<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, 1996
Dear Shareholder:
You are cordially invited to the Annual Meeting of Shareholders of Outboard
Marine Corporation to be held on Thursday, January 16, 1997, commencing at
9:00 a.m., local time, at The Palmer House Hilton, 17 East Monroe Street,
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, approve the Outboard Marine
Corporation Non-Employee Directors Equity Compensation Plan and ratify the
appointment of independent auditors of the Company.
Your Board of Directors unanimously recommends a vote FOR all three of the
proposals.
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
Waukegan, Illinois
<PAGE>
OUTBOARD MARINE CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------
TO BE HELD JANUARY 16, 1997
The 1997 Annual Meeting of Shareholders of Outboard Marine Corporation will
be held at The Palmer House Hilton, 17 East Monroe Street, Chicago, Illinois,
on Thursday, January 16, 1997, at 9:00 a.m., local time, for the following
purposes:
1. To elect three directors for a three year term;
2. To approve the Outboard Marine Corporation Non-Employee Directors Equity
Compensation Plan;
3. To ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors and accountants; and
4. 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 19, 1996
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
D. Jeffrey Baddeley
Vice President,
Secretary
and General Counsel
Waukegan, Illinois
December 13, 1996
<PAGE>
PROXY STATEMENT
------------
PROXY SOLICITATION BY BOARD OF DIRECTORS
DECEMBER 13, 1996
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 16, 1997,
commencing at 9:00 a.m., local time, at The Palmer House Hilton, 17 East
Monroe Street, 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 1996 Annual Report to
Shareholders are being mailed to shareholders on or about December 13, 1996.
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 $6,500 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 19, 1996 (the "Record Date"),
there were 20,165,574 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.
The Northern Trust Company ("Northern") 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. Northern has advised that it intends to tender its
proxy only as directed by each participant.
The following tables set forth information with respect to (i) persons or
groups who are known to the Company to be beneficial owners, as of November
19, 1996, of more than 5% of the outstanding Common Stock
<PAGE>
(the "Investor Table") and (ii) beneficial ownership of Common Stock held, as
of November 19, 1996, 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 OF
NAME AND ADDRESS OWNED (1) CLASS
---------------- ------------ ----------
<S> <C> <C>
Fidelity Management & Research
82 Devonshire Street
Boston, Massachusetts 02109-3614.................. 2,171,872 10.77%
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166.......................... 2,053,000 10.18%
ICM Asset Management, Inc.
601 West Main Avenue
Spokane, Washington 99201......................... 2,052,265 10.18%
Greenway Partners, L.P.
277 Park Avenue 27th Floor
New York, New York 10017.......................... 2,000,000 9.92%
NM Capital Management, Inc.
6501 Americas Parkway
Albuquerque, NM 87710............................. 1,664,518 8.25%
</TABLE>
- --------
(1) Except for Greenway Partners, L.P., owned by the named company or its
affiliates which are registered investment advisors 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>
D. Jeffrey Baddeley........................... 26,921 18,950
Harry W. Bowman............................... 25,000 37,500
Frank Borman.................................. 2,916 0
William C. France............................. 3,910 0
Ilene S. Gordon............................... 1,000 0
Richard T. Lindgren........................... 27,811 0
David R. Lumley............................... 35,230 1,800
J. Willard Marriott, Jr....................... 8,911 0
Richard H. Medland............................ 26,585 21,000
Donald L. Runkle.............................. 500 0
George L. Schueppert.......................... 43,000 0
Richard J. Stegemeier......................... 4,811 0
Richard F. Teerlink........................... 4,810 0
Directors and Executive Officers as a group
(17) persons.................................. 254,447 93,300
</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 and receive dividends and phantom
restricted for which they receive dividend equivalents, but have no voting
or investment power. All Directors and Executive
2
<PAGE>
Officers as a group own approximately 1.262% 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 19, 1996
through the exercise of stock options prior to any cancellation thereof,
as described herein.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires directors,
officers and 10 percent holders of the Company's Common Stock to file reports
concerning their ownership of Company securities. The Company has adopted
procedures to assist its Directors and Executive Officers in complying with
this section, including the actual preparation and filing of the necessary
reports. The Company failed to timely file the following reports on behalf of
the listed Directors and Executive Officers: Harry W. Bowman, one report
involving one transaction; D. Jeffrey Baddeley, one report involving four
transactions; Laurin M. Baker, one report involving one transaction; L. Earl
Bentz, three reports involving four transactions; Carlisle R. Davis, one
report involving one transaction; John D. Flaig, two reports involving four
transactions; David R. Lumley, two reports involving six transactions; Richard
H. Medland, two reports involving four transactions; Howard Malovany, two
reports involving six transactions; James R. Maurice, one report involving one
transaction; Christopher R. Sachs, one report involving two transaction;
George L. Schueppert, one report involving two transactions; Frank Borman, one
report involving one transaction; William C. France, three reports involving
four transactions; Richard T. Lindgren, three reports involving five
transactions; J. Willard Marriott, three reports involving five transactions;
Richard J. Stegemeier, three reports involving five transactions; Richard F.
Teerlink, three reports involving five transactions. In all cases the
appropriate reports have now been filed.
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 II Directors will expire on the date
of the 1997 Annual Meeting of Shareholders.
It is intended that votes will be cast, pursuant to the accompanying proxy,
FOR the election of Frank Borman, Harry W. Bowman and J. Willard Marriott, Jr.
as Class II 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 the Nominees, and the other Directors whose terms will continue
after the 1997 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 a member of the Board and was elected Chairman
by 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 II Directors
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.
3
<PAGE>
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), Database Online (Ft. Lauderdale, FL) 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 Corporate
Governance Committees. Age 68.
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 53.
J. W. Marriott, Jr.
Chairman of the Board, President and Chief Executive Officer of Marriott
International, Inc. (Washington, D. C.), 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 (Washington, D.C.), Host
Marriott Services Corporation (Washington, D.C.), General Motors Corporation
(Detroit, MI), and a member of the Business Council. 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 64.
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 I Directors
(Terms expire in 1999)
William C. France
Chairman of the Board 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 63.
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
4
<PAGE>
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.
A Director since 1996. Ms. Gordon is a member of the Audit and Corporate
Governance Committees. Age 43.
Donald L. Runkle
Vice President of General Motors Corporation and General Manager of their
Delphi Energy and Engine Management Systems division (Flint, MI), an energy
and engine management system component manufacturer for the worldwide
automotive market. Mr. Runkle has been General Manager since May, 1996. Prior
to that Mr. Runkle held numerous positions with GM including Vice President,
GM Advanced Engineering, from 1988 to 1993, and General Manager of Delphi
Saginaw Steering Systems from 1993 to 1996.
A Director since 1996. Mr. Runkle is a member of the Compensation and
Corporate Governance Committees. Age 51.
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 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 Trustee of Suomi
College (Hancock, MI).
A Director since 1980. Mr. Lindgren is Chairman of the Audit Committee and a
member of the Corporate Governance Committee. Age 69.
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 a Director of Wells Fargo Bank
(San Francisco, 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 Corporate Governance Committee. Age 68.
Richard F. Teerlink
Chairman of the Board, 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 and
Chairman of the Board since May 1996. Mr. Teerlink is also a Director of
Johnson Controls, Inc. (Milwaukee, WI), FirstStar Bank Milwaukee (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 60.
5
<PAGE>
BOARD OF DIRECTORS, COMMITTEES AND EXECUTIVE OFFICERS
The Board of Directors met eight times during the 1996 fiscal year. Board
Committees include Audit, Compensation and Corporate Governance which during
the year met two, four and three times, respectively.
The Audit Committee consists of four 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 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 four 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 eight 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
Officer; reviews, develops and recommends plans and proposals for management
succession with respect to the Chief Executive Officer; and acts on, reports
to and makes recommendations with respect to specific matters within a
delegated authority.
The Corporate Governance 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 in accordance with procedures
under "Shareholder Proposal Procedures" discussed below. 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
6
<PAGE>
Act of 1934. The shareholder must also 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 1996, 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.
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.
Each Director, except Ms. Gordon and Mr. Runkle, is a vested participant in
the Retirement Plan for Non-Employee Directors (the "Directors Retirement
Plan"). The Directors 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 one
hundred percent (100%) of the retainer. The benefit begins to vest after six
(6) years of service, is fully vested after ten (10) years and is payable for
the life of the Director. It is proposed that the Directors Retirement Plan be
frozen and replaced by the Outboard Marine Corporation Non-Employee Directors
Equity Compensation Plan (the "Equity Plan") which is more fully described
under Proposal 2 below.
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. Currently, all non-employee Directors have
elected to have all of their retainer used to purchase Common Stock.
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, 1996, (i) the Chief Executive Officer or served in such capacity during
fiscal 1996, (ii) the other four most highly compensated Executive Officers of
the Company and (iii) 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, 1996 (the "Named Executives") for
services rendered in all capacities to the Company for the 1996, 1995 and 1994
fiscal years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------- -----------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARDS OPTIONS/ PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) $(1) ($)(2) SARS # ($) ($)(3)
- --------------------------- ---- ------ ----- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
H. W. Bowman,(4) 1996 428,341 0 0 0 38,200 0 16,856
Chairman of the Board, 1995 246,928 240,000 0 0 150,000 0 12,812
President and Chief Executive 1994 -- -- -- -- -- -- --
Officer
D. R. Lumley,(5) 1996 226,250 0 0 607,500 11,000 0 6,761
Senior Vice President, 1995 175,208 106,332 0 0 0 0 2,767
Sales and Marketing, MPPG 1994 36,070 0 0 0 3,600 0 0
G. L. Schueppert,(6) 1996 225,000 0 0 810,000 10,000 0 80,031
Executive Vice President 1995 -- -- -- -- -- -- --
and Chief Financial Officer 1994 -- -- -- -- -- -- --
D. J. Baddeley, 1996 199,170 0 0 303,750 7,500 52,096 15,374
Vice President, Secretary 1995 190,000 100,415 0 0 0 39,366 15,269
and General Counsel 1994 175,000 92,273 0 0 6,100 21,392 20,871
R. H. Medland, 1996 193,083 0 0 303,750 6,000 45,056 13,939
Senior Vice President and 1995 183,000 96,716 0 0 0 52,024 16,316
Chief Administrative Officer 1994 170,000 89,637 0 0 4,600 24,284 10,474
</TABLE>
NOTES TO SUMMARY COMPENSATION TABLE
(1) No Named Executive's Other Annual Compensation reached the level required
for disclosure.
(2) In fiscal 1996 the Named Executive Officers, except Mr. Bowman, and
certain other employees of the Company received grants of Restricted Stock
at prices of $16.00-$20.25 per share based on the closing price of a share
of Common Stock on the date of grant. The number of shares granted were
255,000 having an aggregate value on the date of grant of $5,037,500.
Based on the value of a share of Common Stock as of September 30, 1996,
the aggregate value of all outstanding restricted stock was $4,930,762.
The restricted stock granted in fiscal year 1996, like prior grants of
restricted stock, will not vest for a period of five years, except for one
grant of 5,000 shares which will not vest for a period of three years.
During the restricted period, the recipients will receive dividends in the
form of additional shares of restricted stock and shall not have the right
to vote the stock, unlike prior grants of restricted stock where the
recipients receive dividends and do have the right to vote the stock. If
the recipient does not remain in the employ of the Company for the entire
five year period, other than as a result of retirement, death, disability
or a change-in-control, such recipient's restricted stock shall be
forfeited.
(3) For fiscal 1996 includes matching contributions to the OMC Employees Taxed
Deferred Savings Plan in the amount of $0.0, $1,497, $0.0, $1,500 and
$1,455 and the dollar value of insurance premiums paid by the Company of
$16,856, $3,764, $$20,031, $11,386 and $10,054 for the benefit of Messrs.
Bowman, Lumley, Schueppert, Baddeley and Medland, respectively, restricted
stock dividends in the amount of $1,500, $2,490 and $2,430 for the benefit
Messrs. Lumley, Baddeley and Medland, respectively, and a sign-on bonus in
the amount of $60,000 for the benefit of Mr. Schueppert.
(4) Mr. Bowman was hired by the Company February 19, 1995 and therefore
information prior to that date does not exist.
8
<PAGE>
(5) Mr. Lumley was hired by the Company July 15, 1994 and therefore
information prior to that date does not exist.
(6) Mr. Schueppert was hired by the Company January 2, 1996 and therefore
information prior to that date does not exist.
OPTION EXERCISES IN THE 1996 FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table shows information on the exercise in the 1996 fiscal
year of options to purchase Common Stock by the Named Executives, all current
Executive Officers as a group and all other employees as a group. Also shown
are the unexercised options to purchase Common Stock as of September 30, 1996
and the value of in-the-money options as of such date.
<TABLE>
<CAPTION>
VALUE OF IN-THE-MONEY
NUMBER OF OPTIONS UNEXERCISED OPTIONS
SHARES UNEXERCISED AT YEAR END AT YEAR END(1)
ACQUIRED OR VALUE ------------------------- -------------------------
EXERCISED REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
H. W. Bowman............ 0 0 37,500 150,700 (362,813) (1,265,113)
D. R. Lumley............ 0 0 1,800 12,800 (16,650) (67,525)
G. L. Schueppert........ 0 0 0 10,000 0 (46,250)
D. J. Baddeley.......... 0 0 17,775 13,625 (71,513) (73,538)
R. H. Medland........... 0 0 19,450 11,450 (84,425) (60,225)
All Current Executive
Officers As A Group.... 0 0 89,675 213,325 (575,643) (1,561,367)
All Other Employees
As A Group............. 14,850 164,053 697,475 277,125 (945,635) (1,500,605)
</TABLE>
- --------
(1) Value of in-the-money options determined by multiplying the number of
exercisable or unexercisable options by $15.375, the closing price of the
Company's Common Stock on September 30, 1996, and subtracting the option
price.
LONG-TERM INCENTIVE PLAN AWARDS IN FISCAL YEAR 1996
The following table describes the performance shares granted to the Named
Executive Officers during the Company's 1996 fiscal year under the 1994 OMC
Long-Term Incentive Plan (the "LTIP"). The grants cover the three year award
cycle October 1, 1995 through September 30, 1998. As a result of timing
issues, grants for the three year award cycle October 1, 1996 through
September 30, 1999 were made in fiscal year 1997 and are not disclosed herein.
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 each 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" below. 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>
G. L. Schueppert............... 5,317 3 years 5.32 5,317 7,976
</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
9
<PAGE>
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 1996 FISCAL YEAR
The following table provides information on the grants of options to
purchase Common Stock given to the Named Executives on January 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE
SECURITIES OPTIONS EXERCISE VALUE
UNDERLYING GRANTED TO PRICE ($)(4)
GRANT OPTIONS/SARS ALL EMPLOYEES PER SHARE EXPIRATION -----------------------
NAME DATE GRANTED (#)(1) IN 1996(2) ($)(3) DATE 0% 5% 10%
- ---- -------- -------------- ------------- --------- ---------- --- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
H. W. Bowman............ 01/31/96 38,200 16.36 20.000 01/31/07 0 $542,699 $1,415,781
D. R. Lumley............ 01/31/96 11,000 4.71 20.000 01/31/07 0 $156,275 $ 407,686
G. L. Schueppert........ 01/31/96 10,000 4.28 20.000 01/31/07 0 $142,068 $ 307,623
D. J. Baddeley.......... 01/31/96 7,500 3.21 20.000 01/31/07 0 $106,551 $ 277,968
R. H. Medland........... 01/31/96 6,000 2.57 20.000 01/31/07 0 $ 85,241 $ 222,374
</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 1996 fiscal year 118 employees received stock options.
(3) The exercise price of $20.00 was the closing price of a share of Common
Stock on the New York Stock Exchange on January 31, 1996.
(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, certain 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% of total
pay 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 such participant's last ten years of
employment. 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
10
<PAGE>
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 5 10 15 20 OR MORE
BASE EARNINGS YEARS YEARS YEARS 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, 1996, Messrs. Bowman, Lumley, Schueppert, Baddeley and
Medland will have 1.9, 2.5, 1.0, 7.0 and 5.5, respectively, credited years of
service under the Company's retirement plans of which 1.9, 2.5, 1.0, 7.0 and
5.5, respectively, credited years of service will be as an Executive Officer
of the Company. The total estimated annual benefit payable from these two
plans for Messrs. Bowman, Lumley, Schueppert, Baddeley and Medland 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 $26,881, $15,647, $7,650, $50,322 and $40,367 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 CONTRACTS AND SEVERANCE AGREEMENTS
As of February 19, 1995, the Company and Mr. Bowman entered into an
agreement 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)
guaranteed a bonus for the 1995 fiscal year of at least $240,000 (which
represented the 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 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 % OF
AGE AT FINAL AVERAGE
TERMINATION 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
11
<PAGE>
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
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.
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.
REPORT OF THE COMPENSATION COMMITTEE
GOALS OF THE COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") is made up of four non-employee
Directors. The Committee met four times in the 1996 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;
12
<PAGE>
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 personnel with ownership opportunities for their successful execution,
thereby aligning personnel with the Shareholders.
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. The Committee will, in order to satisfy Section 162(m) of the Code,
certify the attainment of those standards.
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
personnel in achieving these goals; the need to attract, retain and motivate
personnel 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 to more closely align management with
the shareholders; the need to link personnel rewards with shareholder value
and profitability; and the need to communicate the Corporation's goals through
performance measures linked to pay that focus personnel on achievement of
business objectives.
In addition to reports and recommendations from senior management, the
Committee has relied on the services of various nationally known executive
compensation consulting firms for information regarding appropriate
compensation levels and programs, including Hewitt Associates and KPMG Peat
Marwick.
For the Company's 1996 fiscal year, the primary criteria used in evaluating
Company performance were (1) return on net assets, 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 failed to achieve 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
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, including
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
13
<PAGE>
has the authority, without Board approval, to set the salary ranges and
adjustments for all other employees. For fiscal year 1996 merit salary
increases for all exempt employees, including the Named Executives, averaged
approximately 4.5%. For fiscal year 1997 merit salary increases for all exempt
employees averaged 2%, except for the Named Executives who received no merit
increase.
ANNUAL INCENTIVE COMPENSATION
The Executive Bonus Plan is designed to add incentive for participants to
execute and exceed the Company's plans and their personal goals and receive
annual rewards for that execution. Under the Executive Bonus Plan the reward
is based on corporate, business unit where applicable and individual goals.
The corporate goal is based on return on net assets ("RONA") for the fiscal
year. Business unit goals, where applicable, are developed in accordance with
Company guidelines and are the same for all participants in the unit.
Individual goals are developed jointly by the participant and their
supervisor. The target amount of annual incentive compensation is determined
by the participant's salary grade. The Named Executives' target bonus amounts
range from 35% to 60% of base annual salary. The Chief Executive Officer's
target bonus amount equals 60% of salary and is based entirely on corporate
goals. 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, and the business unit where applicable,
achieves its annual performance targets and the individual performs vis-a-vis
their pre-determined individual annual goals. There will be no corporate bonus
paid for fiscal 1997 unless RONA exceeds 1.4% and earnings before tax ("EBT")
exceeds $15 million and a maximum award if RONA equals or exceeds 3.8% and EBT
equals or exceeds $41 million.
For fiscal 1994 the corporate component of incentive compensation was earned
at 150.6% of target as a result of an absolute return on net assets ("ARONA")
of 10.8% and a return on investment improvement ("ROII") of over 10.8%. For
fiscal 1995 the corporate component of incentive compensation was earned at
151% of target as a result of an ARONA of 10.8% and a return on net asset
improvement ("RONAI") of over 10.8%. For fiscal 1996 the corporate component
of incentive compensation was earned at 0% of target as a result of a RONA of
less than 8%. No bonuses were paid to Executive Officers for fiscal 1996.
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 participants 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, including 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 or cash,
at the discretion of the Compensation Committee. The performance goals for the
outstanding award cycles are: (1) three year average of ARONA, (2) three year
average of RONAI and (3) the monthly average of total shareholder return on
the Common Stock versus the total return
14
<PAGE>
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 points, and a maximum award for 8 points 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 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 Executive Officers 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. 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" and "Employment Contracts and
Severance Agreements" above. For the 1997 fiscal year, Mr. Bowman received no
merit salary increase.
Submitted by the Compensation Committee of the Company's Board of Directors:
Richard J. Stegemeier, Chairman
J. Willard Marriott, Jr.
Donald L. Runkle
Richard F. Teerlink
15
<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 for the Company's last five fiscal years. "Cumulative total
return" is defined as stock price appreciation plus dividends paid, assuming
reinvestment of all such dividends.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
OUTBOARD MARINE CORPORATION S & P 500 S & P LEISURE TIME (PRODUCTS)
--------------------------- --------- -----------------------------
<S> <C> <C> <C>
9/91 $100 $100 $100
9/92 $ 95 $111 $163
9/93 $115 $125 $188
9/94 $144 $130 $188
9/95 $139 $169 $236
9/96 $101 $203 $279
</TABLE>
$100 INVESTED ON 9/30/91 IN STOCK OR INDEX--INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
The Company is using the same published industry indexes it has in previous
years. Standard & Poor's Corporation, without any direction or input from the
Company, modified the list of issuers which comprise the Leisure Time Index.
The Company has provided the necessary comparisons for the required time
period using the published industry index as modified.
2. APPROVE THE OUTBOARD MARINE CORPORATION NON-EMPLOYEE DIRECTORS EQUITY
COMPENSATION PLAN
On September 24, 1996, the Corporate Governance Committee approved, for
submission to a vote of the shareholders, the Outboard Marine Corporation Non-
Employee Directors Equity Compensation Plan (the "Equity Plan"). A summary of
the principal provisions of the Equity Plan are set forth below and a complete
copy of the Equity Plan is attached to this proxy as Exhibit A.
16
<PAGE>
The Equity Plan is designed to replace the Directors Retirement Plan,
discussed in more detail above under the heading "Board of Directors,
Committees and Executive Officers," which will be frozen effective January 1,
1996 after the adoption by the shareholders of the Equity Plan. The primary
purpose of the Equity Plan is to advance the interests of the Company and its
shareholders by providing for a greater portion of the compensation of non-
employee Directors in the form of equity. In addition, the Equity Plan is
designed to help attract and retain those non-employee Directors upon whose
skill, experience and continued efforts the success of the Company in large
measure depends.
The Equity Plan has two primary components. The first component is designed
to provide an equity based alternative for those non-employee Directors who,
as of January 1, 1996, have a vested benefit under the Directors Retirement
Plan. Under the Equity Plan, a non-employee Director has the option to convert
the present value of his or her cash benefit under the Directors Retirement
Plan into deferred stock units under the Equity Plan. The present value of the
Directors Retirement Plan benefit will be arrived at by adjusting the fully
vested benefit of each Director as of January 1, 1996 using standard actuarial
assumptions.
For those Directors who make the election, the conversion will take place on
November 15, 1996 based on the average fair market value per share of the
Company's Common Stock for the period October 15, 1996 through November 15,
1996. The deferred stock units will be tracked in an account established by
the Company and will fluctuate with the value of a share of the Company's
Common Stock. In addition, non-employee Directors will earn dividends, based
on actual dividends, paid in the form of an equivalent number of additional
deferred stock units. The value of the Directors account will be distributed
in cash upon his or her reaching the then existing mandatory retirement age,
currently age 70, upon the death of the non-employee Director, or upon a
change-in-control of the Company and he or she will be taxed as ordinary
income based upon the value of the account at the time of distribution. The
non-employee Director will not have the right to vote the deferred stock
units.
The second component is designed to provide an equity based benefit to those
non-employee Directors not vested in the Directors Retirement Plan and to
provide a vehicle for future retainer increases for all non-employee Directors
without increasing the Director's cash retainer. As such, each non-employee
Director will receive an annual grant of 300 shares of Common Stock. Receipt
of the stock and any dividends paid by the Company on such Common Stock can be
deferred for any period determined by the non-employee Director. To defer all
or some of the Common Stock, the election must be made more than six months
prior to the date of the annual grant. Directors will have the right to vote
the shares and will be taxed as ordinary income on the value of the annual
grant on the date of the grant. Dividends will also be taxable upon receipt.
The Company will have an accounting charge corresponding to the value of the
annual grant.
The following table sets forth the number of deferred stock units and shares
of Common Stock that will be received by the non-employee Directors pursuant
to the Equity Plan during fiscal 1997, if approved by the Shareholders at the
Annual Meeting:
<TABLE>
<CAPTION>
COMMON
DEFERRED STOCK
NAME AND POSITION UNITS (#) (#)
----------------- -------- ------
<S> <C> <C>
Non-employee Directors 46,877 4,800
</TABLE>
The maximum number of shares available for annual grants of Common Stock
under the Equity Plan is 50,000 (as such number shall be adjusted to reflect
any increase or decrease in the number of shares issued due to stock splits
and other capital adjustments). There are presently eight non-employee
Directors eligible to participate under the Equity Plan.
The Equity Plan will be administered by the Corporate Governance Committee
of the Board of Directors currently composed of all non-employee Directors.
The Equity Plan is designed to be perpetual in existence or until the shares
of Common Stock reserved are used or until terminated by the Board of
Directors. The Corporate Governance Committee may amend the Equity Plan at any
time.
17
<PAGE>
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or by proxy and entitled to vote at the annual meeting
is required to approve the Equity Plan.
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.
3. RATIFICATION OF APPOINTMENT OF AUDITORS
Arthur Andersen LLP, 33 West Monroe Street, Chicago, Illinois 60603, served
as independent auditors and accountants of the Company for the 1996 fiscal
year. The Audit Committee has recommended to the Board, and the Board in turn,
having approved such appointment at its November 6, 1996 meeting, recommends
to the shareholders, that Arthur Andersen LLP's appointment as the Company's
independent auditors and accountants for the 1997 fiscal year be confirmed.
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
or she desires to do so, and is expected to be available to respond to
appropriate questions.
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 1998
Annual Meeting of Shareholders and who wishes to have such proposal included
in the Company's proxy soliciting material for that meeting must, pursuant to
regulations issued by the Securities and Exchange Commission, submit the
proposal(s) in writing to the Secretary of the Company on or before August 13,
1997.
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, 1996, 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>
EXHIBIT A
OUTBOARD MARINE CORPORATION
NON-EMPLOYEE DIRECTOR
EQUITY COMPENSATION PLAN
1. DEFINITIONS.
As used herein, the following terms shall have the meanings hereinafter set
forth:
(a) "Annual Meeting" means the Annual Meeting of the shareholders of the
Company.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Company" shall mean Outboard Marine Corporation, a Delaware
corporation, and its successors.
(d) "Continuing Directors" means individuals who at the beginning of any
two (2) year period for purposes of a Change in Control analysis constitute
the Board.
(e) "Deferred Stock Unit" means the equivalent of one Share, as
established pursuant to the Plan.
(f) "Directors Stock Purchase Plan" means the Outboard Marine Corporation
Stock Purchase Plan for Non-Employee Directors.
(g) "Dividend Date" means each regular quarterly cash dividend payment
date on Stock.
(h) "Effective Date" means the date of the Annual Meeting of Shareholders
at which the Equity Plan is approved by the affirmative vote of the holders
of a majority of the Shares of the Company's Stock voted in person or by
proxy.
(i) "Equity Plan" means the Outboard Marine Corporation Non-Employee
Director Equity Compensation Plan, as it may be amended from time to time.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(k) "Fair Market Value Per Share" as of any date means the closing price
for sales of Stock as reported on the Composite Transaction Reporting
System on the New York Stock Exchange, which includes other participating
exchanges and over-the-counter markets, on such date, or if the Shares are
not listed on such exchange, on the principal United States securities
exchange registered under the Exchange Act on which the Shares are listed.
(l) "Non-Employee Director" means any person who is a member of the Board
and who is not, as of the date of an award under the Plan, an employee of
the Company or any of its subsidiaries.
(m) "Retirement Plan" means the Retirement Plan for Non-Employee
Directors of Outboard Marine Corporation.
(n) "Share or Stock" means a share of the Company's Common Stock, $.15
par value.
2. PURPOSE AND EFFECTIVE DATE.
The primary purpose of the Equity Plan is to advance the interests of the
Company and its shareholders by providing for the payment of a greater portion
of the compensation of Non-Employee Directors in the form of equity
equivalents by the grant to such Directors of Stock and Deferred Stock Units
under the terms set forth herein. By thus compensating Non-Employee Directors
and increasing Non-Employee Directors' equity equivalent position in the
Company, the Company seeks to attract, retain, compensate and motivate those
highly competent individuals upon whose judgment, initiative, leadership, and
continued efforts the success of the Company in large measure depends.
A-1
<PAGE>
The Equity Plan is intended to replace the Retirement Plan, effective as of
January 1, 1996. The Retirement Plan shall be frozen as of such date after
adoption of the Equity Plan as set forth below; with all participating
Directors becoming fully vested therein. New Non-Employee Directors (those who
become members of the Board after January 1, 1996) shall not be permitted to
participate in the Retirement Plan, and shall instead be permitted to
participate in the Equity Plan. Furthermore, Current Non-Employee Directors
(those who were members of the Board prior to January 1, 1996) who elect to
terminate participation in the Retirement Plan after the adoption of the
Equity Plan shall be entitled to a grant pursuant to paragraph 6 below.
The Equity Plan shall be deemed adopted as of the Effective Date. The
replacement of the Retirement plan and any grants of Stock or Deferred Stock
Units made prior to that date shall be made contingent upon such shareholder
approval.
3. ELIGIBILITY.
Each Non-Employee Director shall be eligible to participate in the Equity
Plan.
4. SHARES OF COMMON STOCK AVAILABLE.
The number of Shares that may be issued for annual award, pursuant to
paragraph 6.(a) of the Equity Plan shall not exceed 50,000, subject to
proportionate adjustment in the event of any stock split, reverse stock split,
reorganization or recapitalization.
5. DEFERRED STOCK ACCOUNT.
The Company shall establish a deferred stock account (an "Account") for each
current Non-Employee Director who elects to convert his/her benefit under the
Retirement Plan into Deferred Stock Units hereunder. On each Dividend Date the
Company shall credit the Account with the number of Deferred Stock Units
determined in accordance with paragraph 6.(a) hereof. Distributions from a
Non-Employee Director's Account shall be made in cash upon the retirement of a
Non-Employee Director, unless the distributions are accelerated in accordance
with Articles 8 or 9 hereof. The value of the Deferred Stock Units is
dependent upon the Fair Market Value Per Share on the date of distribution to
the Non-Employee Director, and is therefore subject to market fluctuations in
value until such distribution.
6. CONVERSION AND ANNUAL AWARDS.
(a) On or prior to October 15, 1996, each current Non-Employee Director
shall make an irrevocable election to continue in the Company's Retirement
Plan or convert his or her benefit into Deferred Stock Units at the present
value of their vested benefit under the Retirement Plan valued as of January
1, 1996. The conversion shall be effective as of January 1, 1996 and will take
place November 15, 1996, based on the average Fair Market Value Per Share
during the period October 15, 1996 through November 15, 1996.
(b) At any time a balance is maintained in a current Non-Employee Director's
Account, there shall be credited to the Account of such current Non-Employee
Director additional Deferred Stock Units on each Dividend Date. The number of
such additional Deferred Stock Units shall be determined by (I) multiplying
the total number of Deferred Stock Units (including fractional Deferred Stock
Units) credited to the Account immediately prior to the Dividend Date by the
amount of the dividend per share and (ii) dividing the product by the Fair
Market Value Per Share as of the date preceding the Dividend Date.
(c) In the event of any change in the outstanding Shares upon which the
stock equivalency hereunder is based, by reason of a merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, combination or
exchange of shares, or any other change in corporate structure or in the event
any dividend is paid in Shares or other property, the number of Deferred Stock
Units credited to the Account shall be adjusted in such manner as a majority
of the Board shall determine to be fair under the circumstances; provided,
however,
A-2
<PAGE>
that if a Change in Control (as defined below) shall have occurred, then such
determination shall be made by a majority of the Continuing Directors. In the
case of dividends payable in property, the amount paid shall be based on the
fair market value of the property at the time of distribution of the dividend,
as determined by a majority of the Board, or in the event of a Change in
Control, by a majority of the Continuing Directors.
(d) All Non-Employee Directors, including those Directors who choose not to
convert their benefit under the Retirement Plan, shall receive an annual grant
of 300 Shares at the Company's Annual Meeting, commencing with the January 18,
1996 Annual Meeting; provided, however, that the Shares attributable to such
Annual Meeting shall not be distributable until approval of the Plan by the
Stockholder at the 1997 Annual Meeting. Receipt of the annual grants may be
deferred in accordance with the deferral provisions of Section 2.3 of the
Directors Stock Purchase Plan. The minimum deferral period shall be one (1)
year; the maximum period shall be until the mandatory retirement age then in
effect. All grants are fully vested when made. Dividends, if and when paid,
will be paid on both Shares taken currently and on those shares deferred.
7. DISTRIBUTION.
(a) Except as otherwise provided herein, the balance of each current Non-
Employee Director's Account shall be paid to the Non-Employee Director in
cash, in a lump sum following the date that Director reaches the mandatory
retirement age then in effect.
(b) In the event of the death of a current Non-Employee Director prior to
such Director's retirement, the entire balance in the Account, as of the date
of the current Non-Employee Director's death, shall be paid in cash in a lump
sum to such surviving beneficiary or beneficiaries as the current Non-Employee
Director may have designated by notice in writing to the Company or by will,
or, if no beneficiaries are so designated, the legal representative of such
Director's estate.
(c) If a current Non-Employee Director shall become totally and permanently
disabled, as determined by a majority of the Board, while he or she is a
director of the Company, the entire balance in the Account as of the date of
such total and permanent disability shall be paid in cash to such Non-Employee
Director, or his or her personal representative, in a lump sum within one
hundred twenty (120) days of the date of such determination of total and
permanent disability.
(d) If a current Non-Employee Director ceases to be a Director of the
Company for any reason other than due to death or total and permanent
disability, including, without limitation, the failure of such person to be
re-elected as a Director of the Company by the shareholders of the Company,
the balance of such Director's Account shall continue to fluctuate with the
Company's Stock and earn dividends and shall be paid in a lump sum when he or
she reaches the mandatory retirement age then in effect.
(e) The provisions of the Plan shall apply to and be binding upon the
beneficiaries, distributees, personal representatives and any other successors
in interest of the Non-Employee Director.
(f) The Company shall be entitled to deduct from all distributions hereunder
any taxes required to be withheld by the federal, state or local law. Such
deductions may be made by withholding Shares with a Fair Market Per Share
equal to the amount of such taxes.
8. ACCELERATION OF DISTRIBUTION.
(a) For purposes of this Plan, a "Change-in-Control" shall be deemed to have
occurred if:
1) Any "person" (as defined in Section 13 (d) and 14 (d) of the Exchange
Act), other than the Company, any trustee or other fiduciary holding
securities under any employee benefit plan of the Company or a company
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of Stock of the
Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly of securities of the Company
representing fifteen percent (15%) or more of the combined voting power of
the Company's then outstanding securities; or
A-3
<PAGE>
2) During the period of two (2) consecutive years (not including any
period prior to the shareholders approval of the Plan) there shall cease to
be a majority of Continuing Directors and any new Director(s) (other than a
Director designated by a "person" who has entered into an agreement with
the Company to effect a transaction described in Sections (1), (3) or (4)
of this Article 8), whose election by the Board or nomination for election
by the Company's shareholders was approved by a vote of at least two-thirds
( 2/3) of the Directors then still in office who either were Directors at
the beginning of the period or whose election or nomination of election was
previously so approved;
3) The shareholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than (I) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least eighty-percent (80%) of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (ii) a merger
or consolidation effected to implement a recapitalization of the Company
(or a similar transaction in which no "person" acquires fifteen percent
(15%) or more of the combined voting power of the Company's then
outstanding securities); or
4) The shareholders of the Company approve a plan of complete liquidation
of the Company or the Company enters into an agreement for the sale or
other disposition of all or substantially all of the Company's assets or
the Company otherwise disposes of such assets.
The Company shall notify all Non-Employee Directors of the occurrence of a
Change-in-Control promptly after its occurrence, but any failure of the
Company so to notify shall not deprive the Non-Employee Directors of any
rights accruing hereunder by virtue of a Change-in-Control.
(b) Notwithstanding any other provision of the Plan, if a Change-in-Control
occurs and at any time after the occurrence of such Change-in-Control either
of the following events occurs:
1) the current Non-Employee Director ceases for any reason to be a
Director of the Company; or
2) The Plan is terminated;
then the entire balance of the Account shall be payable in a lump sum to the
Director in cash. Such payment shall be made by the Company as promptly as
practicable, but not more than thirty (30) days following the date on which
the right to such payment arose.
(c) The Company shall promptly reimburse the Director for all legal fees and
expenses reasonably incurred in successfully seeking to obtain or enforce any
right or benefit provided under this Article 8.
(d) This Article 8 may not be amended or modified after the occurrence of a
Change-in-Control.
9. NONTRANSFERABILITY OF DEFERRED STOCK UNITS.
No Deferred Stock Units shall be pledged, hypothecated or transferred by a
current Non-Employee Director other than by will or the laws of descent and
distribution.
10. AMENDMENT AND TERMINATION.
The Board, or any committee to the extent authorized by the Board, may make
such modifications to the Plan as it shall deem advisable, without further
approval of the shareholders of the Company, except as such shareholder
approval may be required under the listing requirements of any securities
exchange registered under the Exchange Act on which are listed any of the
Company's equity securities.
11. TERM.
The Plan shall continue in effect without limit unless and until the Board
otherwise determines.
A-4
<PAGE>
12. COMPLIANCE WITH SEC REGULATIONS.
It is the Company's intent that the Plan comply with the provisions of
Section 16 of the Exchange Act and the rules promulgated thereunder. To the
extent that any provision of the Plan is later found not to be in compliance
with Section 16 or such rules, such provision shall be deemed to be null and
void.
13. MISCELLANEOUS.
(a) Neither the Plan nor any action taken hereunder shall be construed as
giving any Non-Employee Director any right to continue to serve as a Director
of the Company or otherwise to be retained in the service of the Company.
(b) No Shares shall be issued hereunder unless and until counsel for the
Company shall be satisfied such issuance will be in compliance with applicable
federal, state and other securities laws and regulations.
(c) The expenses of the Plan shall be borne by the Company.
(d) Neither a current Non-Employee Director nor any other person shall have
any interest in any fund or in any specific asset of the Company by reason of
amounts credited to the Account of such Director, nor the right to exercise
any of the rights or privileges of a shareholder with respect to any Deferred
Stock Unit credited to such Account, nor the right to receive any distribution
under the Plan except as expressly provided herein. Distributions hereunder
shall be made from the general funds of the Company, and the rights of the
Director shall be those of an unsecured general creditor of the Company.
(e) The Plan, the grant of Deferred Stock Units thereunder and the
obligation of the Company to deliver Shares shall be subject to all applicable
federal and state laws, rules and regulations and to such approvals by any
governmental or regulatory agency or national securities exchange as may be
required. The Company shall not be required to issue or deliver any
certificates for Shares prior to the completion of any registration or
qualification of such Shares under any federal or state law or any ruling or
regulation of any governmental body or national securities exchange which the
Company shall, in its sole discretion, determine to be necessary or advisable.
(f) This Plan shall be interpreted by and all questions arising in
connection therewith shall be determined by a majority of the Board, whose
interpretation or determination, when made in good faith, shall be conclusive
and binding, except in the event of a Change in Control, in which case such
interpretation and determination shall be made by a majority of the Continuing
Directors.
A-5
<PAGE>
LOGO
[RECYCLING LOGO] Printed on Recycled paper.
<PAGE>
X Please mark your votes as in this example.
FOR WITHHELD Election of three Class II Directors for a three year term.
1. Election of Directors
For, except vote withheld from the following nominee(s);
Nominees: Frank Borman, Harry W. Bowman, J. Willard Marrion, Jr.
- --------------------------------
FOR AGAINST ABSTAIN
2. Approve the Outboard Marine Corporation Non-Employee Directors Equity
Compensation Plan.
3. Ratify the appointment of Auditors.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW YES NO
I will attend the annual meeting
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.
- --------------------------------------------
- --------------------------------------------
SIGNATURES(S) DATE
PROXY
OUTBOARD MARINE CORPORATION
ANNUAL MEETING-JANUARY 16, 1997
PROXY SOLICITED BY BOARD OF DIRECTORS
HARRY W. BOWMAN, D. JEFFREY BADDELEY and ROBERT S. ROMANO 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 16, 1997 at
9:00 a.m., (local time) at the Palmer House Hilton, 17 East Monroe Street,
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 Proposals 2 and 3.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
-------------------
SEE REVERSE
SIDE
-------------------
. FOLD AND DETACH HERE .
