, the obligations of the Company with
respect to Stock to be issued pursuant to the Plan shall be
subject to all applicable laws, rules and regulations and such
approvals by any governmental agencies as may be required. The
Company reserves the right to restrict, in whole or in part, the
issuance of Stock pursuant to the Plan until such time as:
(a) Any legal requirements or regulations have
been met relating to the issuance of such Stock or to
its registration, qualification or exemption from
registration or qualification under the Securities Act
of 1933, as amended, or any applicable state
securities laws; and
(b) Satisfactory assurances have been received
that such Stock, when issued, will be duly listed on
the New York Stock Exchange, Inc. or any other
securities exchange on which Stock is then listed.
12.4 CHOICE OF LAW. The Plan shall be governed by, and
construed in accordance with, the laws of the State of Delaware.
ARTICLE 13. FUTURE OF THE PLAN.
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13.1 TERM OF THE PLAN. The Plan, as set forth herein,
shall become effective on January 1, 1996, subject to the
approval of the Company's stockholders. The Plan shall remain
in effect until it is terminated under Section 13.2.
13.2 AMENDMENT OR TERMINATION. The Board of Directors
may, at any time and for any reason, amend or terminate the
Plan. However, any amendment of the Plan shall be subject to
the approval of the Company's stockholders to the extent
required by applicable laws, regulations or rules.
ARTICLE 14. DEFINITIONS.
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14.1 "BOARD OF DIRECTORS" means the Company's Board of
Directors, as constituted from time to time.
14.2 "BONUS" means a bonus payment under the Company's
year-end bonus plan for executives and key employees.
14.3 "CHANGE IN CONTROL" means the occurrence of any of
the following events:
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(a) A change in control required to be reported
pursuant to Item 6(e) of Schedule 14A of Regulation
14A under the Exchange Act;
(b) A change in the composition of the Board of
Directors, as a result of which fewer than two-thirds
of the incumbent directors are directors who either
(i) had been directors of the Company 24 months prior
to such change or (ii) were elected, or nominated for
election, to the Board of Directors with the
affirmative votes of at least a majority of the
directors who had been directors of the Company 24
months prior to such change and who were still in
office at the time of the election or nomination; or
(c) Any "person" (as such term is used in
sections 13(d) and 14(d) of the Exchange Act) is or
becomes the beneficial owner, directly or indirectly,
of securities of the Company representing 20% or more
of the combined voting power of the Company's then
outstanding securities ordinarily (and apart from
rights accruing under special circumstances) having
the right to vote at elections of directors (the "Base
Capital Stock"); provided, however, that any change in
the relative beneficial ownership of securities of any
person resulting solely from a reduction in the
aggregate number of outstanding shares of Base Capital
Stock, and any decrease thereafter in such person's
ownership of securities, shall be disregarded until
such person increases in any manner, directly or
indirectly, such person's beneficial ownership of any
securities of the Company.
14.4 "COMMITTEE" means the Compensation Committee of the
Board of Directors, as constituted from time to time in
accordance with Article 2.
14.5 "COMPANY" means American President Companies, Ltd., a
Delaware corporation.
14.6 "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
14.7 "EXECUTIVE" means a common-law employee of the
Company or a Subsidiary whom the Committee has designated as an
Executive for purposes of the Plan.
14.8 "FEE" means a retainer payment or a fee for attending
a meeting.
14.9 "PLAN" means this American President Companies, Ltd.
1995 Stock Bonus Plan, as it may be amended from time to time.
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14.10 "NON-EMPLOYEE DIRECTOR" means a member of the Board
of Directors who is not a common-law employee of the Company or
a Subsidiary.
14.11 "PARTICIPANT" means a Non-Employee Director or
Executive who has elected to participate in the Plan.
14.12 "PHANTOM SHARE" means a bookkeeping entry repre-
senting the dollar value of one share of Stock, as adjusted from
time to time.
14.13 "PREMIUM" means a share of Stock or Phantom Share
issued or credited under the Plan to a Participant in addition
to the shares of Stock or Phantom Shares into which the
Participant's Fee or Bonus was converted.
14.14 "RETIREMENT" means a termination of Service on or
after the earlier of:
(a) The date when the Participant attains age 65; or
(b) The earliest date when the Participant has both
(i) attained age 55 and (ii) completed five years of
Service, as determined by the Committee.
14.15 "SERVICE" means service as a member of the Board of
Directors or employment as a common-law employee of the Company
or a Subsidiary.
14.16 "STOCK" means the common stock of the Company.
14.17 "SUBSIDIARY" means any corporation, if the Company
and/or one or more other Subsidiaries own not less than 50% of
the total combined voting power of all classes of outstanding
stock of such corporation. A corporation that attains the
status of a Subsidiary on a date after the adoption of the Plan
shall be considered a Subsidiary commencing as of such date.
14.18 "TOTAL AND PERMANENT DISABILITY" means that the
Participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or
which has lasted, or can be expected to last, for a continuous
period of not less than 12 months.
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ARTICLE 15. EXECUTION.
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To record the adoption of the Plan by the Board of
Directors, the Company has caused its duly authorized officer to
affix the corporate name hereto.
AMERICAN PRESIDENT COMPANIES, LTD.
By
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