<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
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
[X] Definitive Proxy Statement COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
OUTBOARD MARINE CORPORATION
(Name of Registrant as Specified In Its Charter)
OUTBOARD MARINE CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
LOGO
- -------------------------------------------------------------------------------
OUTBOARD MARINE CORPORATION
December 13, 1995
Dear Shareholder:
You are cordially invited to the Annual Meeting of Shareholders of Outboard
Marine Corporation to be held on Thursday, January 18, 1996, commencing at
9:00 a.m., local time, at the First Chicago Conference Center, One First
National Plaza, Chicago, Illinois. The Board of Directors and management look
forward to greeting those shareholders able to attend the meeting.
At the Annual Meeting you will be asked to consider and vote upon the
election of three directors for a three year term and the ratification of the
appointment of independent auditors and accountants of the Company.
Your Board of Directors unanimously recommends a vote FOR the election of
directors and the ratification of auditors and accountants.
Regardless of the number of shares you own and whether or not you plan to
attend, it is important that your shares are represented and voted at the
meeting. Accordingly, you are requested to sign, date and mail the enclosed
proxy at your earliest convenience.
On behalf of the Board of Directors, thank you for your cooperation and
support.
Sincerely,
/s/ Harry W. Bowman
Harry W. Bowman
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
OUTBOARD MARINE CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------
TO BE HELD JANUARY 18, 1996
The 1996 Annual Meeting of Shareholders of Outboard Marine Corporation will
be held at the First Chicago Conference Center, One First National Plaza,
Chicago, Illinois, on Thursday, January 18, 1996, at 9:00 a.m., local time,
for the following purposes:
1. To elect three directors for a three year term;
2. To ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors and accountants; and
3. To consider and act upon such other matters as may properly come before
the meeting or any adjournment thereof.
Only shareholders of record at the close of business on November 21, 1995
are entitled to notice of and to vote at the meeting. A list of such
shareholders shall be open to examination by every shareholder at the meeting
and for a period of ten days prior to the meeting, during the Company's normal
business hours, for any purpose germane to the meeting.
Holders of a majority of the Company's outstanding voting shares must be
present in person or by proxy for the meeting to be properly held. Please
sign, date and promptly return the enclosed proxy in the envelope provided.
You may revoke any proxy previously voted by attending the meeting and voting
your shares personally at any time before the voting is closed.
If you plan on attending the Annual Meeting, please check the appropriate
box on the proxy card.
By order of the Board of Directors
/s/ Howard Malovany
Howard Malovany
Secretary
Waukegan, Illinois
December 13, 1995
<PAGE>
PROXY STATEMENT
------------
PROXY SOLICITATION BY BOARD OF DIRECTORS
DECEMBER 13, 1995
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors (the "Board") of Outboard Marine Corporation, a Delaware
corporation and its subsidiaries (the "Company"), of proxies to be used at the
Annual Meeting of Shareholders of the Company to be held on January 18, 1996,
commencing at 9:00 a.m., local time, at the First Chicago Conference Center,
One First National Plaza, Chicago, Illinois, or any adjournment thereof. The
principal executive offices of the Company are at 100 Sea Horse Drive,
Waukegan, Illinois 60085.
This Proxy Statement, the proxy and the Company's 1995 Annual Report to
Shareholders are being mailed to shareholders on or about December 13, 1995.
The Company will bear the cost of soliciting proxies. In addition to mail
solicitation, there may be incidental personal solicitation made by Officers
and employees of the Company. The Company has engaged, at its expense, the
services of D. F. King & Co., Inc., 77 Water Street, New York, New York 10005,
to assist in the solicitation of proxies at an estimated fee of $6,000 plus
out-of-pocket expenses. A proxy may be revoked, in writing, at any time prior
to its exercise.
VOTING SECURITIES AND PRINCIPAL HOLDERS
The only issued class of capital stock of the Company is $.15 par value
common stock (the "Common Stock"). On November 21, 1995 (the "Record Date"),
there were 20,052,213 shares of Common Stock outstanding. Each share of Common
Stock is entitled to one vote. Only shareholders of record at the close of
business on the Record Date will be entitled to notice of and to vote at the
Annual Meeting.
A majority of the issued and outstanding shares of Common Stock, if present
in person or by proxy, will constitute a quorum for the transaction of
business at the Annual Meeting of Shareholders. The inspectors of election
appointed at the meeting will determine the existence of a quorum and tabulate
the votes cast at the meeting. Shareholders may withhold authority to vote for
one or more of the nominees for director and may abstain on one or more of the
other questions that may come before the meeting. Shares for which authority
is withheld or abstentions are indicated will be counted as present for
general quorum purposes. Directors are elected by a majority of those shares
present in person or by proxy and entitled to vote at the meeting; votes
withheld will be excluded entirely from the vote and will have no effect. The
other questions expected to come before the meeting require the approval of a
majority of the shares represented in person or by proxy and entitled to vote
at the meeting, and, therefore, abstentions will have the effect of a negative
vote. If a broker indicates on a proxy that it does not have discretionary
authority to vote on a particular question, under applicable Delaware law,
those shares will be counted as present for general quorum purposes but will
not be counted as votes cast on the question and will have no effect on the
outcome of the vote on such question.
The First Chicago Trust Co. of New York (the "Bank") is the record holder of
shares of Common Stock for participants in the Outboard Marine Corporation
Automatic Dividend Reinvestment and Cash Stock Purchase Plan. The Bank has
advised the Company that it intends to tender its proxy only as directed by
each participant.
NBD Bank, N.A. ("NBD") is the record holder of shares of Common Stock for
participants in the OMC Employee Stock Purchase Plan, the Outboard Marine
Corporation Employees Tax Deferred Savings Plan and the OMC Boat Group 401(k)
Plan. NBD has advised that it intends to tender its proxy only as directed by
each participant.
<PAGE>
The following tables set forth information with respect to (1) persons or
groups who are known to the Company to be beneficial owners, as of November
21, 1995, of more than 5% of the outstanding Common Stock (the "Investor
Table") and (2) beneficial ownership of Common Stock held, as of November 21,
1995, by each of the Company's Directors, Named Executives and all the
Company's Directors and the Company's elected Officers (the "Executive
Officers") as a group (the "Director and Executive Officer Table"). Beneficial
ownership is defined as the sole or shared power to vote, or direct the
disposition of, a security. Except as otherwise indicated, beneficial
ownership in the following tables includes sole voting and dispositive power.
INVESTOR TABLE
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME AND ADDRESS OWNED(1) OF CLASS
---------------- ------------ --------
<S> <C> <C>
Loomis, Sayles & Company, Inc.
One Financial Center
Boston, Massachusetts 02111-2660.................... 1,807,207 9.03%
Sanford C. Bernstein Co., Inc.
767 Fifth Avenue
New York, New York 10153............................ 1,669,143 8.34%
NM Capital Management, Inc.
6501 Americas Parkway
Albuquerque, NM 87710............................... 1,432,449 7.16%
Fidelity Management & Research
82 Devonshire Street
Boston, Massachusetts 02109-3614.................... 1,169,527 5.84%
</TABLE>
- --------
(1) Owned by the named company or its affiliates which are registered
investment advisers and held for the benefit of one or more persons.
DIRECTOR AND EXECUTIVE OFFICER TABLE
<TABLE>
<CAPTION>
SHARES OPTION SHARES
BENEFICIALLY BENEFICIALLY
OWNED(1) OWNED(2)
------------ -------------
<S> <C> <C>
DIRECTORS
Harry W. Bowman............................... -- --
Frank Borman.................................. 2,100 --
William C. France............................. 2,346 --
Urban T. Kuechle.............................. 4,823(3) --
Richard T. Lindgren........................... 26,247 --
J. W. Marriott, Jr............................ 7,347 --
Richard J. Stegemeier......................... 3,247 --
Charles D. Strang............................. 22,987 --
Richard F. Teerlink........................... 3,246 --
NAMED EXECUTIVES AND EXECUTIVE OFFICERS
L. Earl Bentz................................. 10,854 11,290
D. Jeffrey Baddeley........................... 9,562 14,350
David R. Lumley............................... 5,118 900
James C. Chapman(4)........................... 45,466 154,975
Ronald J. Jensen(4)........................... 162 14,875
Directors and Executive Officers as a group
(20 persons).................................. 202,675 270,385
</TABLE>
- --------
(1) Except as otherwise noted, the named individuals and members of the group
have sole voting and investment power as to the shares they own
beneficially except for restricted shares, which are included, over which
they currently have voting power only. All Directors and Executive
Officers as a group own
2
<PAGE>
approximately 1.35% of the Company's outstanding Common Stock. No Director
or Executive Officer owns beneficially more than 1% of such stock.
(2) Shares that could be acquired within 60 days following November 21, 1995
through the exercise of stock options prior to any cancellation thereof,
as described herein.
(3) This does not include 200 shares beneficially owned by Mr. Kuechle's wife
as to which Mr. Kuechle disclaims beneficial ownership.
(4) Mr. Chapman resigned his positions effective February 19, 1995 and Mr.
Jensen resigned his position effective November 2, 1995.
1. ELECTION OF DIRECTORS
The Board presently consists of nine members, one of whom is an Executive
Officer of the Company.
The Directors are divided into three classes. At each Annual Meeting of
Shareholders, Directors of a given class are elected for a three year term.
The current term of office of the Class I Directors will expire on the date of
the 1996 Annual Meeting of Shareholders.
Charles D. Strang and Urban T. Kuechle are retiring from, and will not be
renominated for positions on, the Board effective as of the date of the 1996
Annual Meeting of Shareholders pursuant to the Board's policy.
It is intended that votes will be cast, pursuant to the accompanying proxy,
FOR the election of William C. France, Ilene S. Gordon and Donald L. Runkle as
Class I Directors ("Nominees"). In the event any of the Nominees should become
unavailable, it is intended that votes will be cast, unless otherwise
instructed pursuant to the enclosed proxy, for such substitute nominee or
nominees as may be nominated by the Board. The Board is unaware of any need
for substitution of Nominees.
NOMINEES AND DIRECTORS
Names of and information concerning the Nominees, and the other Directors
whose terms will continue after the 1996 Annual Meeting of Shareholders,
together with certain additional information, are set forth below. Mr. Bowman
was appointed by the board to replace Mr. Chapman as Chairman of the Board and
Ms. Gordon and Mr. Runkle are new nominees to the Board. All other persons
listed are now serving as Directors and have been previously elected by the
shareholders. To the knowledge of the Company, there are no family
relationships between any Director or Executive Officer and any other Director
or Executive Officer. An affirmative vote of a majority of those shares
represented and entitled to vote at the meeting where a quorum is present is
required to elect Directors.
NOMINEES
Class I Directors
William C. France
Chairman of the Board, President and Chief Executive Officer of
International Speedway Company (Daytona Beach, FL), an owner and operator of
four automobile racing facilities. Mr. France has been President and Chief
Executive Officer since 1981 and Chairman since 1987. Mr. France is also
President of the National Association of Stock Car Automobile Racing (Daytona
Beach, FL).
A Director since 1985. Mr. France is a member of the Audit and Corporate
Governance Committees. Age 62.
3
<PAGE>
Ilene S. Gordon
Vice President, Operations of Tenneco, Inc. (Houston, TX), a major
diversified industrial corporation with significant interests in packaging
(Tenneco Packaging), natural gas transportation and marketing (Tenneco
Energy), automotive parts (Tenneco Automotive), and ship design, construction
and repair (Newport News Shipbuilding). Ms. Gordon has been Vice President
since 1994. Prior to that Ms. Gordon held numerous positions with Tenneco
Packaging including Senior Vice President, Total Quality Management from 1992
to 1994 and Vice President, Area Manager, Containerboard Division from 1990 to
1992. Age 42.
Donald L. Runkle
Vice President of General Motors Corporation and General Manager of their
Delphi Saginaw Steering Systems division (Saginaw, MI), a steering system
component manufacturer for the worldwide automotive market. Mr. Runkle has
been General Manager since 1993. Prior to that Mr. Runkle held numerous
positions with GM including Vice President, Advanced Engineering and GM's
Engineering Center, from 1983 to 1993. Age 50.
YOUR BOARD RECOMMENDS YOU VOTE "FOR" ALL NOMINEES. PROXIES SOLICITED BY THE
BOARD OF DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY A CONTRARY
CHOICE IN THEIR PROXIES.
OTHER DIRECTORS
Class II Directors
(Terms expire in 1997)
Frank Borman
Chairman of the Board and Chief Executive Officer of Patlex Corporation (Las
Cruces, NM), a laser technology patent royalty company. Mr. Borman has been
Chairman and Chief Executive Officer since 1988. Mr. Borman was Chairman of
the Board and Chief Executive Officer of Eastern Airlines, Inc. from 1976
until he retired in 1986. He is also a Director of American Superconductor
Corp. (Watertown, MA), Home Depot Companies (Atlanta, GA) and Thermo
Instrument Systems, Inc. (Boston, MA) and is a member of the Board of Trustees
of the National Geographic Society.
A Director since 1985. Mr. Borman is a member of the Audit and Compensation
Committees. Age 67.
Harry W. Bowman
Chairman of the Board, President and Chief Executive Officer of the Company
since February 19, 1995. Mr. Bowman held numerous positions with Whirlpool
Corporation from 1971 to 1995, most recently as Executive Vice President,
Global Business Process Integration from 1994 to 1995, President, Whirlpool
Europe from 1992 to 1994 and Senior Vice President, North American Operations
1991 to 1992.
A Director since 1995. Age 52.
J. W. Marriott, Jr.
Chairman of the Board, President and Chief Executive Officer of Marriott
International, Inc. (Washington, DC), a diversified lodging and services
management company. Mr. Marriott became Chief Executive Officer of Marriott
Corporation in 1972 and was named Chairman of the Board in 1985. Mr. Marriott
is also a Director of Host Marriott Corporation (formerly Marriott
Corporation, Washington, D.C.), General Motors Corporation (Detroit, MI), and
the U.S.-Russia Business Roundtable. He also serves on the boards of trustees
of the Mayo Foundation, the National Geographic Society, Georgetown
University, and on the advisory board of the Boy Scouts of America. He is on
the President's Advisory committee of the American Red Cross and the Executive
Committee of the World Travel & Tourism Council.
A Director since 1986. Mr. Marriott is a member of the Compensation and
Corporate Governance Committees. Age 63.
4
<PAGE>
Class III Directors
(Terms expire in 1998)
Richard T. Lindgren
President, The Lorr Corporation (Detroit, MI), a private investment company.
Mr. Lindgren has been President since 1989. Mr. Lindgren was President, Chief
Executive Officer and a Director of Cross and Trecker Corporation (Bloomfield
Hills, MI) from 1982 until 1988. Mr. Lindgren is also Chairman of the Board of
Robert Sinto Corporation (Lansing, MI), a foundry engineering and equipment
manufacturer, a Director of Sinto America, Inc., parent of Robert Sinto
Corporation, a Director of Atmosphere Group, Inc. (Birmingham, MI) and Dimango
Products Corporation (Brighton, MI) and Trustee of Suomi College (Hancock,
MI).
A Director since 1980. Mr. Lindgren is a member of the Compensation and
Corporate Governance Committees. Age 68.
Richard F. Teerlink
President and Chief Executive Officer of Harley-Davidson, Inc. (Milwaukee,
WI), the only major American-based manufacturer that produces heavyweight
motorcycles and a complete line of motorcycle parts and accessories. Mr.
Teerlink has been President and Chief Operating Officer since August 1988. He
has been Chief Executive Officer since March 1989. Mr. Teerlink is also a
Director of Johnson Controls, Inc. (Milwaukee, WI), FirstStar Bank Milwaukee
(Milwaukee, WI), Harley Davidson, Inc. (Milwaukee, WI) and Holiday Rambler LLC
(Wakarusa, IN).
A Director since 1990. Mr. Teerlink is Chairman of the Corporate Governance
Committee and a member of the Compensation Committee. Age 59.
Richard J. Stegemeier
Chairman Emeritus of the Board of Unocal Corporation (Los Angeles, CA), an
integrated petroleum company. Mr. Stegemeier was Chairman from April 1989 to
May 1995, and was Chief Executive Officer from 1988 to 1994. From December
1985 to June 1992 he was President, and from December 1985 to July 1988 he was
Chief Operating Officer. Mr. Stegemeier is also director of First Interstate
Bancorp (Los Angeles, CA), Northrop Grumman Corporation (Los Angeles, CA),
Halliburton Company (Dallas, TX), Foundation Health Corporation (Rancho
Cordova, CA), and Pacific Enterprises (Los Angeles, CA).
A Director since 1990. Mr. Stegemeier is Chairman of the Compensation
Committee and a member of the Audit and Corporate Governance Committees. Age
67.
BOARD OF DIRECTORS, COMMITTEES AND EXECUTIVE OFFICERS
The Board of Directors met eight times during the 1995 fiscal year. Board
Committees included Audit, Compensation and Nominating (whose responsibilities
have been incorporated into the new Corporate Governance Committee) which
during the year met two, four and three times, respectively.
The Audit Committee consists of five non-employee Directors. This Committee
oversees the Company's financial reporting process and internal controls,
reviews any significant issues concerning litigation and contingencies, meets
with independent public accountants and internal auditors to discuss the
results of their examinations, reviews the insurance programs of the Company,
and monitors compliance with the Company's Code of Conduct and other policies
on ethical business practices. This Committee also consults with management,
the internal auditors and the independent public accountants on matters
related to the annual audit
5
<PAGE>
plan, audit procedures applied, audit and non-audit fees, status of federal
tax returns and related reserves, the published financial statements, the
accounting principles applied and any material changes thereto.
The Compensation Committee consists of six non-employee Directors. This
Committee reviews and approves management's recommendations with respect to a
competitive, fair and equitable compensation and benefits policy designed to
retain personnel, stimulate their useful and profitable efforts on behalf of
the Company and attract necessary and qualified additions to staff; reviews,
approves and administers the Company's executive compensation plans and, after
taking into consideration the recommendations of management, determines the
salaries and incentive compensation of the Executive Officers of the Company
and its foreign and domestic subsidiaries, including but not limited to annual
bonuses and grants of stock options, restricted stock and performance units or
shares; carries out the administrative responsibilities for the Company's
compensation programs applicable to executives; reviews annually the
performance of the Company's Chief Executive Officer vis-a-vis the Company's
performance and based upon such review, recommends to the Board appropriate
compensation adjustments and bonus awards, if any; and acts on, reports to and
makes recommendations with respect to specific matters within delegated
authority.
The Corporate Governance Committee consists of seven non-employee Directors.
This Committee develops and recommends the criteria for the selection of
candidates to serve on the Board which include whether the potential
candidate's principal employment, occupation or association involves an active
leadership role, whether the potential candidate has expertise or experience
relevant to the Company's business that would not be otherwise readily
available to the Board, whether the potential candidate brings diversity to
the Board, and with respect to incumbent directors, how the potential
candidate performed and contributed during his or her most recent term;
develops and recommends the procedure for the selection of candidates to serve
on the Board; reviews and recommends the number of members of the Board;
recommends the slate of nominees to be proposed for election by the
shareholders of the Company at the Company's annual meeting; recommends
nominees to fill vacancies on the Board; considers and recommends the number,
size and composition of committees of the Board including rotation of members
and Chairperson responsibilities; reviews and recommends the compensation and
retirement programs for members of the Board; reviews the performance of the
members of the Board including any change in a member's status from date of
nomination; annually performs a self-assessment of the Board as a whole to
ensure that its members still possess the necessary skills, talents,
experience and qualities; reviews the performance of the Chief Executive and
Chief Operating Officers; reviews, develops and recommends plans and proposals
for management succession with respect to the Chief Executive and Chief
Operating Officers; and acts on, reports to and makes recommendations with
respect to specific matters within a delegated authority. The Committee will
consider nominees recommended by shareholders for existing vacancies. For a
shareholder to properly bring a nomination for a Director before the Annual
Meeting of Shareholders, such shareholder must give the Company written
notice, received by the Secretary of the Company, at least sixty (60) days
prior to the date one year from the date of the immediately preceding annual
meeting of shareholders. Such notice must contain, for each person such
shareholder intends to nominate, the name, age, business address and residence
address of the person, the principal occupation or employment of the person,
the class and number of shares of stock of the Company which are beneficially
owned by the person and any other information relating to the person that is
required to be disclosed in solicitations for proxies for election of
Directors pursuant to Rule 14a under the Securities Exchange Act of 1934. The
shareholder must provide such shareholder's name and address and the class and
number of shares such shareholder beneficially owns as of the record date for
the shareholder's meeting.
In fiscal year 1995, no Director attended fewer than 75 percent of the
aggregate number of meetings of the Board and the Board Committees on which
such Director served except for J. W. Marriott, Jr.
Directors who are not employees of the Company receive an annual retainer of
$25,000 and a fee of $1,000 for each Board and Board Committee meeting
attended, provided no Director will be paid for more than two meetings held in
any one day. Directors who are employees of the Company receive no
remuneration or fees, as such, for serving as Directors.
6
<PAGE>
In fiscal year 1995, the Company paid Mr. Strang $100,000 in exchange for
his agreement not to compete.
Each Director is a participant in the Retirement Plan for Non-Employee
Directors (the "Director's Retirement Plan"). The Director's Retirement Plan
provides an annual retirement benefit equal to ten percent (10%) of the
Director's retainer, as of the date of retirement, times the years of service
as a Director, up to a maximum of 100% of the retainer. The benefit begins to
vest after six (6) years of service (10% per year) and is payable for the life
of the Director.
Under the Stock Purchase Plan for Non-Employee Directors, non-employee
Directors of the Company are entitled to have all or a portion of their
retainer used to purchase Common Stock at a price not less than eighty-five
percent (85%) of the fair market value of the Common Stock on the date of
purchase. Receipt of the Common Stock may be deferred for any period of time
chosen by the Director. The Director must make the election to receive or
defer receipt of stock, or change any such election, no less than six (6)
months prior to the date the retainer would ordinarily have been received. As
long as the stock is held or deferred the Director will receive dividends, as
and if declared, and will have the right to vote the stock. Payment of
deferred amounts may be altered by the Committee in the case of financial
hardship or change-in-control.
On May 26, 1995, the Company loaned Mr. Bowman $175,000 to assist him in
relocating from his previous employer, in exchange for a promissory note in
the same amount. The note was repaid in full on August 23, 1995. The loan was
interest free for 180 days with the first monthly interest payment commencing
210 days after the date of execution. Interest was based on one-half of one
percent (.5%) in excess of the prime interest rate of Citibank NA on a rolling
basis.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the annual and long-
term compensation paid or to be paid to those persons who were, at September
30, 1995, (1) the Chief Executive Officer or served in such capacity during
fiscal 1995, (2) the other four most highly compensated Executive Officers of
the Company and (3) individuals who would have been one of the four most
highly paid Executive Officers but for the fact that they were not serving as
an Executive Officer on September 30, 1995 (the "Named Executives") for
services rendered in all capacities to the Company for the 1995, 1994 and 1993
fiscal years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERMCOMPENSATION
----------------------- -------------------------------
OTHER
ANNUAL RESTRICTED SECURITIES
NAME AND COMPEN- STOCK UNDERLYING LTIP ALL OTHER
PRINCIPAL SALARY BONUS SATION AWARDS OPTIONS/SARS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) $(1) ($)(2) # ($) ($)(3)
--------- ---- ------ ----- ------- ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
H. W. Bow-
man,(4) 1995 246,928 240,000 0 0 150,000 0 12,812
Chairman of
the Board, 1994 -- -- -- -- -- -- --
President and
Chief 1993 -- -- -- -- -- -- --
Executive Of-
ficer
L. E. Bentz, 1995 199,482 110,969 0 0 0 0 11,047
Vice President
and 1994 201,500 104,022 0 0 6,400 0 5,589
President, OMC
Fishing 1993 201,500 0 0 157,200 17,100 0 826
Boat Group,
Inc.
D. J.
Baddeley, 1995 190,000 100,415 0 0 0 39,366 15,269
Vice President
and 1994 175,000 92,273 0 0 6,100 21,382 20,871
General Coun-
sel 1993 155,208 0 0 153,550 12,300 11,380 20,656
D. R.
Lumley,(5) 1995 175,208 106,332 0 0 0 0 2,767
Senior Vice
President, 1994 36,070 0 0 0 3,600 0 78
Worldwide 1993 -- -- -- -- -- -- --
Sales and
Marketing,
MPPG
J. C. Chap-
man,(6) 1995 505,000 457,530 60,971 0 0 204,474 24,533
Former Chair-
man, 1994 467,000 424,833 55,915 0 30,600 126,419 48,496
President and 1993 459,388 0 40,027 456,950 67,100 69,970 52,129
Chief
Executive Of-
ficer
R. J. Jen-
sen,(6) 1995 210,000 113,811 0 0 0 49,202 3,443
Vice President
and 1994 193,333 112,980 0 0 7,900 21,007 4,028
President, In-
ternational 1993 169,202 0 0 170,200 14,300 11,226 3,787
Group
</TABLE>
NOTES TO SUMMARY COMPENSATION TABLE
(1) With the exception of Mr. Chapman, no other Named Executive's Other Annual
Compensation reached the level required for disclosure. The amount listed
for Mr. Chapman includes amounts paid by the Company for financial and
estate planning and tax preparation advice of $ 31,278 and amounts paid by
the Company representing the allocable expense for a leased automobile of
$24,097.
(2) In September 1993, for fiscal 1994, most Executive Officers were granted
Restricted Stock at a value of $18.50 per share on the date of grant in
lieu of a salary increase. The number of shares granted were 126,100
having an aggregate value on the date of grant of $2,332,850. Based on the
value of a share of Common Stock as of September 29, 1995 the aggregate
value of all outstanding shares of Restricted Stock granted was
$2,001,650. The Restricted Stock will not vest for five years from the
date of grant. During the restricted period, the Executive Officers will
receive dividends and will have the right to vote the stock. If the
Executive Officer (including a Named Executive) does not remain in the
employ of the Company for the entire five year period other than for
retirement, death, disability or a change-in-control, such Executive
Officer's restricted stock will be forfeited.
(3) For fiscal 1995 includes matching contributions to the OMC Employees Taxed
Deferred Savings Plan, and for Mr. Bentz the OMC Boat Group 401(k) Plan,
in the amount of $0, $7,411, $4,088, $0, $0 and $0 and
8
<PAGE>
the dollar value of insurance premiums paid by the Company of $12,812,
$3,636, $11,181, $2,767, $24,533 and $3,443 for the benefit of Messrs.
Bowman, Bentz, Baddeley, Lumley, Chapman and Jensen, respectively. Mr.
Chapman received compensation from the Company as a result of an agreement
with the Company as further described below under the heading "Severance
Agreements".
(4) Mr. Bowman was hired by the Company February 19, 1995 and therefore
information for the years 1993 and 1994 is not applicable.
(5) Mr. Lumley was hired by the Company July 15, 1994 and therefore
information prior to that date is not applicable.
(6) Mr. Chapman resigned his positions effective February 19, 1995 and Mr.
Jensen resigned his position effective November 2, 1995.
OPTION EXERCISES IN THE 1995 FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table shows information on the exercise in the 1995 fiscal
year of options to purchase Common Stock by the Named Executives, all current
Executive Officers as a group and all other employees as a group. Also shown
are the unexercised options to purchase Common Stock as of September 30, 1995
and the value of in-the-money options as of such date.
<TABLE>
<CAPTION>
VALUE OF IN-THE-MONEY
NUMBER OF OPTIONS UNEXERCISED OPTIONS
SHARES UNEXERCISED AT YEAR END AT YEAR END(1)
ACQUIRED OR VALUE ------------------------- -------------------------
EXERCISED REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
H. W. Bowman............ 0 0 0 150,000 0 (532,500)
L. E. Bentz............. 0 0 9,190 13,350 12,655 6,975
D. J. Baddeley.......... 0 0 13,175 10,725 33,928 2,120
D. R. Lumley............ 0 0 900 2,700 (2,813) (8,438)
J. C. Chapman........... 0 0 147,100 56,500 1,040,800 15,150
R. J. Jensen............ 1,500 14,813 13,425 13,075 22,378 397
All current Executive
Officers as a group (20
persons)............... 0 0 252,610 290,200 1,366,554 (506,546)
All other employees as a
group.................. 40,215 373,357 439,960 199,350 2,397,095 28,926
</TABLE>
- --------
(1) Value of in-the-money options determined by multiplying the number of
exercisable or unexercisable options by $21.50, the closing price of the
Company's Common Stock on September 29, 1995, and subtracting the option
price.
9
<PAGE>
LONG-TERM INCENTIVE PLAN AWARDS IN FISCAL YEAR 1995
The following table describes the performance shares granted to the Named
Executive Officers during the Company's 1995 fiscal year under the 1994 OMC
Long-Term Incentive Plan (the "LTIP"). With respect to the LTIP, the grants
cover the three year award cycle October 1, 1995 through September 30, 1998.
No distribution of performance shares, whether in cash or stock, will be made
until after the end of the three year award cycle and the Compensation
Committee has determined the extent to which the Company has achieved the
performance goals set at the beginning of the award cycle. The initial value
of each performance share granted under the LTIP was $21.865. The initial
value was the average of the closing price for a share of Common Stock on the
New York Stock Exchange for the month of September 1995. The performance goals
set for these performance shares are (1) the average of the absolute return on
net assets for the three year award cycle, (2) return on net assets
improvement for the three year award cycle over the prior three year award
cycle and (3) total shareholder return on the Common Stock as compared to the
return on the S&P 400 measured over the three year award cycle. For a complete
description of these performance goals, see the Report of the Compensation
Committee under the heading "Long-Term Incentive Compensation" beginning on
page 15 of this Proxy Statement. The performance shares will be paid in stock
or cash at the discretion of the Compensation Committee.
<TABLE>
<CAPTION>
ESTIMATED FUTURE
PAYOUTS(1) (POTENTIAL
NUMBER OF PERFORMANCE SHARES)
PERFORMANCE PERIOD ------------------------
SHARES UNTIL THRESHOLD TARGET MAXIMUM
NAME GRANTED PAYOUT (#) (#) (#)
- ---- ----------- ----------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
H. W. Bowman................... 17,900 3 years 17.9 17,900 26,850
L. E. Bentz.................... 3,600 3 years 3.6 3,600 5,400
D. J. Baddeley................. 3,600 3 years 3.6 3,600 5,400
D. R. Lumley................... 2,700 3 years 2.7 2,700 4,050
R. J. Jensen................... 4,600 3 years 4.6 4,600 6,900
</TABLE>
- --------
(1) The number of shares to be paid upon the completion of an award cycle will
depend entirely on the extent to which the Company achieves the
performance goals set at the beginning of the award cycle. The payout at
the Threshold level will be 0.1%, the payout at the Target level will be
100% and the payout at the Maximum level will be 150% of the number of
performance shares originally granted. If the payment is in cash, as
determined by the Compensation Committee, the amount of the payout will be
the number of performance shares earned, as set forth above, times the
average price of a share of Common Stock on the date the Committee
approves such payment.
OPTION GRANTS IN THE 1995 FISCAL YEAR
The following table provides information on the grants of options to
purchase Common Stock given to the Named Executive on February 19, 1995.
<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS
NUMBER OF GRANTED TO POTENTIAL REALIZABLE
SECURITIES ALL EXERCISE VALUE
UNDERLYING EMPLOYEES PRICE ($)(4)
GRANT OPTIONS/SARS IN 1995 PER SHARE EXPIRATION ---------------------
NAME DATE GRANTED (#)(1) (2) ($)(3) DATE 0% 5% 10%
- ---- -------- -------------- ---------- --------- ---------- --- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
H. W. Bowman............ 02/19/95 50,000 32.6 20.875 02/19/06 0 741,250 1,934,250
02/19/95 50,000 32.6 25.050 02/19/06 0 532,500 1,725,500
02/19/95 50,000 32.6 29.225 02/19/06 0 323,750 1,516,750
</TABLE>
- --------
(1) All options vest over a four-year period; 25% of the option grant being
exercisable at the end of the first year after the grant date, and an
additional 25% each year thereafter.
(2) In the 1995 fiscal year 2 employees received stock options.
10
<PAGE>
(3) The exercise price of $20.875 was the closing price of a share of OMC
common stock on the New York Stock Exchange on February 19, 1995. The
other exercise prices are per the agreement entered into between the
Company and Mr. Bowman pursuant to his employment as further described
below.
(4) The amounts set forth reflect the potential realizable value of the
options granted at assumed annual rates of stock price appreciation of 5%
and 10% through the expiration date of the options (eleven years) using
the closing price of a share of common stock on the grant date. The use of
5% and 10% is pursuant to Securities and Exchange Commission requirements
and is not intended by the Company to forecast possible future
appreciation.
RETIREMENT PLANS
The Outboard Marine Corporation Employees Retirement Plan (the "Retirement
Plan") provides a fixed benefit determined on the basis of years of service
and final average base earnings. In addition to the benefits from the
Retirement Plan, participants in the Company's annual incentive compensation
plan(s) are eligible for retirement benefits from a supplemental non-qualified
retirement plan. The retirement benefits under the non-qualified plan are
based upon amounts paid under the annual bonus plan as well as salary, and the
total retirement benefits payable under the plans may exceed the maximum
benefits payable under the Employee Retirement Income Security Act of 1974, as
amended. Upon a change-in-control of the Company and certain other actions by
an acquiror, all participants of the Retirement Plan would become vested in
any excess of plan assets over total accumulated benefit obligations.
Participants in the plans who are not Executive Officers receive an
aggregate benefit equal to 1.2% of total pay and .5% above social security
covered compensation for each year of credited service times the average of
the five highest consecutive annual earnings (base annual salary rate plus
incentive compensation earned in the same year under an annual incentive
compensation plan) during such participant's last ten years of employment. An
Executive Officer who participates in the plans will receive the 1.2% and .5%
above social security covered compensation for each year of credited service
as a non-Executive Officer and 2.55% for each year of credited service as an
Executive Officer times the average of the three highest annual earnings
during the last ten years of such participant's tenure with the Company. The
total annual benefit payable from these two plans is shown in the table below
for selected average base earnings levels and years of service based upon
certain assumptions including all years of credited service as an Executive
Officer, retirement at age 65 and election of a single life annuity for the
benefit payment.
The approximate annual benefits shown in the table below are for the Named
Executive participants and are not subject to social security offset but are
subject to offset for any benefits payable from retirement programs of the
Company's foreign subsidiaries.
ANNUAL BENEFIT FOR NAMED EXECUTIVE PARTICIPANTS FOR SELECTED YEARS OF SERVICE
<TABLE>
<CAPTION>
AVERAGE ANNUAL 20 OR
BASE EARNINGS 5 YEARS 10 YEARS 15 YEARS MORE YEARS
-------------- ------- -------- -------- ----------
<S> <C> <C> <C> <C>
$ 150,000 $ 19,125 $ 38,250 $ 57,375 $ 76,500
250,000 31,875 63,750 95,625 127,500
300,000 38,250 76,500 114,750 153,000
500,000 63,750 127,500 191,250 255,000
900,000 114,750 229,500 344,250 459,000
1,300,000 165,750 331,500 497,250 663,000
</TABLE>
As of December 31, 1995, except for Mr. Jensen where November 2, 1995 is
applicable, Messrs. Bowman, Bentz, Baddeley, Lumley, Chapman and Jensen will
have .83, 2.9, 5.92, 1.5, 17.92, and 21.17, respectively, credited years of
service under the Company's retirement plans of which .83, 2.9, 5.92, 1.5,
17.25 and 4.75, respectively, credited years of service will be as an
Executive Officer of the Company. The total estimated annual
11
<PAGE>
benefit payable from these two plans for Messrs. Bowman, Bentz, Baddeley,
Lumley, Chapman and Jensen based upon certain assumptions including actual
years of credited service as a non-Executive Officer and Executive Officer, as
the case may be, current age and base earning levels, and election of a single
life annuity for the benefit payment is $13,600, $25,233, $42,468, $7,736 and
$440,276 and $122,485, respectively, which payments are not subject to social
security offset but are subject to offset for any benefits payable from
retirement programs of the Company's foreign subsidiaries.
EMPLOYMENT AND SEVERANCE AGREEMENTS
As of February 19, 1995, the Company and Mr. Bowman entered into an
agreement, pursuant to his employment, which (1) guarantees salary payments
for three years from February 19, 1995, starting at $400,000 for the first
year with warranted merit increases for the second and third years, unless
termination occurs by reason of his death, disability or termination for cause
prior thereto, (2) guarantees a bonus for the 1995 fiscal year of at least
$240,000 (which represents the normal target annual bonus to which he would
have been entitled had he been employed by the Company for the entire fiscal
year), (3) authorized the granting of stock options and performance shares (as
set forth in the Option Grants table contained in this Proxy Statement) and
(4) guarantees a special supplemental retirement benefit if termination of
employment with the Company occurs after age 55, as follows:
<TABLE>
<CAPTION>
RETIREMENT BENEFITS AS
AGE AT TERMINATION % OF FINAL AVERAGE COMPENSATION
------------------ -------------------------------
<S> <C>
55 54
56 56
57 58
58 and over 60
</TABLE>
which benefits will be reduced by (a) 1/4% for each month termination occurs
between the ages of 60 and 65, (b) 1/2% for each month termination occurs
between the ages of 55 and 60 and (c) retirement benefits received from his
previous employer.
The Company has also entered into a severance agreement with Mr. Bowman,
which has a one year term and is automatically extended from year to year.
This severance agreement, which applies only upon a change-in-control of the
Company, provides that if Mr. Bowman (1) elects to resign, or (2) is
terminated by the Company other than for cause, the Company will pay Mr.
Bowman an amount, in cash, equal to (a) a fraction, the numerator of which is
equal to the lesser of thirty-six or the number of full and partial months
existing between the date Mr. Bowman terminates employment and his 65th
birthday and the denominator of which is twelve, multiplied by (b) his then
current base salary plus the highest amount of incentive compensation received
by him in the five years preceding the change-in-control. In addition, the
Company will pay Mr. Bowman, in cash, amounts accelerated, earned, allocated
or deferred under the Company's pension, retirement, compensation or Annual
and Long-Term Incentive Plans, plus an amount, if applicable, required to be
paid by Mr. Bowman pursuant to the application of Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code").
The Company has also entered into severance agreements with its other
current Executive Officers, including the Named Executives. Each of these
agreements has a one year term which is automatically extended from year to
year. These severance agreements, which apply only upon a change-in-control of
the Company, provide that if such Executive Officer (1) elects to resign his
employment for certain specified reasons, or (2) is terminated by the Company
other than for cause, the Company will pay such Executive Officer an amount,
in cash, equal to (a) a fraction, the numerator of which is equal to the
lesser of twenty-four and the number of full and partial months existing
between the date such Executive Officer terminates employment and his 65th
birthday and the denominator of which is twelve, multiplied by (b) such
Executive Officer's then current base salary plus the highest amount of
incentive compensation received by such Executive Officer in the five years
preceding the change-in-control. In addition, the Company will pay such
Executive Officer, in cash, amounts accelerated, earned, allocated or deferred
under the Company's pension, retirement, compensation or Annual and Long-Term
Incentive Plans.
12
<PAGE>
No amounts are expensed by the Company for financial reporting purposes with
respect to any severance agreement.
For purposes of the severance agreements referred to above, a change-in-
control of the Company shall generally be deemed to have occurred if (1) any
person, other than the Company or fiduciaries holding securities under an
employee benefit plan of the Company, is or becomes the beneficial owner of
securities of the Company representing 15% or more of the combined voting
power of the Company's then outstanding securities; (2) during any period of
two consecutive years, individuals, who, at the beginning of such period,
constitute the Board and certain new Directors (other than certain Directors
designated by a person who has entered into certain change-in-control
transactions), whose election by the Board or nomination for election by the
Company's shareholders is approved by a vote of at least two-thirds of the
Directors then still in office, cease for any reason to constitute a majority
thereof; (3) the shareholders of the Company approve a merger or consolidation
of the Company with any other company, other than certain transactions in
which the voting securities of the Company continue to represent at least 80%
of the combined voting power of the Company or such surviving entity following
such transaction or certain recapitalizations in which no person acquires more
than 15% of the combined voting power of the Company's then outstanding
securities; (4) the shareholders of the Company approve a plan of complete
liquidation of the Company; or (5) the Company enters into an agreement for
the disposition of all or substantially all the Company's assets or the
Company otherwise disposes of such assets.
On February 19, 1995 (the "Termination Date") James C. Chapman resigned as
Chairman of the Board, President and Chief Executive Officer of the Company.
Mr. Chapman and the Company entered into an agreement pursuant to which the
Company would provide certain benefits to Mr. Chapman. Pursuant to the
agreement, the Company would (1) through November 2, 1996 continue to pay Mr.
Chapman's salary in effect on the Termination Date, (2) through November 2,
1996 provide the medical, health and life insurance coverage in existence as
of the Termination Date, (3) for the 1995 fiscal year, to the extent the
Company otherwise pays an annual bonus under its Executive Bonus Plan, pay an
amount to Mr. Chapman equal to the amount to which he would have been entitled
as if he were an employee of the Company through the end of such fiscal year,
(4) pro rate the amount of performance units and shares earned for the 1995,
1996 and 1997 fiscal years based on the Termination Date and (5) pay certain
life insurance premiums for a period ending October 1, 2001. In consideration
of these benefits, Mr. Chapman agreed (1) the Severance Agreement he
previously held would terminate as of February 19, 1995 and (2) he would not
compete with the Company for a period of time ending May 2, 1998.
REPORT OF THE COMPENSATION COMMITTEE
GOALS OF THE COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") is made up of six non-employee
Directors. The Committee met four times in the 1995 fiscal year. Its charter
is to:
1. Review and approve a competitive, fair and equitable compensation and
benefits policy designed to retain personnel, to stimulate their useful
and profitable efforts on behalf of the Company and to attract necessary
additions to the staff with appropriate qualifications;
2. Review, approve and administer the Company's executive compensation
plans and determine the salaries and incentive compensation of the
Executive Officers of the Company and its foreign and domestic
subsidiaries; and
3. Review annually the performance of the Company's Chief Executive Officer
vis-a-vis the Company's performance and, based upon such review,
recommend to the Board appropriate compensation adjustments and bonus
awards, if any.
To carry out this charter, the Committee's current objective is to rely more
heavily on incentive compensation to support the Company's strategies and
provide executives ownership opportunities for their
13
<PAGE>
successful execution. The Committee will, if necessary to satisfy Section
162(m) of the Code of 1986, certify the attainment of these incentives.
Section 162(m) of the Code denies a tax deduction to any publicly held
corporation such as the Company for compensation in excess of $1 million paid
to any Named Executive. Certain performance-based compensation, however, is
specifically exempt from the deduction limit. The determination of whether
compensation is performance-based depends on several factors including:
whether the compensation is payable solely on account of the attainment of one
or more nondiscretionary objective performance goals established by an
independent compensation committee of the board of directors; whether there
has been disclosure to and approval by the shareholders of performance
standards to be used in determining awards under the plan; whether the
company's compensation committee is composed solely of "outside" directors;
and whether prior to the payment of such compensation, the compensation
committee has certified that applicable performance standards have been
satisfied.
In addition to reports and recommendations from senior management the
Committee has relied on the services of various nationally known compensation
consulting firms for information regarding appropriate compensation levels and
programs.
The Committee's compensation philosophy is based on several criteria,
including, but not limited to, the financial and operational goals recommended
by the Company's senior management and approved by the Board for the Company,
as a whole, as well as for significant business units; performance by the
executives in achieving these goals; the need to attract, retain and motivate
executives to execute and exceed the Company's plans and programs; the need to
reward sustained corporate, functional, and/or individual performance with an
appropriate base salary and incentive opportunity; the need to increase
management ownership in the Corporation; the need to link executive reward
with stockholder value and profitability; and the need to communicate the
Corporation's goals through performance measures linked to pay that focus
executives on achievement of business objectives.
For the Company's 1995 fiscal year, the primary criteria used in evaluating
Company performance were (1) return on investment, both in absolute terms and
as compared to prior years, (2) the total shareholder return of the Company's
stock compared to the total return of the S&P 400 Index and (3) business unit
profitability for evaluating business unit performance. The Company's
performance for the fiscal year just ended exceeded the goals set at the
beginning of the year.
There are three components of executive compensation reviewed by the
Committee: base salary, annual incentive compensation and long-term incentive
compensation. The combination of these programs produces total direct
compensation.
BASE SALARY
In fiscal 1994 most Executive Officers received a grant of restricted stock
in lieu of a salary increase to encourage them to remain with the Company,
take the steps necessary to help the Company achieve its goals and to increase
their stock ownership. The amount of the restricted stock grants attempted to
take into account the cumulative effect of the loss of the single year salary
increase. The restricted stock will not vest for five years and during that
period, dividends will be paid to the Executive Officer and the Executive
Officer will be able to vote the shares. For fiscal years 1995 and 1996,
salary increases for all exempt employees, including the Named Executives,
averaged approximately 4.2% and 4.5%, respectively.
It is the Committee's practice to target base annual salary at the 50th
percentile of executives with comparable levels of responsibility and
individual performance at other manufacturing companies and competitors.
Individual performance is evaluated each year by the Committee and
recommendations for salary adjustments, for all Executive Officers, are made
by the Committee to the Board each November. The Committee has the authority,
without Board approval, to set the salary ranges and adjustments for all other
employees.
14
<PAGE>
ANNUAL INCENTIVE COMPENSATION
The Executive Bonus Plan is designed to add incentive for executives to
execute and exceed the Company's plans and receive annual rewards for that
execution. Under the Executive Bonus Plan the reward is based on absolute
return on net assets ("ARONA") for the fiscal year. The target amount of
annual incentive compensation is determined by the executive's salary grade.
The Named Executives' target bonus amounts range from 30% to 60% of base
annual salary. The Chief Executive Officer's target bonus amount equals 60% of
salary. The target award, when added to base annual salary, is intended to
result in total annual compensation at approximately the 50th percentile of
competitive annual compensation, as discussed under the heading "Base Salary"
above. Each executive can earn up to 200% of that target amount depending on
the extent to which the Company achieves its annual performance targets and
the individual performs vis-a-vis pre-determined annual goals. There will be
no corporate bonus paid unless ARONA exceeds 8% and a maximum award if ARONA
equals or exceeds 15%.
No annual incentive compensation was earned in the 1993 fiscal year by any
employee, including the Named Executives. For fiscal 1994 incentive
compensation was earned at 150.6% of target as a result of an ARONA of 10.8%
and a return on investment improvement ("ROII") of over 10.8%. For fiscal 1995
incentive compensation was earned at 151% of target as a result of an ARONA of
10.8% and a ROII of over 10.8%.
LONG-TERM INCENTIVE COMPENSATION
The LTIP provides for the grant of stock options, restricted stock,
performance units and performance shares. The purpose of the plan is to create
an opportunity for executives to share in the enhancement of shareholder value
through equity based awards. The overall goal is to create a link between the
Company's management and its shareholders through stock ownership and
incentive compensation based on the achievement of specific financial
measures.
Each Executive Officer has a target amount of performance shares, ranging
between 20% and 70% of annual salary, with a maximum amount that can be earned
equal to 150% of the target amount depending on the extent to which
performance targets are achieved over a three year award cycle. The Chief
Executive Officer's target award equals 70% of salary. In addition, stock
options are granted to Executive Officers in amounts ranging between 40% and
140% of salary, depending solely on such Executive Officer's salary grade. The
Chief Executive Officer's option grant equals 140% of salary. The stock option
and performance share grants, when added to base annual salary (when the
performance share grant is paid at the target level), are intended to result
in total long-term incentive compensation at approximately the 50th percentile
of executives with comparable levels of responsibility and individual
performance at other manufacturing companies and competitors.
It is intended that payment for the achievement of the performance goals set
with respect to performance shares be paid in shares of Common Stock. The
performance goals for the outstanding award cycles are: (1) three year average
of ARONA, (2) three year average of return on net asset improvement ("RONAI")
and (3) the monthly average of total shareholder return on the Common Stock
versus the total return of the S&P 400 Index for the three year award cycle
("TSR"). Under the LTIP, 50% of the award will be based upon the TSR goal, 25%
on the ARONA goal and 25% on the RONAI goals. The ARONA thresholds for payment
and the maximum award are the same as those for Annual Incentive Compensation
above, determined, however, on a cumulative basis for the three year award
cycle. The RONAI is also based on a cumulative three year award cycle but has
a threshold for payment greater than 0 percent, and a maximum award for 8
percent or greater. Under the TSR goals, there will be no award until the
total shareholder return of the Common Stock is greater than 80% of the S&P
400 Index's total return and there will be a maximum award if the Company's
TSR exceeds 120% of the S&P 400's total return.
EXECUTIVE OFFICER BENEFITS
In addition to base salary and annual and long-term incentive compensation,
the Company also provides Executive Officers with a broad range of benefits
available to all employees as well as specific, supplemental
15
<PAGE>
benefits, designed to be comparable to those offered to executives with
similar levels of responsibility and individual performance. These
supplemental benefits include a Company-leased automobile, financial and
estate planning, tax preparation and advice and supplemental life insurance
coverage.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
The salary, annual and long-term incentive compensation and executive
benefits for the Chief Executive Officer ("CEO") are determined by the
Committee substantially in conformance with the policies described above for
all other senior executives of the Company. In addition, the Committee
evaluates the CEO's contribution to the Company's achievement of its long-term
financial and non-financial objectives on an on-going basis. The Committee
also evaluates the CEO's performance at least annually based upon a variety of
factors including the extent to which strategic and business plan goals are
met and targets for earnings per share, return on net assets, growth in sales
and earnings, market share and total return to shareholders are achieved.
Mr. Chapman terminated his positions February 19, 1995.
Mr. Bowman was elected Chairman of the Board, President and Chief Executive
Officer of the Company on February 19, 1995. For more detail on Mr. Bowman's
compensation see Executive Compensation, Employment and Severance Agreements
above. For the 1996 fiscal year, Mr. Bowman received a salary increase of 15%.
Submitted by the Compensation Committee of the Company's Board of Directors:
Richard J. Stegemeier, Chairman
Frank Borman
Urban T. Kuechle
Richard T. Lindgren
J. Willard Marriott, Jr.
Richard F. Teerlink
16
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Common Stock
with the cumulative returns of the Standard & Poor's 500 Stock Index and
Standard & Poor's Leisure Time Index weighted by the year-end market value of
each company. "Cumulative total return" is defined as stock price appreciation
plus dividends paid, assuming reinvestment of all such dividends.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG OUTBOARD MARINE CORPORATION, S&P INDUSTRIALS AND S&P LEISURE TIME
<CAPTION>
OUTBOARD
Measurement Period MARINE S&P S&P LEISURE
(Fiscal Year Covered) CORPORATION INDUSTRIALS TIME
- ------------------- ------------ ----------- -----------
<S> <C> <C> <C>
Measurement Pt-
9/30/90 $100 $100 $100
FYE 9/30/91 $151 $131 $159
FYE 9/30/92 $144 $143 $154
FYE 9/30/93 $173 $155 $185
FYE 9/30/94 $217 $169 $230
FYE 9/30/95 $209 $216 $242
</TABLE>
2. RATIFICATION OF APPOINTMENT OF AUDITORS
Arthur Andersen LLP, P. O. Box 1215, Milwaukee, Wisconsin 53201, served as
independent auditors and accountants of the Company for the 1995 fiscal year.
The Audit Committee has recommended to the Board, and the Board in turn,
having approved such appointment at its November 1, 1995 meeting, recommends
to the shareholders, that Arthur Andersen LLP's appointment as the Company's
independent auditors and accountants for the 1996 fiscal year be confirmed.
17
<PAGE>
A representative of Arthur Andersen LLP is expected to be present at the
Annual Meeting of Shareholders, with the opportunity to make a statement if he
desires to do so, and is expected to be available to respond to appropriate
questions. If the shareholders disapprove, the Company may or may not
reconsider the appointment.
YOUR BOARD RECOMMENDS YOU VOTE "FOR" THIS PROPOSAL. PROXIES SOLICITED BY THE
BOARD OF DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY A CONTRARY
CHOICE IN THEIR PROXIES.
SHAREHOLDER PROPOSAL PROCEDURE
Any shareholder who intends to present a proposal at the Company's 1997
Annual Meeting of Shareholders and who wishes to have such proposal included
in the Company's proxy soliciting material for that meeting must submit the
proposal(s) in writing to the Secretary of the Company on or before August 13,
1996.
OTHER MATTERS
The Board knows of no matters, other than those specified above, to be
brought before the meeting. However, if any other matters properly come before
the meeting, or any adjournments thereof, it is the intention of the persons
named in the enclosed proxy form to vote the same in accordance with their
judgment on such matters.
For shareholders who require information regarding the registration of their
shares, the payment of dividends, details regarding the transfer of their
shares or other similar information, they should call the Company's Transfer
Agent, First Chicago Trust Co. of New York, P.O. Box 2500, Jersey City, New
Jersey 07303-2500, Shareholder Services Division, 1-800-446-2617.
The Company will provide without charge, upon written request, to any person
who was a beneficial owner of the Company's Common Stock on the Record Date, a
copy of the Company's Annual Report on Form 10-K for the year ended September
30, 1995, without exhibits, as filed with the Securities and Exchange
Commission. Requests should be sent to the Company to: Corporate Secretary,
100 Sea Horse Drive, Waukegan, Illinois 60085.
18
<PAGE>
PROXY
OUTBOARD MARINE CORPORATION
ANNUAL MEETING - JANUARY 18, 1996
PROXY SOLICITED BY BOARD OF DIRECTORS
HARRY W. BOWMAN, D. JEFFREY BADDELEY and HOWARD MALOVANY and each of them,
are appointed Proxies, with power of substitution, to vote all stock of the
undersigned at the Annual Meeting of Shareholders to be held January 18, 1996 at
9:00 a.m. (local time) at the First Chicago Conference Center, One First
National Plaza, Chicago, Illinois, and at any adjournment thereof, upon the
matters mentioned hereafter and, in their discretion, upon such other matters as
may come before said meeting.
Unless otherwise instructed, this proxy will be voted FOR all nominees listed
in Proposal 1 and FOR Proposal 2.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
-----------
SEE REVERSE
SIDE
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+ FOLD AND DETACH HERE +
<PAGE>
[X] Please mark your votes as in this example. 4886
1. Election of Directors. FOR [_] WITHHELD [_]
For, except vote withheld from the following nominee(s):
________________________________________________________
Election of three Class I Directors for a three year term.
Nominees: William C. France, Ilene S. Gordon and Donald L. Runkle
2. Ratify the appointment of Auditors. FOR [_] AGAINST [_] ABSTAIN [_]
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [_]
I will attend the annual meeting
YES [_] NO [_]
If you plan on attending please bring a photo
I.D. If your shares are held by your broker in
other than your name please bring broker
confirmation of your ownership.
Please date and sign exactly as your name
appears. If acting as attorney, executor,
trustee, or in a representative capacity, also
indicate title.
______________________________________________
______________________________________________
SIGNATURE(S) DATE
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FOLD AND DETACH HERE
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[PHOTO]