<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Owens Corning
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
Notice Of Annual Meeting Owens Corning
Of Stockholders
And Proxy Statement
Time:
Thursday, April 18, 1996
2 P.M.
Place:
SeaGate Centre
401 Jefferson Avenue
Toledo, Ohio
[LOGO]
We Make The Difference
<PAGE>
OWENS CORNING
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 18, 1996
The annual meeting of stockholders of OWENS CORNING will be held at SeaGate
Centre, 401 Jefferson Avenue, Toledo, Ohio, on Thursday, April 18, 1996 at
2:00 o'clock P.M.
The meeting will be held for the following purposes:
1. To elect four directors to serve until the 1999 Annual Meeting of
Stockholders and until their successors are elected and qualified;
2. To consider a proposal to approve the amendments to the Stock
Performance Incentive Plan adopted by the Board of Directors;
3. To consider a proposal to approve the Long-Term Performance Incentive
Plan;
4. To consider a proposal to approve the Corporate Incentive Plan;
5. To consider a proposal to approve the action of the Board of Directors
in selecting Arthur Andersen LLP as independent public accountants for
Owens Corning for the year 1996; and
6. To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on February 21, 1996
are entitled to vote at the meeting. A list of the stockholders entitled to
vote at the meeting will be available at the offices of Owens Corning,
Fiberglas Tower, 210 North St. Clair Street, Toledo, Ohio, for a period of at
least ten days prior to the meeting.
By Order of the Board of Directors,
CHRISTIAN L. CAMPBELL
Secretary
Toledo, Ohio
March 21, 1996
IN ORDER TO ASSURE THE PRESENCE OF A QUORUM, PLEASE DATE, SIGN, VOTE AND
RETURN PROMPTLY THE ENCLOSED PROXY IF YOU WILL BE UNABLE TO ATTEND THE
MEETING. RETURN PROXIES TO: OWENS CORNING, CHURCH STREET STATION, P.O. BOX
1513, NEW YORK, NEW YORK 10277-1513.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Information....................................................... 1
Proposal 1. Election of Directors......................................... 2
Biographies of Nominees and Continuing Directors........................ 2
Stock Ownership of Management........................................... 6
Committees and Meetings of the Board of Directors....................... 7
Directors' Compensation................................................. 8
Transactions with Owens Corning......................................... 9
Compensation Committee Report on Executive Compensation................. 10
Executive Compensation.................................................. 12
Retirement Benefits..................................................... 16
Employment and Severance Agreements..................................... 17
Performance Graph....................................................... 18
Proposal 2. Approval of Amendments to the Stock Performance Incentive
Plan..................................................................... 18
Proposal 3. Approval of Long-Term Performance Incentive Plan.............. 25
Proposal 4. Approval of Corporate Incentive Plan.......................... 28
Proposal 5. Selection of Independent Public Accountants................... 30
Other Matters............................................................. 30
Exhibit A................................................................. 32
Exhibit B................................................................. 48
Exhibit C................................................................. 52
</TABLE>
<PAGE>
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement is furnished by the Board of Directors of Owens Corning
in connection with the solicitation of proxies to be used at the 1996 Annual
Meeting of Stockholders ("Annual Meeting"), which is scheduled to take place
on April 18, 1996 at 2:00 P.M. at SeaGate Centre, 401 Jefferson Avenue,
Toledo, Ohio. This proxy statement and a proxy are scheduled to be mailed to
stockholders commencing on March 21, 1996.
You can ensure that your shares are voted at the Annual Meeting by
completing, signing, dating and returning the enclosed proxy in the envelope
provided. Sending in a signed proxy will not affect your right to attend the
meeting and vote. A stockholder who submits a proxy may revoke it at any time
before it is exercised by voting in person at the Annual Meeting, submitting
another proxy bearing a later date, or notifying the Inspectors of Election in
writing of the revocation.
MAJOR STOCKHOLDERS
Based on Schedule 13G filings, stockholders holding 5% or more of Owens
Corning common stock as of December 31, 1995, were:
<TABLE>
<CAPTION>
NAME ADDRESS SHARES %
---- ------- ------ -
<S> <C> <C> <C>
FMR Corp. and related entities 82 Devonshire Street 5,589,698(1) 10.8%
Boston, MA 02109
Franklin Resources, Inc. and 777 Mariners Island Blvd. 4,356,900(2) 8.4%
related entities San Mateo, CA 94404
Wellington Management Company 75 State Street 3,469,600(3) 6.7%
Boston, MA 02109
Vanguard/Windsor Fund, Inc. 100 Vanguard Blvd. 3,189,600(4) 6.2%
Malvern, PA 19355
Fayez Sarofim and related entities 2907 Two Houston Center 2,950,305(5) 5.7%
Houston, TX 77010
</TABLE>
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(1) Sole dispositive power; sole voting power over 80,342 shares (less than
1%).
(2) Shared dispositive power; sole voting power over 3,908,100 shares (7.5%)
and shared voting power over 448,800 shares (less than 1%).
(3) Shared dispositive power; shared voting power over 280,000 shares (less
than 1%); Vanguard/Windsor Fund has interest with respect to more than 5%
of class.
(4) Sole voting and shared dispositive power.
(5) Shared dispositive power over 2,550,305 shares (4.9%); shared voting power
over 2,184,344 shares (4.2%); sole voting and dispositive power over
400,000 shares (less than 1%).
In addition, as of February 21, 1996 ("Record Date"), Owens Corning
employees, including officers, beneficially owned 6,187,486 shares (11.9%) of
Owens Corning's common stock under Owens Corning's Savings and Profit Sharing
Plan (for salaried employees), Savings and Security Plan (for hourly
employees), and UC Industries Retirement/Investment Plan.
1
<PAGE>
PROPOSAL 1. ELECTION OF DIRECTORS
Owens Corning's Board of Directors currently is composed of ten directors,
divided into three classes. Directors' terms of office are for three years and
expire on a staggered basis at the annual meeting of stockholders.
The directors whose terms expire at the Annual Meeting are: W. Walker Lewis,
David T. McGovern and Furman C. Moseley, Jr. Mr. McGovern, a director since
1989, has elected to retire from the Board at the Annual Meeting.
Effective as of the Annual Meeting, the Board of Directors has increased the
size of the Board to eleven directors. The Board of Directors has nominated
Mr. Lewis and Mr. Moseley for reelection at the Annual Meeting at the
recommendation of the Board's Corporate Governance Committee, which consists
solely of outside directors, and has nominated John H. Dasburg, President and
Chief Executive Officer of Northwest Airlines Corporation, and Ann Iverson,
Group Chief Executive of Laura Ashley Holdings plc., to fill the vacancies
created by Mr. McGovern's retirement and the increase in the size of the
Board.
Biographies of each nominee for director and each director whose term
continues past the Annual Meeting follow this section.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 1.
Unless a stockholder specifies otherwise, the proxies received in response
to this solicitation will be voted in favor of the election of the four
nominees for director. Should any of these nominees become unable to accept
nomination or election, the proxies will be voted for the other nominees and
any substitute nominees, unless the stockholder specifically votes otherwise.
The Board of Directors now knows of no reason why any nominee will be unable
to serve as a director.
Directors will be elected by a plurality of the votes cast at the Annual
Meeting. Each person elected at the Annual Meeting will serve until the 1999
annual meeting of stockholders and until his or her successor is duly elected
and qualified.
Nominees for Election as Directors--term expiring 1999
[PHOTO] JOHN H. DASBURG, 53. President and Chief Executive Of-
ficer, Northwest Airlines Corporation, a transportation
company, St. Paul, MN. Nominee for Director.
After graduating from the University of Florida and
serving three years in the U.S. Navy, Mr. Dasburg was a
Partner at KPMG Peat Marwick. He then joined Marriott
Corporation where he held several positions, eventually
becoming President of the Marriott Lodging Group. He
joined Northwest Airlines as Executive Vice President
in 1989 and was elected to his current position in
1990. Mr. Dasburg serves on numerous eleemosynary and
academic boards, has published articles in many jour-
nals and is a frequent speaker at universities, profes-
sional institutions and civic groups.
Mr. Dasburg is a director of Northwest Airlines Corpo-
ration and The St. Paul Companies, Inc.
2
<PAGE>
Nominees for Election as Directors--term expiring 1999 (continued)
[PHOTO] ANN IVERSON, 52. Group Chief Executive, Laura Ashley
Holdings plc., women's clothing and home furnishings,
Maidenhead, England. Nominee for Director.
Ms. Iverson began her career in retailing and held var-
ious buying and executive positions at retail stores in
the U.S. through 1989, including Dayton Hudson, US Shoe
and Bloomingdales. She then joined British Home Stores
as Director of Stores Planning, Design, Construction
and Merchandising in 1990; Mothercare as Chief Execu-
tive Officer in 1992; Kay-Bee Toy Stores as President
and Chief Executive Officer in 1994; and assumed her
present position in 1995.
Ms. Iverson is a director of Laura Ashley Holdings plc.
[PHOTO] W. WALKER LEWIS, 51. Senior Advisor, Dillon, Read &
Co., Inc., an investment banking firm, New York, NY,
and Senior Advisor to Marakon Associates, a consulting
firm, Stamford, CT. Director since 1993.
Most recently, Mr. Lewis served as Managing Director,
Kidder, Peabody & Co., Inc. Prior to April 1994, he was
President, Avon U.S. and Executive Vice President, Avon
Products, Inc. Prior to March 1992, Mr. Lewis was
Chairman of Mercer Management Consulting, Inc., a whol-
ly-owned subsidiary of Marsh & McLennan, which is the
successor to Strategic Planning Associates, a manage-
ment consulting firm he founded in 1972. He is a gradu-
ate of Harvard College, where he was President and Pub-
lisher of the Harvard Lampoon.
Mr. Lewis is a director of Unilab Corporation and Amer-
ican Management Systems, Inc. He is also a member of
the Council on Foreign Relations, the Washington Insti-
tute of Foreign Affairs and The Harvard Committee on
University Resources.
[PHOTO] FURMAN C. MOSELEY, JR., 61. President, Simpson Invest-
ment Company, manufacturer of wood, pulp, and paper
products, Seattle, WA. Director since 1983.
After serving in the United States Marine Corps, Mr.
Moseley joined Simpson Paper Company in 1960, rising to
become Executive Vice President and then Chairman. He
later became President of Simpson Investment Company,
the parent company of Simpson Paper.
Mr. Moseley is a director of Eaton Corporation.
3
<PAGE>
Incumbent Directors--term expiring 1997
[PHOTO] NORMAN P. BLAKE, JR., 54. Chairman of the Board, Chief
Executive Officer and President of USF&G Corporation,
insurance and financial services, Baltimore, MD. Direc-
tor since 1992.
A graduate of Purdue University, Mr. Blake became
Chairman, Chief Executive Officer and President of
USF&G in 1990 after serving as Chairman and Chief Exec-
utive Officer of Heller International Corporation of
Chicago, a subsidiary of Fuji Bank, Ltd. of Tokyo, Ja-
pan.
Mr. Blake is a director of Enron Corporation and a mem-
ber of the American Insurance Association and Community
Partnership for Education. He is also Chairman of Pur-
due University's Parents' Advisory Council and a member
of the Purdue Research Foundation and Purdue
University's President's Council and Dean's Advisory
Council, Krannert Graduate School of Management and
School of Liberal Arts. He is the recipient of the de-
gree of Doctor of Economics honoris causa from Purdue
University, granted jointly by the Krannert Graduate
School of Management and School of Liberal Arts.
[PHOTO] JON M. HUNTSMAN, JR., 35. Vice Chairman of Huntsman
Corporation, manufacturer of petrochemicals, Salt Lake
City, UT. Director since 1993.
A graduate of The University of Pennsylvania, Mr.
Huntsman served as U.S. Ambassador to Singapore from
1992 to 1993. From 1989 through 1992, he held positions
as Deputy Assistant Secretary of Commerce in the Inter-
national Trade Administration and Deputy Assistant Sec-
retary of Commerce for East Asian and Pacific Affairs.
Mr. Huntsman is a director of Valassis Communications
and all Huntsman companies. He also is a member of the
Council of American Ambassadors, the Council on Foreign
Relations, and a trustee of both the University of
Pennsylvania and Princeton's Institute for Advanced
Study. In addition, Mr. Huntsman serves on the Interna-
tional Advisory Council of Singapore's Economic Devel-
opment Board and is a Trustee of the Asia Society in
New York. He also serves on the National Advisory Board
of the University of Utah School of Business, as a di-
rector of the Center for Contemporary German Studies at
Johns Hopkins University, and on the Governing Board of
Intermountain Health Care.
[PHOTO] W. ANN REYNOLDS, 58. Chancellor of City University of
New York, New York, NY. Director since 1993.
A graduate of Kansas State Teachers College and the
University of Iowa, Dr. Reynolds became Chancellor of
City University of New York in September 1990. Previ-
ously, she served eight years as Chancellor of the
twenty-campus California State University system.
Dr. Reynolds is a Director of Humana, Inc., Abbott Lab-
oratories and Maytag Corporation. She is also a member
of the American Association for the Advancement of Sci-
ence, the American Association of Anatomists, the Amer-
ican Board of Medical Specialties, the Society for Gyn-
ecological Investigation, and the Perinatal Research
Society.
4
<PAGE>
Incumbent Directors--term expiring 1998
[PHOTO] WILLIAM W. COLVILLE, 61. Consultant to and formerly Se-
nior Vice President, General Counsel and Secretary of
Owens Corning. Director since 1995.
A graduate of Yale University and the Columbia Univer-
sity Law School.
Mr. Colville is a director of Nordson Corporation.
[PHOTO] LANDON HILLIARD, 56. Partner, Brown Brothers Harriman &
Co., private bankers, New York, NY. Director since
1989.
A graduate of the University of Virginia, Mr. Hilliard
began his career at Morgan Guaranty Trust Co. of N.Y.
He joined Brown Brothers Harriman in 1974 and became a
partner in 1979.
Mr. Hilliard is a director of Norfolk Southern Corpora-
tion. He is also Chairman of the Board of Trustees of
the Provident Loan Society of New York and Secretary of
The Economic Club of New York.
[PHOTO] GLEN H. HINER, 61. Chairman of the Board and Chief Ex-
ecutive Officer, Owens Corning. Director since 1992.
A graduate of West Virginia University, Mr. Hiner spent
35 years of his professional career at General Electric
Company, eventually becoming Senior Vice President and
head of GE Plastics. He was elected Chairman and Chief
Executive Officer of Owens Corning in January 1992.
Mr. Hiner is a director of Dana Corporation.
[PHOTO] SIR TREVOR HOLDSWORTH, 68. Former Chairman, National
Power plc, an electricity generator company, London,
England. Director since 1994.
Sir Trevor began his career as an accountant qualifying
as a Fellow of the Institute of Chartered Accountants
in England and Wales. He held various finance and ad-
ministration positions prior to his joining National
Power. He is also a member of the Confederation of
British Industry, New York Stock Exchange European Ad-
visory Committee, Committee of Honour of European Com-
munity Chamber Orchestra, Winston Churchill Memorial
Trust and British Neurological Research Trust; Vice
President of the British Institute of Management and
Ironbridge Gorge Museum Development Trust; and Trustee
of Duke of Edinburgh's Award, UK Thrombosis Research
Trust, and Wigmore Hall, as well as serving as Chancel-
lor of Bradford University, Council Chair of the Foun-
dation for Manufacturing and Industry, and Chairman of
the Yorkshire Region National Trust Centenary Appeal.
Sir Trevor is a director of Allied Colloids Group plc,
Beauford plc, Lambert Howarth plc, and Prudential Cor-
poration plc.
5
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT
The following table shows information concerning beneficial ownership of
Owens Corning common stock on February 21, 1996 by all directors and nominees,
by each of the executive officers named in the Summary Compensation Table on
page 13 ("Named Executive Officers"), and by all directors and executive
officers as a group. With the exception of the ownership of all directors and
executive officers as a group, which represents 1.6%, each ownership shown
represents less than 1% of the shares of common stock outstanding. Owens
Corning's stock ownership guidelines are for directors to own a minimum of
2,000 shares within five years of becoming a director; stock ownership
guidelines for officers range from 85,000 shares for the Chief Executive
Officer to 9,000 to 20,000 shares for other executive officers.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNERSHIP
---- -----------------------
<S> <C>
Norman P. Blake, Jr.......................... 11,500(1)(3)
Christian L. Campbell........................ 11,761(1)(2)
William W. Colville.......................... 64,072(1)
Charles H. Dana.............................. 126,394(1)(2)
John H. Dasburg.............................. --
David W. Devonshire.......................... 35,105(1)(2)
Ann Iverson.................................. --
Landon Hilliard.............................. 14,000(1)
Glen H. Hiner................................ 268,583(1)(2)
Sir Trevor Holdsworth........................ 2,500(1)
Jon M. Huntsman, Jr.......................... 5,000(1)(3)
W. Walker Lewis.............................. 8,000(1)(3)
David T. McGovern............................ 13,000(1)(3)
Furman C. Moseley, Jr........................ 42,850(1)(3)
W. Ann Reynolds.............................. 7,230(1)(3)
Efthimios O. Vidalis......................... 43,930(1)(2)
All Directors and Executive Officers
(including Named Executive Officers)(21
people)..................................... 823,625(1)(2)(3)(4)
</TABLE>
- --------
(1) Includes shares which are not owned but are unissued shares subject to
exercise of options, or which will be subject to exercise of options under
Owens Corning benefit plans within 60 days after the Record Date, as
follows: Mr. Blake, 6,000; Mr. Campbell, 5,000; Mr. Colville, 53,000; Mr.
Dana, 74,000; Mr. Devonshire, 18,000; Mr. Hilliard, 10,000; Mr. Hiner,
116,665; Sir Holdsworth, 2,000; Mr. Huntsman, 4,000; Mr. Lewis, 6,000; Mr.
McGovern, 10,000; Mr. Moseley, 10,000; Dr. Reynolds, 4,000; Mr. Vidalis,
16,773; All Directors and Executive Officers (21), 425,488.
(2) Includes shares over which there is sole voting power, but no investment
power, as follows: Mr. Campbell, 6,761; Mr. Dana, 14,180; Mr. Devonshire,
9,726; Mr. Hiner, 123,106; Mr. Vidalis, 7,824; All Directors and Executive
Officers (21), 206,469.
(3) Includes deferred shares over which there is currently no voting or
investment power, as follows: Mr. Blake, 1,000; Mr. Huntsman, 500; Mr.
Lewis, 1,000; Mr. McGovern, 2,000; Mr. Moseley, 3,500; Dr. Reynolds, 500;
All Directors and Executive Officers (21), 8,500.
(4) Does not include 13,393 shares of common stock held by family members in
which beneficial interest is disclaimed.
6
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 and Securities and
Exchange Commission regulations require Owens Corning's directors, certain
officers and greater than ten percent stockholders to file reports of
ownership on Form 3 and changes in ownership on Forms 4 or 5 with the
Securities and Exchange Commission. Owens Corning undertakes to file such
forms on behalf of the reporting directors and officers pursuant to a power of
attorney given to certain attorneys-in-fact. Such reporting officers,
directors and ten percent stockholders are also required by Securities and
Exchange Commission rules to furnish Owens Corning with copies of all Section
16(a) reports they file.
Based solely on its review of copies of such reports received or written
representations from such executive officers, directors and ten percent
stockholders, Owens Corning believes that all Section 16(a) filing
requirements applicable to its directors, executive officers and ten percent
stockholders were complied with during fiscal year 1995 except as follows. In
May 1994, Mr. Hiner entered into a settlement agreement transferring pecuniary
interest, but not record ownership, in certain stock options and restricted
shares to his former spouse. Because of his continuing record ownership, Mr.
Hiner did not report the disposition of such options and shares at the time of
the settlement agreement. Based upon further advice from counsel in September
1995, however, Mr. Hiner concluded that the settlement agreement might be
deemed the disposition of such options and shares and he amended his Form 5
for the year 1994 to reflect such disposition. In October 1995, Mr. Robert
Lonergan, an officer of the company, exercised stock options and sold the
subject shares in a single cashless exercise transaction. Due to a clerical
error, the Form 4 reporting such exercise and sale was not filed until early
1996.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has standing audit, compensation, executive, finance
and corporate governance committees. The Corporate Governance Committee also
serves as a nominating committee. The Board of Directors held 7 meetings
during 1995. All directors attended at least 75% of the meetings of the Board
and all Committees of the Board of which they were members.
AUDIT COMMITTEE
Norman P. Blake, Jr., Responsible for overseeing financial reporting and
Chairman internal controls. Recommends independent public
accountant to the Board of Directors; reviews sig-
nificant accounting policies, accruals, reserves
and estimates made by management; reviews policies
and procedures for assuring accurate and complete
quarterly financial reporting, as well as compli-
ance with applicable laws and regulations. The Au-
dit Committee held 3 meetings in 1995.
William W. Colville
Sir Trevor Holdsworth
W. Walker Lewis
David T. McGovern
W. Ann Reynolds
COMPENSATION COMMITTEE
Landon Hilliard, Chair- Reviews Owens Corning's policies concerning compen-
man sation and benefits for officers and directors; ap-
proves the salaries and incentive opportunity of
all officers of Owens Corning; determines incentive
payments for all officers; reviews the compensation
of the Chief Executive Officer. (A report by the
Compensation Committee follows on page 10.) The
Compensation Committee held 6 meetings in 1995.
Norman P. Blake, Jr.
Sir Trevor Holdsworth
Furman C. Moseley, Jr.
W. Ann Reynolds
7
<PAGE>
EXECUTIVE COMMITTEE
Glen H. Hiner, Chairman May exercise the powers of the Board of Directors,
with certain exceptions, in the intervals between
meetings of the Board. The Executive Committee held
1 meeting in 1995.
Norman P. Blake, Jr.
William W. Colville
Jon M. Huntsman, Jr.
Furman C. Moseley, Jr.
FINANCE COMMITTEE
Responsible for reviewing financial plans, struc-
Furman C. Moseley, Jr., ture and policies of Owens Corning, including an-
Chairman nual and long-range operating plans and capital
structure. Has oversight responsibility for Owens
Corning's funded retirement plans. The Finance Com-
mittee held 4 meetings in 1995.
Landon Hilliard
Jon M. Huntsman, Jr.
W. Walker Lewis
David T. McGovern
CORPORATE GOVERNANCE COMMITTEE
W. Walker Lewis, Chair- Serves as the nominating committee for membership
man to the Board of Directors; advises the other direc-
tors about meeting dates, the agenda and the char-
acter of information to be presented at Board meet-
ings; reviews plans and personnel for management
continuity and development. The Corporate Gover-
nance Committee held 3 meetings in 1995.
Landon Hilliard
Jon M. Huntsman, Jr.
David T. McGovern
W. Ann Reynolds
DIRECTORS' COMPENSATION
RETAINER AND MEETING FEES--In 1995, Owens Corning paid each director who was
not an Owens Corning officer an annual retainer of $25,000. Non-employee
Committee Chairmen receive an additional retainer of $4,000 each year. In
addition, Owens Corning paid non-employee directors a fee of $1,000 for (a)
attendance at one or more meetings of the Board of Directors on the same day,
(b) attendance at one or more meetings of each Committee of the Board of
Directors on the same day, and (c) for each day's attendance at other
functions in which directors were requested to participate.
A director may elect to defer all or a portion of his or her annual retainer
and fees under the Directors' Deferred Compensation Plan, in which case his or
her account is credited with the number of shares of common stock that such
compensation could have purchased on the date of payment. Payments are made in
cash based on the value of the account, which is determined by the then fair
market value of common stock, after the individual has ceased to be a
director.
STOCK PLAN FOR DIRECTORS--Owens Corning maintains a stockholder approved
Stock Plan for Directors, applicable to each director who is not an Owens
Corning employee. The plan provides for two types of grants to each eligible
director: (1) a one-time nonrecurring grant of non-transferable options to
each new outside director to acquire 10,000 shares of common stock at a per
share exercise price of 100 percent of the value of a share of common stock on
the date of the grant, and (2) an annual grant of 500 shares of common stock
on the fourth Friday in April.
Initial option grants become exercisable in equal installments over five
years from date of grant, subject to acceleration in certain events, and
generally expire ten years from date of grant. No grant
8
<PAGE>
may be made under the plan on or after August 20, 1997, and a director may not
receive an annual grant of common stock in the same calendar year he or she
receives an initial option grant. A director entitled to receive an annual
grant may elect to defer receipt of the common stock until he or she leaves
the Board of Directors.
In 1995, William W. Colville received an initial option grant for 10,000
shares of common stock with an exercise price of $35.25 per share and Messrs.
Blake, Hilliard, Huntsman, Lewis, McGovern and Moseley, Sir Holdsworth and Dr.
Reynolds each received an annual 500 share grant valued at $18,363 on the date
of grant.
INDEMNITY AGREEMENTS--Owens Corning has entered into an indemnity agreement
with each member of the Board of Directors which provides that if the director
becomes involved in a claim (as defined in the agreement) by reason of an
indemnifiable event (as defined in the agreement), Owens Corning will
indemnify the director to the fullest extent authorized by Owens Corning's by-
laws, notwithstanding any subsequent amendment, repeal or modification of the
by-laws, against any and all expenses, judgments, fines, penalties and amounts
paid in settlement of the claim.
The indemnity agreement also provides that, in the event of a potential
change of control (as defined in the agreement), the director is entitled to
require the creation of a trust for his or her benefit, the assets of which
would be subject to the claims of Owens Corning's general creditors, and the
funding of such trust from time to time in amounts sufficient to satisfy Owens
Corning's indemnification obligations reasonably anticipated at the time of
the funding request.
CHARITABLE AWARD PROGRAM--To recognize the interest of Owens Corning and its
directors in supporting worthy educational institutions and other charitable
organizations, Owens Corning permits each director to nominate up to two
organizations to share a contribution of $1 Million from the Owens-Corning
Foundation. These contributions will be made by the Foundation in ten annual
installments after the death of a director. Owens Corning expects to
ultimately fund its contributions to the Foundation and insurance premiums
from the proceeds of life insurance policies which it maintains on directors.
Directors will receive no financial benefit from this program, since the
charitable deduction and insurance proceeds accrue solely to Owens Corning.
TRANSACTIONS WITH OWENS CORNING
Upon his retirement as an executive officer on December 31, 1994, Owens
Corning entered into an agreement with William W. Colville, who subsequently
became a director of the company, providing for his retention as a consultant
for a one year term, annually renewable as agreed by the parties for up to
five years. Under this agreement, Mr. Colville receives a monthly consulting
fee of $14,583 ($27,917 for each of the first three months of 1995) and is
also provided office space and related services plus reimbursement of expenses
incurred in the performance of services for Owens Corning. When Mr. Colville
ceases to be a consultant, his retirement benefit will be recomputed to
include the five year maximum period he could be a consultant as if it were
employment by Owens Corning. This will increase his monthly supplemental
pension by approximately $1,400 per month.
Director Jon M. Huntsman, Jr. is Vice Chairman of, and his family owns a
majority interest in, Huntsman Corporation. Units of Owens Corning purchased
approximately $8.6 million of materials from Huntsman companies during 1995.
John H. Dasburg, a nominee for election as a director, is President and Chief
Executive Officer of Northwest Airlines Corporation. Units of Owens Corning
purchased approximately $1.8 million of transportation services from this
corporation in 1995.
9
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
TO THE STOCKHOLDERS OF OWENS CORNING
The Compensation Committee ("Committee") reviews Owens Corning's
compensation programs to promote the attraction, retention and motivation of a
highly qualified leadership team that will accomplish Owens Corning's
strategic business goals. The members of the Committee are independent, non-
employee directors.
PHILOSOPHY--The Committee's philosophy is to provide a total pay opportunity
for executive officers, including Mr. Hiner, that is competitive with the
external market and rewards individual contribution based on company
performance against a predetermined set of goals, both short-term and long-
term. Key elements of this pay opportunity are base salary and annual and
long-term incentive compensation as described below. In determining
competitive levels, the Committee analyzes information from independent survey
data on comparator companies in the context of executive performance. Since
Owens Corning's market for executive talent extends beyond its own industry,
the survey data include companies outside the Dow Jones Building Materials
Index referred to in the Performance Graph on page 18.
In response to the Omnibus Budget Reconciliation Act of 1993, the Committee
has determined that it will maintain flexibility with respect to non-
deductible payments to executive officers.
BASE SALARY--For each executive officer, base salaries are targeted at the
median of comparator companies' base salaries for comparable positions. Actual
salaries for executive officers can deviate from targeted salary levels based
on an individual's experience and level of performance in the position.
The primary factor in determining a salary increase is the individual's
performance against pre-established goals. Individual salary increases are
also generally based on the officer's contribution to the corporation; support
of Owens Corning's core values of customer satisfaction, individual dignity
and shareholder value; competitive practices and relationship of current
salary to the market value of the job. Individual salary increases are
administered within an overall company merit budget and salary band for the
individual's position. The time between actual salary reviews and increases
for executive officers can range from 10 to 18 months.
For 1995, Mr. Hiner received a base salary of $840,000, the same as his 1994
base salary, to reflect a transition to the company's current philosophy to
link more executive compensation to creation of shareholder value, as
described below under "Long-Term Incentive Compensation."
ANNUAL INCENTIVE COMPENSATION--Annual incentive payment "targets" for the
executive officers are set at the 75th percentile of the comparator companies'
actual incentive payments. The Corporate Incentive Plan terms are based upon
selected financial criteria (tied to business objectives) as determined by the
Committee. In 1995, these criteria and weightings were earnings per share
(60%), cash flow from operations (30%) and sales growth (10%). Goals were set
for each criterion, including thresholds for each measure which identified the
minimum level of business performance at which any funding occurs. The goals
are approved by the Committee after a review of key business and economic
assumptions for the year. Actual business results against the criteria
determine amounts available for payments. Funding at the minimum threshold is
25% of maximum and at maximum cannot exceed 100% of participating salaries.
Any unused amount may be applied to a reserve fund and be available for awards
in future years.
Each executive officer's participation in the Plan is based upon his/her job
level, with each officer eligible to earn a percentage of base salary. Maximum
annual incentive opportunities for executive officers other than Mr. Hiner
range from 90% to 110% of base salary. For executive officers other than
10
<PAGE>
Mr. Hiner, the Committee can award from 0 to a maximum of 140% of the Plan's
funded amount applicable to the officer. These adjustments are based on the
individual's contributions to Owens Corning's financial and operating results
as well as support of Owens Corning's core values. The annual incentive
opportunity for Mr. Hiner is 182% of base salary, with the Committee able to
award a lesser amount based on its assessment of his performance. Total
payments to all participants cannot exceed 100% of the funds available under
the Plan.
Mr. Hiner's total incentive compensation award for 1995 amounts to
$1,400,000, which is higher than the target incentive opportunity but less
than the maximum incentive opportunity Mr. Hiner could have earned under the
Plan. In determining Mr. Hiner's incentive compensation award for 1995, the
Committee focused upon Owens Corning's performance in the three measurement
areas described above (earnings per share, cash flow and sales growth), and
the incentive award generated for Mr. Hiner by that performance. The Committee
also considered the company's performance in 1995 versus results achieved in
1994, and the incentive award made to Mr. Hiner for that year.
LONG-TERM INCENTIVE COMPENSATION--In 1995, the company realigned its
philosophy regarding the long-term rewards of its executives. This new
philosophy establishes a stronger link between executive compensation and pre-
determined business goals which, in turn, supports the creation of shareholder
value and aligns executive interests with those of stockholders. Long-term
incentives consist of annual awards of Stock Options and Restricted Stock
provided under Owens Corning's Stock Performance Incentive Plan ("SPIP")
approved by shareholders in 1992 and restricted stock with attendant
performance criteria ("Performance Restricted Shares") or cash equivalents
provided under the Long-Term Performance Incentive Plan ("LTPIP") terms
approved in 1995 by the Board of Directors under SPIP, subject to stockholder
approval as described below. Owens Corning's objective is to provide awards
that result in values approximating the median of the total long-term
incentives provided by the comparator companies. The executive officers
including Mr. Hiner participate in LTPIP and SPIP.
We believe that Stock Options encourage executive officers to relate their
long-term economic interests to other shareholders. The 1995 Stock Options
were granted with exercise prices equal to the fair market value of common
stock at the date of grant. They vest ratably over three years and have an
exercise period of ten years from date of grant.
Restricted Stock is used to provide continuing incentives to increase value
to our shareholders and to retain certain executive officers. The 1995 grants
of Restricted Stock vest 50% in five years and 50% in ten years from date of
grant.
The size of each executive officer's stock award granted in 1995 was based
on the individual's responsibility level as well as competitive practice and
was targeted to be at the median of long-term incentive values granted by
other comparable companies. In addition, each officer's past option and
restricted grants were considered as well as the Committee's assessment of
each executive's individual contributions. The number of shares awarded are
held constant from year to year as long as the total value of an award is
within the range of the competitive objective. In 1995, Mr. Hiner was awarded
options on 60,000 shares of stock, at the median level, and 8,000 shares of
restricted stock, less than the median level, of other comparable companies.
The purpose of LTPIP is to provide incentive compensation opportunities
which are directly tied to the achievement of the company's performance goals
over a period of three years (two and one-half years in the case of the first
performance period). The Committee intends to begin new three year performance
periods under LTPIP annually beginning in 1996.
For the performance period beginning July 1, 1995 and ending December 31,
1997, the LTPIP performance measures are return on net assets, sales growth
and cash flow. The three performance
11
<PAGE>
measures are weighted equally, except that no portion of the award based on
sales growth can be earned unless the minimum return on net assets goal is
also achieved. The historical performance of comparator companies and the
companies which constitute the Standard & Poor's 400 were benchmarked before
establishing these performance goals.
Under the LTPIP terms, the executive officers, including Mr. Hiner, will
have the opportunity to earn cash equal to the market value on the date of
payment of a specified number of shares of company stock ("Phantom Performance
Shares"), contingent upon the degree to which performance goals for the
performance period are met. Except in the case of certain executive officers
("Specified Officers", currently including only Mr. Hiner), Phantom
Performance Shares are also earned seven years after the end of the
performance period if the recipient is still employed by the company. Since
the Plan represents an additional compensation element for participants,
including Mr. Hiner and other executive officers, the Committee will reduce
future annual stock option and restricted stock grants to the great majority
of participants to keep overall compensation opportunities in line with
competitive practice. For the performance period concluding with fiscal year
1997, Mr. Hiner has the opportunity to earn up to 18,750 Phantom Performance
Shares, contingent upon the company's performance in the above referenced
measurements.
Because 1995 served as a transition year toward this new plan philosophy,
option awards and restricted stock awards were granted under previous
guidelines. In 1995, awards of Performance Restricted Shares and Phantom
Performance Shares were granted on a pro-rated basis for the two and one-half
year performance period.
Awards under LTPIP are subject to stockholder approval of the amended SPIP
and, in the case of the LTPIP terms applicable to Specified Officers, the
LTPIP Terms, as more fully described in Proposals 2 and 3, respectively, of
the proxy statement.
Respectfully submitted,
Compensation Committee
Landon Hilliard, Chairman
Norman P. Blake, Jr.
Sir Trevor Holdsworth
Furman C. Moseley, Jr.
W. Ann Reynolds
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION--The
Compensation Committee presently consists of Landon Hilliard (Chairman),
Norman P. Blake, Jr., Sir Trevor Holdsworth, Furman C. Moseley, Jr. and W. Ann
Reynolds (who replaced Jon M. Huntsman, Jr. in April 1995). Director and
former Compensation Committee member Jon M. Huntsman, Jr. is Vice Chairman of,
and his family owns a majority interest in, Huntsman Corporation. Units of
Owens Corning purchased approximately $8.6 million of materials from Huntsman
companies during 1995. Until April 1995, Owens Corning's Chief Executive
Officer, Glen H. Hiner, was a director of Huntsman Petrochemical Corporation,
a subsidiary of Huntsman Corporation.
EXECUTIVE COMPENSATION
The following tables disclose compensation received by Owens Corning's Chief
Executive Officer and its four other most highly paid executive officers in
1995 ("Named Executive Officers") for the three years ended December 31, 1995,
as well as options granted and exercised in 1995 and the value of options
outstanding at year end.
12
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
- --------------------------------------------------------------- ---------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS/ COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) ($)(1) SARS(#)(2) ($)
------------------ ---- ------- --------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Glen H. Hiner........... 1995 840,000 1,400,000(5) 75,379(7) 300,000 60,000 75,321(9)(10)
Chairman and Chief 1994 840,000 986,076 45,162(7) 257,000 50,000 66,141(9)(10)
Executive Officer 1993 770,000 700,000 33,082(7) 324,000 50,000 77,608(9)(10)
Charles H. Dana(3)...... 1995 317,500 335,000 90,000 20,000 7,500(10)
Executive Vice 1994 307,500 300,000 77,100 20,000 6,750(10)
President 1993 275,000 225,000 97,200 20,000 10,000(9)
David W. Devonshire(4).. 1995 303,333 330,000 90,000 20,000 11,092(9)(10)
Senior Vice 1994 283,333 285,000 77,100 20,000 9,996(9)(10)
President and Chief 1993 125,160 200,000(6) 38,474(8) 286,350 17,000 5,156(10)
Financial Officer
Christian L.
Campbell(4)............ 1995 275,000 240,000(6) 33,016(8) 169,500 32,500 2,292(10)
Senior Vice President,
General Counsel and
Secretary
Efthimios O. Vidalis.... 1995 236,667 225,000 115,985(8) 56,250 15,000 7,500(10)
Vice President and 1994 220,000 165,000 24,094 10,000 7,500(10)
President-- Composites 1993 162,000 117,000 30,375 7,000 5,925(10)
</TABLE>
- --------
(1) 50% of the shares awarded in 1995, 1994 and 1993 will vest 5 years after
award, with the remaining 50% vesting after 10 years. Vesting occurs under
an alternate vesting schedule for employees who retire with the consent of
the Compensation Committee. Vesting also accelerates in the event of
death, disability, normal retirement and in certain other events at the
discretion of the Compensation Committee. Mr. Devonshire received a grant
of 6,900 shares of restricted stock upon his employment on July 19, 1993,
2,400 shares of which vest 50% after 5 years and 50% after 10 years while
the remaining 4,500 shares vested on January 20, 1994, to replace stock
awards forfeited as a result of leaving his prior employer. The number of
shares of restricted stock outstanding at year end and their value based
on the year end stock price of $44.875 for each of the Named Executive
Officers is as follows: Mr. Hiner, 113,633 shares, $5,099,281; Mr. Dana,
10,200 shares, $457,725; Mr. Devonshire, 7,200 shares, $323,100; Mr.
Campbell, 5,000 shares, $224,375; and Mr. Vidalis, 4,300 shares, $192,963.
If dividends were paid by Owens Corning, they would be paid on restricted
stock.
(2) One-third of each award becomes exercisable in each of the first through
the third years following the grant. An alternate vesting schedule applies
in the event of early retirement with the consent of the Compensation
Committee. Vesting also accelerates in the event of death, disability,
normal retirement and in certain other events at the discretion of the
Compensation Committee.
(3) Prior to January 1, 1994, Mr. Dana was Senior Vice President and
President--Industrial Materials Group.
(4) Mr. Devonshire was hired as Senior Vice President and Chief Financial
Officer on July 17, 1993. Mr. Campbell was hired as Senior Vice President,
General Counsel and Secretary on February 2, 1995.
(5) Consists of $1,064,700 that has been paid pursuant to Mr. Hiner's
employment agreement and $335,300 that will be paid if the Corporate
Incentive Plan described in Proposal 4 is approved by stockholders.
13
<PAGE>
(6) Mr. Devonshire received a sign-on bonus upon his employment of $50,000
(net of taxes) and a contractually agreed bonus for 1993 of $150,000, half
of which replaced incentive compensation lost as a result of his change of
employment. Mr. Campbell received a sign-on bonus upon his employment of
$50,000 (net of taxes).
(7) Mr. Hiner's numbers show contractually required tax payments on income
from his Pension Preservation Trust account. The Pension Preservation
Trust is described on page 17.
(8) Mr. Devonshire received a payment of $38,474 for taxes on his $50,000
sign-on bonus. Mr. Campbell received a payment of $33,016 for taxes on his
$50,000 sign-on bonus. Mr. Vidalis received a payment of $115,985 pursuant
to Owens Corning's standard tax equalization program to compensate him for
excess taxes payable as a result of a prior foreign assignment.
(9) Of Mr. Hiner's numbers, $67,608, $59,496 and $67,821 were the present
values (based upon the Applicable Federal Rate from date of payment to
earliest date of repayment to Owens Corning) of split-dollar life
insurance premiums paid by Owens Corning which were invested on his behalf
in 1993, 1994 and 1995, respectively. Mr. Hiner reimburses Owens Corning
for the portion of the premium which represents term life cost. Of Mr.
Devonshire's numbers, $3,246 and $3,592 were the present values of split-
dollar life insurance premiums paid by Owens Corning in 1994 and 1995,
respectively. Mr. Devonshire also reimburses Owens Corning for the portion
of the premium representing term life cost.
(10) Messrs. Hiner, Dana, Devonshire, Campbell and Vidalis had $7,500, $7,500,
$7,500, $2,292, and $7,500, respectively, of contributions made to their
accounts in the Company's Savings and Deferral Investment Plan in 1995;
contributions of $6,645, $6,750, $6,750, $0, and $7,500 in 1994; and
contributions of $10,000, $10,000, $5,156, $0, and $5,925 in 1993.
OPTION GRANT TABLE
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM(1)
- ----------------------------------------------------------------- -----------------------------
PERCENT
OF TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED
OPTIONS/ TO EXERCISE
SARS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#)(2) YEAR ($/SH) DATE 5% ($) 10% ($)
---- ---------- --------- -------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Glen H. Hiner........... 60,000 5.96% $37.50 June 2005 $1,417,500 $3,577,500
Charles H. Dana......... 20,000 1.99% $37.50 June 2005 $472,500 $1,192,500
David W. Devonshire..... 20,000 1.99% $37.50 June 2005 $472,500 $1,192,500
Christian L. Campbell... 15,000 1.49% $31.50 Jan. 2005 $297,675 $751,275
17,500 1.74% $37.50 June 2005 $413,438 $1,043,438
Efthimios O. Vidalis.... 15,000 1.49% $37.50 June 2005 $354,375 $894,375
All Stockholders........ N/A N/A N/A N/A $1,197,421,478 $3,022,063,730
</TABLE>
- --------
(1) The potential realizable value shown for the Named Executive Officers is
net of the option exercise price; the value for "All Stockholders" is
calculated based on a 10 year option term commencing June 15, 1995 (the
date most options were granted) and is net of the common stock closing
price and shares outstanding on that date. These amounts represent assumed
rates of appreciation only. Actual gains, if any, on stock option
exercises and common stock holdings are dependent on the future
performance of Owens Corning's common stock. There is no assurance that
the values shown will be attained.
(2) Options become exercisable ratably over three years from the grant date,
and have a 10 year exercise period. A separate vesting schedule applies in
the event of early retirement with the consent of the Compensation
Committee. No stock appreciation rights were granted in 1995.
14
<PAGE>
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
Aggregated Option/SAR Exercises in 1995, and 12/31/95 Option/SAR Values
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
12/31/95 (#) 12/31/95 ($)(1)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ------------ --------------- ---------------------------------
<S> <C> <C> <C> <C>
Glen H. Hiner........... -0- -0- 121,665/120,001 $1,890,156/1,210,585
Charles H. Dana......... -0- -0- 74,000/40,000 $ 1,180,578/346,672
David W. Devonshire..... -0- -0- 18,000/39,000 $ 123,244/336,631
Christian L. Campbell... -0- -0- -0-/32,500 $ -0-/329,688
Efthimios O. Vidalis.... -0- -0- 16,733/24,000 $ 196,012/205,836
</TABLE>
- --------
(1)The year end price of Owens Corning's common stock was $44.875
The following table sets forth the awards made in 1995 under Long-Term
Performance Incentive Plan terms to each of the Named Executive Officers,
subject to stockholder approval of the amended SPIP and, in the case of Mr.
Hiner, the LTPIP Terms.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR (1)
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS
NUMBER OF OR OTHER UNDER NON-STOCK
SHARES, PERIOD PRICE-BASED PLANS
UNITS OR UNTIL ------------------------
OTHER RIGHTS MATURATION THRESHOLD TARGET MAXIMUM
NAME (#) OR PAYOUT (#) (#) (#)
---- ------------ ----------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
Glen H. Hiner................ 12,500 2.5 Years 6,250 12,500 18,750
Charles H. Dana.............. 4,000 2.5 Years 2,000 4,000 6,000
David W. Devonshire.......... 4,000 2.5 Years 2,000 4,000 6,000
Christian L. Campbell........ 3,500 2.5 Years 1,750 3,500 5,250
Efthimios O. Vidalis......... 4,000 2.5 Years 2,000 4,000 6,000
</TABLE>
- --------
(1) Each award shown in the second column of the table represents the
opportunity to earn the cash value of the number of shares of Owens
Corning common stock shown in the "maximum" column of the table if certain
"maximum" performance goals established by the Compensation Committee at
the beginning of the performance period are attained or exceeded during
the performance period, the cash value of the number of shares shown in
the "target" column if certain lower, "target" levels of performance are
attained, or the cash value of the number of shares shown in the
"threshold" column if certain lower, "threshold" levels of performance are
attained. Participants will earn the cash value of intermediate numbers of
shares for performance between the maximum and target levels, or between
the target and threshold levels. The performance goal that applies to one-
third of each award is based on return on net assets ("RONA"), one-third
is based on cash flow from operations, and one-third is based on sales
growth. However, the portion of the award that is based on sales growth
will not be earned unless the minimum RONA goal is also achieved. Payments
will be made after the close of the performance period, when the Committee
determines the extent to which the performance goals have been attained,
and will be based on the market value of Owens Corning common stock at
that time. The performance period ends on December 31, 1997. If employment
terminates during the performance period by death or disability, a
prorated award will be paid after the
15
<PAGE>
performance period, based on the level of performance attained. If a Change
of Control (as defined in the amended Stock Performance Incentive Plan)
occurs during the performance period, the maximum award may be paid. In the
case of Mr. Hiner, no portion of the award will be earned unless the
threshold level of RONA, cash flow from operations or sales growth is
attained (except in the event of a Change of Control). Executive officers
other than Mr. Hiner will earn any portion of their target award which is
not earned during the performance period seven years after the performance
period, if their employment continues until that time, in which case
payment will be based on the market value of the shares at that time.
RETIREMENT BENEFITS
Effective January 1, 1996, Owens Corning maintains a qualified Cash Balance
Plan covering its salaried employees in the United States, including each of
the Named Executive Officers, in lieu of its prior qualified Salaried
Employees' Retirement Plan ("SERP"), which provided retirement benefits
primarily on the basis of age at retirement, years of service and average
earnings from the highest three consecutive years of service. In addition,
Owens Corning has a non-qualified Executive Supplemental Benefit Plan ("ESBP")
to pay eligible employees the difference between the maximum benefits payable
under the company's qualified retirement plan and those benefits which would
have been payable except for limitations imposed by the Internal Revenue Code.
Messrs. Dana and Vidalis were eligible to receive benefits under this plan as
of December 31, 1995.
CASH BALANCE PLAN--Under the Cash Balance Plan, each covered employee's
earned retirement benefit under the SERP (including ESBP) was converted to an
opening cash balance. Each year, Owens Corning credits to each covered
employee's account 2% of such employee's covered pay up to 50% of the Social
Security Taxable Wage Base and 4% of covered pay in excess of such wage base.
For this purpose, covered pay includes base pay, overtime pay, other wage
premium pay and annual incentive bonuses payable during the year. Cash Balance
Plan accounts earn monthly interest based on the average interest rate for
five-year U.S. treasury securities. Employees may receive their account
balance as a lump sum or as a monthly payment when they leave the company.
For employees who were at least age 40 with 10 years of service as of
January 1, 1996 ("Grandfathered Employees"), including Messrs. Dana and
Vidalis, the credit percentages applied to covered pay are increased pursuant
to a formula based on age and years of service on such date. In addition,
Grandfathered Employees are guaranteed that, through the year 2000, they will
earn at least as much under the Cash Balance Plan as they would have earned
under the SERP (in each case including ESBP).
The estimated annual annuity amounts payable to the Named Executive Officers
at age 65 under the Cash Balance Plan are: Mr. Hiner, $96,000; Mr. Dana,
$267,000; Mr. Devonshire, $37,000; Mr. Campbell, $45,000; and Mr. Vidalis,
$148,000. These amounts assume current levels of covered pay through age 65,
estimated interest rates and, in the case of Messrs. Dana and Vidalis, the
special rules applicable to Grandfathered Employees.
OTHER ARRANGEMENTS--Mr. Hiner's Employment Agreement calls for him to
receive a pension which will, together with amounts payable under his prior
employer's pension plan, any qualified defined benefit plan maintained by
Owens Corning, and Social Security, total 60% of his "average annual
compensation" (the pension he would have obtained had he remained with his
prior employer). His "average annual compensation" is one third of his highest
36 months of compensation from Owens Corning or his prior employer.
Owens Corning has agreed with Mr. Devonshire to provide him with a
supplemental pension providing a benefit, under the usual pension plan
formula, determined as if he had earned two years of service for each year
employed after age 53. Mr. Devonshire is now 50.
16
<PAGE>
In 1992, Owens Corning established a Pension Preservation Trust for amounts
payable under the ESBP as well as under the pension arrangements described
above. The Compensation Committee determines (except with respect to Mr.
Hiner, where payments are contractually determined) the amounts to be paid
with respect to the Pension Preservation Trust, which are a portion of
benefits earned under the ESBP and the pension agreements described above.
During 1995, pretax payments of $794,827 and $341,298 were made to the Trust
for the accounts of Messrs. Hiner and Dana, respectively. Income from the
Trust is distributed annually to participants, which reduces the pension
otherwise payable at retirement.
EMPLOYMENT AND SEVERANCE AGREEMENTS
Mr. Hiner is employed under an agreement which has a renewing term of three
years, ending when he reaches age 65. Under his employment agreement, Mr.
Hiner would receive a lump sum termination payment equal to 330% of his base
salary if he were to be terminated by Owens Corning without "cause", or if he
should terminate his employment for "good reason", as each of the terms is
defined in Mr. Hiner's employment agreement. Under his agreement, Mr. Hiner
received an initial annual salary of $700,000, with an annual review. Any
higher salary approved may not be decreased. Mr. Hiner is also to receive a
bonus of up to 130% of base pay based upon mutually agreed entry, target and
maximum company performance objectives.
Owens Corning also has entered into severance arrangements with each of the
other Named Executive Officers. These agreements provide for the payment of an
amount equal to two times base salary plus annual incentive bonus (based on an
average of the three previous years' annual incentive payments or the average
of the three previous years' annual incentive targets, whichever is greater),
and a payment equal to the additional lump sum pension payment that would have
been made had the Named Executive Officer been three years older, with three
additional years of service at the time of employment termination. The base
salaries as of December 31, 1995 are as follows: Mr. Hiner $840,000, Mr. Dana
$320,000, Mr. Devonshire $320,000, Mr. Campbell $275,000, and Mr. Vidalis
$240,000.
17
<PAGE>
PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the total return on
Owens Corning's common stock be compared with the S&P 500 Stock Index and a
peer group, which is illustrated in the following graph. The stock price
performance shown on the graph is not necessarily indicative of future stock
price performance.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG OWENS CORNING, S&P 500 INDEX AND DOW JONES BUILDING MATERIALS INDEX
<CAPTION>
DOW JONES
Measurement Period OWENS S&P BUILDING
(Fiscal Year Covered) CORNING 500 INDEX MATERIALS INDEX
- ------------------- ---------- --------- ---------------
<S> <C> <C> <C>
Measurement Pt-
12/31/90 $100 $100 $100
FYE 12/31/91 $140 $130 $135
FYE 12/31/92 $225 $140 $171
FYE 12/31/93 $277 $155 $210
FYE 12/31/94 $199 $157 $168
FYE 12/31/95 $280 $215 $230
</TABLE>
PROPOSAL 2. APPROVAL OF AMENDMENTS TO THE STOCK PERFORMANCE INCENTIVE PLAN
The Board of Directors recommends that stockholders approve amendments to
Owens Corning's Stock Performance Incentive Plan ("SPIP") that have been
adopted by the Board of Directors, subject to stockholder approval. If the
amendments are approved by stockholders, stock options granted under the SPIP
would be eligible to qualify as "performance-based compensation" that is
exempt from the $1 million limit imposed by Section 162(m) of the Internal
Revenue Code ("Code") on corporate tax deductions for certain executives'
compensation. The amendments would also expand both the group of employees
eligible to receive awards under the SPIP and the types of awards that may be
made, extend the periods during which stock options may be exercised following
termination of employment under certain circumstances, allow shares subject to
awards that are forfeited or expire unexercised to again be made subject to
awards, and make other changes primarily of a legal or technical nature.
Except as provided above with respect to reuse of shares subject to forfeited
or expired awards, the amendments DO NOT affect the number of shares available
for awards.
BACKGROUND
The SPIP was originally named the "Key Management Performance Incentive
Plan". It was adopted by the Board of Directors and approved by stockholders
in 1992. Thereafter, the Board
18
<PAGE>
changed the name of the SPIP to the "Stock Performance Incentive Plan". The
amendments that are presently proposed for approval by stockholders were
adopted by the Board on June 15, 1995 and, if approved by stockholders, will
be effective as of that date. If not approved by stockholders, the amendments
and any awards made pursuant thereto will not be given effect. As of March 13,
1996, the closing price of Owens Corning common stock in consolidated trading
was $42 per share.
The amendments to the SPIP will be approved if they receive the affirmative
vote of the holders of a majority of the common stock represented in person or
by proxy and entitled to vote at the Annual Meeting.
SUMMARY OF THE AMENDED SPIP
The following discussion describes the principal features of the amended
SPIP and the principal changes made by the amendments. The description that
follows is subject to and qualified by reference to the complete text of the
amended SPIP, which is attached to this proxy statement as Exhibit A.
Eligibility: All employees of the Company and its subsidiaries, including
part-time employees and unionized employees, are eligible to be selected to
participate in the amended SPIP. Prior to its amendment, the SPIP provided
that only officers and key employees of the Company, its subsidiaries and
affiliates were eligible to be selected to participate. It is estimated that,
if the amendments are approved, approximately 17,000 persons will be eligible
to be selected to participate. Each eligible person would not necessarily
receive an award.
Administration: The amended SPIP continues to provide that it is to be
administered by the Compensation Committee of the Board of Directors, or by
another committee of the Board consisting of at least two Board members who
are not employees of the Company or its subsidiaries ("Committee"). The
amendments provide that, unless the Board determines otherwise, the Committee
shall consist exclusively of persons who qualify to administer the amended
SPIP under Rule 16b-3 of the Securities and Exchange Commission ("SEC") and
who are "outside directors" within the meaning of Section 162(m)(4)(C) of the
Code. (SEC Rule 16b-3 as presently in effect exempts certain transactions by
executive officers and directors under employee benefit plans such as the
amended SPIP from the short-swing trading rules of federal securities
legislation, if the plans are administered by "disinterested persons". Section
162(m)(4)(C) of the Code exempts certain performance-based compensation from
the $1 million limit on the amount of certain executives' compensation which
publicly traded corporations may deduct on their tax returns, provided, among
other matters, the performance goals are determined by a Board committee
comprised solely of "outside directors").
The Committee is authorized to select participants from among those persons
eligible, determine the size, types and time of grant of awards, determine the
terms and conditions of awards, and make all other determinations necessary
for the administration of the amended SPIP. To the extent permitted by law and
by SEC Rule 16b-3, the Committee may delegate its administrative
responsibilities with respect to the amended SPIP. The amendments provide
that, unless the Committee determines otherwise, transactions by executive
officers and directors under the amended SPIP are intended to qualify for the
exemptions available under SEC Rule 16b-3, and awards granted to executive
officers are intended to qualify as "performance-based compensation" if such
qualification is necessary to preserve the company's deduction for such awards
under Section 162(m) of the Code. The amendments also specifically provide
that the amended SPIP is intended to give the Committee authority to grant
awards that will qualify as "performance-based compensation" as well as awards
that will not so qualify.
Type of Awards: The amended SPIP continues to permit the Committee to grant
stock options that qualify as incentive stock options under Section 422 of the
Code ("ISOs"), stock options that do not so qualify ("NQSOs"), and restricted
stock awards. The amendments also add authority for the
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<PAGE>
Committee to grant stock bonus awards. The principal terms and conditions of
these awards are summarized below.
Terms and Conditions of Stock Options: The price at which shares may be
optioned under the amended SPIP, whether pursuant to an ISO or a NQSO,
continues to be not less than 100% of the Fair Market Value of the shares (as
such term is defined in the amended SPIP) on the effective date of the grant
of the option. The option price of the shares subject to an option may be paid
in cash, by using the cashless exercise procedure allowed under Federal
Reserve Regulation T, or by tendering shares of Owens Corning common stock the
holder of the option already owns. However, common stock must have been held
by the option holder for at least six months or such other period of time as
the Committee may direct before it may be used to exercise an option. Prior to
the amendments, the SPIP did not authorize the Committee to prescribe a
holding period other than six months for this purpose.
No option granted under the amended SPIP may be exercisable prior to six
months following the effective date of the grant of the option, except in the
event of a Change of Control or Potential Change of Control of the company (as
defined in the amended SPIP), nor after the tenth anniversary of the effective
date of the grant of the option. Options may be exercised for up to five years
(or such lesser period as the Committee may prescribe) after retirement, but
not beyond the remaining term of the option. However, pursuant to the
amendments, the privilege of exercising options after early retirement is not
contingent on the company's consent to such retirement. The amendments also
extend by six months the three year period formerly allowed by the SPIP for
exercise of options following an involuntary termination of employment by the
company without cause or a termination of employment by reason of death or
disability. The amendments also provide that, if an optionee dies during the
five year or three year-and-six-months period in which options are exercisable
following termination of employment by reason of retirement or disability, the
optionee's options may be exercised within the full balance of such period, or
within 12 months after death, whichever period is longer. Prior to the
amendments, exercise in such circumstances was limited to 12 months after
death. The amendments also extend from three months to one year the period
within which options may be exercised following a voluntary termination of
employment. However, options continue to terminate at the time of any
termination of employment for cause (as defined in the amended SPIP). The
foregoing provisions of the amendments that extend the periods for exercising
options after termination of employment will not apply to options outstanding
prior to the effective date of the amendments unless the applicable option
agreements are amended to provide otherwise.
Options may be transferred only by will or the laws of descent and
distribution. However, the amendments also add authority for the Committee to
permit options to be transferred on death to a designated beneficiary.
Terms and Conditions of Restricted Stock Awards: The amended SPIP continues
to authorize the Committee to cause Owens Corning to issue shares of its
common stock to eligible participants, subject to restrictions on the
transferability of the shares and any other conditions and restrictions that
the Committee may impose, which may include provisions calling for forfeiture
of the shares if the participant fails to complete a specified period of
continued employment and/or if specific company-wide, divisional and/or
individual performance goals are not achieved. The recipient of a restricted
stock award receives full voting and dividend rights with respect to the
shares as soon as the shares are issued, even though they may be subject to
restrictions and forfeiture at that time. The employee's purchase price for
shares of restricted stock is equal to the par value of the shares. Except in
the event of a Change of Control or Potential Change of Control, the
restrictions may not lapse prior to six months following the effective date of
grant of the restricted stock. Under the amendments, the Committee may provide
for the restrictions to lapse prior to their scheduled lapse date in the event
of death, disability, retirement or other designated termination of
employment. Prior to the amendments,
20
<PAGE>
the SPIP provided that restricted shares were forfeited if employment
terminated for any reason except for special hardship circumstances, and
provided only that, in the case of special hardship circumstances of an
employee whose employment was involuntarily terminated without cause, the
Committee could waive the restrictions.
Terms and Conditions of Stock Bonus Awards: Under the amendments, the
Committee may cause Owens Corning to issue shares of its common stock, or pay
an amount of cash that is determined by reference to the Fair Market Value of
shares of common stock, to any eligible employee, subject to such terms and
conditions (if any) as the Committee may impose. Such shares may be issued or
cash paid at the time the award is granted, at any subsequent time, or in
installments from time to time, as the Committee may determine. The issuance
of such shares or payment of cash may but need not be contingent on the
employee's completion of a specified period of continued employment, the
achievement of specific company-wide, divisional and/or individual performance
goals, and/or the satisfaction of other conditions specified by the Committee.
If such shares are not issued or such cash is not paid at the time the award
is made, the Committee may but need not provide for the company to pay
additional amounts equivalent to the dividends the employee would have
received if such shares (or the shares on which the amount of cash payable is
based) had been issued to the employee at the time the award was made.
Change of Control: The amended SPIP continues to provide that the date on
which awards become nonforfeitable, exercisable and payable will accelerate in
the event of a Change of Control or Potential Change of Control (as such terms
are defined in the amended SPIP) unless the Committee determines that an
acquiror will honor the awards or substitute awards of equal value. The
amended SPIP also continues to provide that the Committee may provide for
awards to be cashed out in such event, based on the highest price of Owens
Corning common stock in the 60 days before the Change of Control or Potential
Change of Control (including the price paid in any transaction related to the
Change of Control or Potential Change of Control). The amended SPIP also
continues to provide for Owens Corning to pay participants amounts sufficient
(after taxes) to pay any excise taxes imposed on them under the golden
parachute tax provisions of the Code as a result of the acceleration of their
awards. Under the amended SPIP a Change of Control is defined, generally
speaking, as the acquisition by a third party of shares representing 15% or
more of the total voting power of Owens Corning's outstanding securities, a
change in a majority of the Board of Directors without the approval of the
Board, the occurrence of a transaction requiring stockholder approval for the
acquisition of Owens Corning or its assets, or the occurrence of certain
"going private" transactions. A Potential Change of Control is deemed to occur
if Owens Corning enters into an agreement which, if consummated, would result
in a Change of Control, or if a third party acquires shares representing 5% or
more of the total voting power and the Board adopts a resolution to the effect
that a Potential Change of Control has occurred for purposes of the amended
SPIP. These definitions are substantially the same as under the SPIP prior to
the amendments, except that prior to the amendments the acquisition by a third
party of shares constituted a Change of Control only if the shares represented
at least 20% of the total voting power of Owens Corning's outstanding
securities, a percentage that was reduced to 15% by the amendments. Also, the
amendments added authority for the Committee to exclude from the definition of
Change of Control and Potential Change of Control with respect to any
particular participant any transaction in which the participant acts in a
capacity other than as an employee, officer or director of Owens Corning or
its subsidiaries or affiliates.
Shares Reserved: The amended SPIP continues to provide that an amount of
Owens Corning common stock equal to two percent (2%) of the outstanding common
stock at the beginning of each calendar year will be available for awards
under the amended SPIP. However, only 25% of that amount, representing 0.5% of
the common stock outstanding at the beginning of the year, may be used for
stock bonus awards, including awards of restricted stock. Prior to the
amendments, the 0.5% limitation applied only to awards of restricted stock
(which were the only awards other than options
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<PAGE>
authorized by the SPIP). As in the past, the amended SPIP permits unused
shares from a particular year's allocation to be carried over for up to three
years following the year for which they were authorized and also permits the
Committee to borrow up to 25% of a succeeding year's authorization.
The amendments also added a provision that the number of shares that are
subject to a stock bonus award shall be charged against the number of shares
available for grants under the amended SPIP, whether the award is settled in
the form of cash or shares. However, the amendments also provide that the
shares that are subject to an award (including a stock bonus award that is to
be settled in cash) which expires or terminates without having been paid or
exercised, or which is cancelled or forfeited, shall be added to the number of
shares available for grant under the amended SPIP in the calendar year in
which the award expires, terminates or is cancelled or forfeited. The number
of shares that would have been added to the number of shares available under
the SPIP in 1995 if this provision had been in effect throughout that year is
56,624, of which 35,017 are attributable to awards that expired or terminated,
or were cancelled or forfeited, since the effective date of the amendments and
that will be added to the number of shares available in 1995 if stockholders
approve this Proposal 2.
The amendments added a provision that the maximum number of shares with
respect to which stock options may be granted to any eligible employee in any
calendar year is 25% of the total number of shares available for grant under
the amended SPIP in such calendar year. The amendments also added a 500,000
share limit on the number of shares which may be issued pursuant to ISOs under
the amended SPIP.
The amendments also state expressly that the amended SPIP is not intended to
preclude the establishment or continuation of, or be a substitute for, any
other employee compensation plan, practice or arrangement which Owens Corning
now has or may hereafter put into effect, including, without limitation, any
retirement, incentive compensation, stock purchase, stock option or stock
bonus plan. The company presently has several other compensation and benefit
plans pursuant to which shares may be issued independently of the amended SPIP
and without reference to its terms, and may institute additional such plans in
the future.
Term of SPIP: The amended SPIP continues to provide that no award may be
granted thereunder after April 30, 2002. However, the amended SPIP will
continue in effect after that date with respect to previously granted awards
that remain outstanding after that date.
Amendment: The Board of Directors may amend the amended SPIP in any respect
without stockholder approval, unless stockholder approval is required by the
Code, by any applicable exemption from the short-swing trading provisions of
Federal securities legislation for which Owens Corning intends transactions by
officers to qualify, by any applicable stock exchange, or by law. The Board
may also terminate the amended SPIP at any time. Prior to the amendments, the
SPIP specifically required any SPIP amendment to be approved by stockholders
if it would increase the total amount of shares which could be issued under
the SPIP, change the class of employees eligible to participate, materially
increase the cost of the SPIP or the benefits to participants, or extend the
maximum period after the date of grant during which options could be
exercised.
Grants to Date: The following table sets forth the number of shares relating
to awards that have been granted to date under the amended Stock Performance
Incentive Plan, including the Long-Term Performance Incentive Plan terms
established thereunder, certain of which are described and proposed for
approval by stockholders under "Proposal 3--Approval of Long-Term Performance
Incentive Plan", which appears on page 25 of this proxy statement.
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<PAGE>
NEW PLAN BENEFITS
Amended Stock Performance Incentive Plan
<TABLE>
<CAPTION>
LONG-TERM PERFORMANCE INCENTIVE PLAN (LTPIP)
TERMS
----------------------------------------------
NUMBER OF WEIGHTED NUMBER OF
SHARES AVERAGE NUMBER OF PERFORMANCE-
UNDERLYING EXERCISE NUMBER OF PHANTOM ACCELERATED
OPTIONS PRICE RESTRICTED PERFORMANCE RESTRICTED DOLLAR
NAME AND POSITION (#) PER SHARE ($) SHARES (#) SHARES (#)(1)(2) SHARES (#)(1)(2) VALUE ($)(3)
----------------- ---------- ------------- ---------- ---------------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Glen H. Hiner........... 105,000 40.61 16,500 29,500 0 -
Chairman and Chief
Executive Officer
Charles H. Dana......... 35,000 40.61 4,400 7,300 0 -
Executive Vice
President
David W. Devonshire..... 35,000 40.61 4,400 7,300 0 -
Senior Vice President
and Chief Financial
Officer
Christian L. Campbell... 29,500 40.45 3,700 5,700 0 -
Senior Vice President,
General Counsel and
Secretary
Efthimios O. Vidalis.... 30,000 41.13 3,500 7,300 0 -
Vice President and
President--Composites
Executive Group
(including Named
Executive Officers)
(12 people)............ 407,500 40.62 53,400 96,500 0 -
Non-Executive Officer
Employee Group......... 367,950 40.74 40,400 0 92,700 -
</TABLE>
- --------
(1) Awards to Mr. Hiner were pursuant to the Long-Term Performance Incentive
Plan terms which are the subject of Proposal 3 of the proxy statement;
awards to other participants were pursuant to generally less restrictive
Long-Term Performance Incentive Plan terms.
(2) Represents the aggregate award opportunity for the performance periods
ending December 31, 1997 and 1998 if there is no interruption in the
participant's employment and specified target levels of performance are
attained but not exceeded. If maximum levels of performance are attained
or exceeded, under the LTPIP the participant will earn 150% of the number
of shares shown in the table. If minimum levels of performance are not
attained, none of the shares will be earned by Mr. Hiner; awards to other
participants will be earned if there is no interruption in the
participant's employment within seven years after the close of the
performance period. Earned phantom performance shares will be paid in the
form of cash; if more than 100% of the performance-accelerated restricted
shares are earned, the excess over 100% will be satisfied through the
issuance of additional shares.
(3) The LTPIP awards shown are subject to substantial continued employment and
future performance contingencies, as noted above, and have no readily
ascertainable value unless and until those contingencies are satisfied.
23
<PAGE>
The additional number of shares that will be received by or allocated to any
person in the future, or that would have been received by or allocated to any
person if the amended SPIP, including the LTPIP, had been in effect throughout
the last completed fiscal year, is not determinable at the present time, as
all such determinations are to be made by the Committee in its sole
discretion.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal United States Federal
income tax consequences of awards under the amended SPIP and is based on
Federal income tax laws currently in effect. This summary does not purport to
be a complete description of such Federal income tax consequences, or to
describe state, local or foreign tax consequences.
Limitation on Corporate Deductions for Certain Executives' Compensation:
Under Section 162(m) of the Code, the amount which the company may deduct on
its tax returns for compensation paid to certain "covered employees"
(generally the chief executive officer and the four highest paid executive
officers other than the chief executive officer) in any taxable year is
generally limited to $1 million per individual. However, certain compensation,
including compensation that qualifies as "performance-based compensation", is
not subject to the $1 million deduction limit. As mentioned under
"Administration" above, the amendments authorize the Committee to grant awards
that qualify as "performance-based compensation" as well as awards that do
not. As a result, the company may not be entitled to any deduction mentioned
below if the individual in question is a "covered employee", the amount in
question does not qualify as "performance-based compensation", and the amount
in question, when added to the covered employee's other taxable compensation
that is not "performance-based" in the same taxable year, exceeds $1 million.
At the present time, the company anticipates that any stock options that are
granted under the amended SPIP will qualify as "performance based
compensation".
Effect of Change of Control: Under the golden parachute tax provisions of
the Code, if compensatory payments made to certain officers, employees and
shareholders, including the vesting of stock options, restricted shares and
stock bonus awards, are contingent, or are deemed to be contingent, on a
change in control of a publicly-traded corporation, and if the value of such
payments exceeds certain limits, the person who receives such payments may be
subject to a 20% excise tax on all or a portion of the payments, payable in
addition to ordinary income taxes, and the corporation may be denied a
deduction for the portion of the payments which is subject to such excise tax.
If a change in control of the company occurs, awards under the amended SPIP
that are deemed to be contingent on the change in control may be subject to
such excise tax, in whole or in part, and may be nondeductible by the company.
The tax summaries that follow do not reflect the potential application of
these Code provisions in the event of a change in control. If any payments to
cover excise taxes are made pursuant to the provisions described under "Change
of Control" above, all of such payments will be subject to such excise tax and
will be nondeductible by the company.
Stock Options: There are no Federal income tax consequences either to the
optionee or the company upon the grant of an ISO or a NQSO. If shares are
purchased under an ISO (i.e., an ISO is exercised) during employment or within
three months thereafter, the optionee will not recognize any income and the
company will not be entitled to a deduction in respect of the option exercise.
However, the excess of the fair market value of the shares on the date of such
exercise over the purchase price of the shares under the option will be
includible in the optionee's alternative minimum taxable income, which may
give rise to alternative minimum tax liability for the optionee in the year of
exercise. Generally, if the optionee disposes of shares purchased under an ISO
within two years of the date of grant or one year of the date of exercise of
the ISO, the optionee will recognize ordinary income, and the company will be
entitled to a deduction, equal to the excess of the fair market value of the
shares on the date of exercise (or, if less, the amount realized by the
optionee on the
24
<PAGE>
disposition of the shares) over the purchase price of such shares. Any gain
after the date on which the optionee purchased the shares will be treated as
capital gain to the optionee and will not be deductible by the company. If the
shares are disposed of after the two year and one year periods mentioned
above, the company will not be entitled to any deduction, and the entire gain
or loss realized by the optionee will be treated as capital gain or loss.
When shares are purchased under a NQSO, the excess of the fair market value
of the shares on the date of purchase over the purchase price of such shares
under the option will generally be taxable to the optionee as ordinary income
and deductible by the company. The disposition of shares purchased under a
NQSO will generally result in a capital gain or loss for the optionee, but
will have no tax consequences for the company.
Restricted Stock Awards: An employee to whom restricted stock is issued will
not recognize taxable income at the time the restricted stock is issued unless
the employee makes a special election in accordance with applicable Treasury
regulations to be taxed (at ordinary income rates) on the fair market value of
the shares at that time (with fair market value determined for this purpose
without regard to any restrictions other than restrictions, if any, which by
their terms will never lapse), in which case the company would be entitled to
a deduction at the same time equal to the amount of income realized by the
employee but would not be entitled to deduct any dividends thereafter paid on
the shares. Absent such an election, an employee who has been awarded
restricted stock will not recognize taxable income until the shares become
transferable or cease to be subject to a substantial risk of forfeiture, at
which time the recipient will recognize ordinary income and the company will
be entitled to a corresponding deduction equal to the excess of the fair
market value of the shares at that time over the amount (if any) paid by the
recipient for the shares. Dividends paid to the recipient on the restricted
stock prior to that time will be ordinary compensation income to the recipient
and deductible by the company.
Stock Bonus Awards: An employee who receives cash or shares of Owens Corning
common stock in payment of a stock award will generally recognize ordinary
income equal to the sum of the cash and the fair market value of the shares
received, and the company will generally be entitled to a corresponding
deduction from its income.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 2.
PROPOSAL 3. APPROVAL OF LONG-TERM PERFORMANCE INCENTIVE PLAN
As indicated in the previous proposal, under Section 162(m) of the Code, the
amount which Owens Corning may deduct on its tax returns for compensation paid
to certain "covered employees" (generally the chief executive officer and the
four highest paid executive officers other than the chief executive officer)
in any taxable year is generally limited to $1 million per individual.
However, compensation that qualifies as "performance-based compensation" is
not subject to the $1 million deduction limit. In order for compensation to
qualify as "performance-based" for this purpose, it must meet certain
conditions, one of which is that the material terms of the performance goal
under which the compensation is to be paid must be disclosed to and approved
by stockholders. The terms of the Long-Term Performance Incentive Plan
("LTPIP") that are set forth in Exhibit B to this Proxy Statement ("LTPIP
Terms") are being submitted to stockholders for approval so that any
compensation paid pursuant to those terms will qualify as "performance-based"
and be deductible by the company. The description of the LTPIP Terms that
follows is subject to and qualified by reference to the complete text of the
LTPIP Terms set forth in Exhibit B.
The Compensation Committee adopted the LTPIP Terms pursuant to its authority
to make awards under the amended SPIP and to prescribe rules and regulations
for the administration of the amended SPIP. Awards made pursuant to the LTPIP
Terms are governed by and charged against the limits set forth in the amended
SPIP, and are intended to qualify as "stock bonus awards" under the amended
25
<PAGE>
SPIP. The vesting and payment of any awards under the LTPIP Terms is
contingent on stockholder approval of the amendments to the SPIP described in
Proposal 2. In addition, payment of any award pursuant to the LTPIP Terms is
contingent on stockholder approval of this Proposal 3.
The persons who are eligible to be selected to participate in the LTPIP
Terms are employees of Owens Corning and its subsidiaries who are executive
officers of the company whose remuneration for any performance period covered
by the LTPIP Terms the Committee anticipates would not be deductible by the
company in whole or in part unless the remuneration qualifies as "performance-
based" under Section 162(m)(4)(C) of the Code, including members of the Board
of Directors who are such employees. At the present time, only one person, Mr.
Hiner, is eligible to be selected to participate. However, approximately 50
other officers of the company are eligible to be selected to receive similar
awards on Long-Term Performance Incentive Plan terms that are generally less
restrictive than the LTPIP Terms. Under the LTPIP Terms, the Committee selects
participants and determines the size of their awards.
Under the LTPIP Terms, participants are awarded the opportunity to receive
the cash value of up to a specified number of shares of Owens Corning common
stock after the close of a designated performance period if specified
performance objectives established by the Committee are attained during the
performance period and if there is no interruption of the participant's
employment during that period ("Phantom Performance Shares"). The cash value
of each Phantom Performance Share that is earned is equal to the fair market
value of a share of common stock on the date, after the close of the
performance period, when the Committee certifies that the performance goals
for that period have been satisfied. If the Committee so provides at the
beginning of a performance period, shares of Owens Corning common stock may be
issued in payment of the Phantom Performance Shares, in lieu of cash.
No later than 90 days after the commencement of each performance period (or
by such other deadline as may apply under Section 162(m)(4)(C) of the Code or
the Treasury regulations thereunder), the Committee will select participants
and establish in writing the performance goals for that performance period as
well as the method for computing the number of Phantom Performance Shares
which each participant in the LTPIP Terms will earn if such performance goals
are attained in whole or in part. Such method will be stated in terms of an
objective formula or standard that precludes discretion to increase the amount
that will be due upon attainment of the goals. Participants pay no cash
consideration for awards under the LTPIP Terms.
The first performance period under the LTPIP Terms commenced on July 1, 1995
and ends on December 31, 1997, and the second performance period commenced on
January 1, 1996 and ends on December 31, 1998. New performance periods of
three years' duration each will commence on January 1, 1997 and on each
subsequent anniversary of that date. An eligible employee may (but need not)
be selected to participate in each new performance period.
The maximum number of Phantom Performance Shares which any eligible
participant may be given the opportunity to earn under the LTPIP Terms in any
single performance period is 50,000 Phantom Performance Shares.
The performance goals for any performance period may be based on any of the
following criteria, either alone or in any combination, and on either a
consolidated or business unit level, as the Committee may determine: sales
growth, earnings per share growth, cash flow, cash flow from operations,
operating profit growth, net income growth, operating margin, net income
margin, return on net assets, return on total assets, return on common equity,
return on total capital, and total shareholder return. The foregoing terms
shall have any reasonable definitions that the Committee may specify, which
may include or exclude any or all of the following items, as the Committee may
specify: extraordinary, unusual or non-recurring items; effects of accounting
changes; effects of currency
26
<PAGE>
fluctuations; effects of financing activities (e.g., effect on earnings per
share of issuance of convertible debt securities); expenses for restructuring
or productivity initiatives; other non-operating items; spending for
acquisitions; effects of divestitures; and effects of asbestos activities and
settlements. Any of the foregoing criteria may apply to a participant's
Phantom Performance Shares in their entirety or to any designated portion of
the Phantom Performance Shares, as the Committee may specify. Unless the
Committee determines otherwise at any time prior to payment of any Phantom
Performance Shares, extraordinary items, such as capital gains and losses,
which affect any performance criterion applicable to the Phantom Performance
Shares will be either excluded or included in calculating the number of such
Shares that have been earned, whichever will produce the higher award. This
provision is included in the LTPIP Terms because awards may qualify as
"performance-based compensation" under Section 162(m) of the Code if the
Committee has discretion to reduce an award, but not if the Committee has
discretion to increase an award.
The performance goals that have been established by the Committee for the
first performance period are based on return on net assets ("RONA"), cash flow
from operations, and sales growth. The performance objectives for the second
performance period are based on RONA, earnings per share growth, and sales
growth. The portion of the Phantom Performance Shares that is based on sales
growth will be earned only if the minimum RONA goal is also attained.
Under the LTPIP Terms, any award may be paid only if and to the extent it is
earned on account of the attainment of the performance goals applicable to
such award (including continued employment during the performance period). The
only exceptions to this rule apply if employment terminates by reason of death
or disability during a performance period, in which case a prorated award will
be paid after the close of the performance period, or if a Change of Control
(as defined in the amended SPIP) occurs during a performance period, in which
case the maximum award may be paid. If a participant's employment terminates
for any reason other than death or disability during a performance period, any
outstanding award previously granted to the participant for such performance
period will be forfeited. However, a prorated award may also be paid after the
performance period if employment terminates by retirement during the
performance period, but only if such a payment will not prevent awards from
qualifying as "performance-based" compensation in the absence of any
termination of employment. Under the LTPIP Terms, the Committee may not
increase the amount of compensation payable in respect of an award upon
attainment of the performance goals.
The Committee may amend or terminate the LTPIP Terms without stockholder
approval at any time. However, as noted above, the LTPIP Terms are in all
events governed by and subject to the terms and conditions of the amended
SPIP, which, as indicated in Proposal 2 above, may be amended only by the
Board of Directors or by the Board and the stockholders.
Awards that have been made to date pursuant to the LTPIP Terms are included
in the "New Plan Benefits" table that appears on page 23 of this proxy
statement. Awards that were made during 1995, for the first performance
period, also are included in the "Long-Term Incentive Plans" table that
appears on page 15 of this proxy statement. The additional number of Phantom
Performance Shares that will be received by or allocated to any person in the
future, or that would have been received by or allocated to any person if the
LTPIP Terms, including the amended SPIP, had been in effect throughout the
last completed fiscal year, is not determinable at the present time, as all
such determinations are to be made by the Committee in its sole discretion.
The LTPIP Terms will be approved if they receive the affirmative vote of the
holders of a majority of the common stock represented in person or by proxy
and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 3.
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PROPOSAL 4. APPROVAL OF CORPORATE INCENTIVE PLAN
As indicated in the two previous proposals, under Section 162(m) of the
Code, the amount which Owens Corning may deduct on its tax returns for
compensation paid to certain "covered employees" (generally the chief
executive officer and the four highest paid executive officers other than the
chief executive officer) in any taxable year is generally limited to $1
million per individual. However, compensation that qualifies as "performance-
based compensation" is not subject to the $1 million deduction limit. In order
for compensation to qualify as "performance-based" for this purpose, it must
meet certain conditions, one of which is that the material terms of the
performance goal under which the compensation is to be paid must be disclosed
to and approved by stockholders. The terms of the Corporate Incentive Plan
("CIP") that are set forth in Exhibit C to this Proxy Statement ("CIP Terms")
are being submitted to stockholders for approval so that any compensation paid
pursuant to those terms will qualify as "performance-based" and be deductible
by the company. The description of the CIP Terms that follows is subject to
and qualified by reference to the complete text of the CIP Terms set forth in
Exhibit C.
Payment of any awards pursuant to the CIP Terms is contingent on stockholder
approval of this Proposal 4. If such approval is not obtained, no awards will
be paid under the CIP Terms.
The persons who are eligible to be selected to participate in the CIP Terms
are employees of Owens Corning and its subsidiaries who are executive officers
of the company whose annual incentive compensation for any taxable year of the
company commencing on or after January 1, 1995 the Committee anticipates would
not be deductible by the company in whole or in part unless the incentive
compensation qualifies as "performance-based" under Section 162(m)(4)(C) of
the Code, including members of the Board of Directors who are such employees.
At the present time, only one person, Mr. Hiner, is eligible to be selected to
participate. However, approximately 1,100 other officers and employees of the
company are eligible to be selected to participate in similar annual incentive
compensation arrangements on Corporate Incentive Plan terms that are generally
less restrictive than the CIP Terms. Under the CIP Terms, the Committee
selects participants and determines the amount of their award opportunities.
Under the CIP Terms, participants are awarded the opportunity to receive
specified payments after the close of each taxable year if specified
performance objectives established by the Committee are attained during the
year and if there is no interruption of the participant's employment during
that year. Unless the Committee provides otherwise, all payments pursuant to
the CIP Terms are to be made in cash when the Committee certifies that the
performance goals for the year have been satisfied. However, the Committee may
provide for the payments to be deferred and/or paid in the form of shares of
Owens Corning common stock.
No later than 90 days after the commencement of each year commencing on or
after January 1, 1995 (or by such other deadline as may apply under Section
162(m)(4)(C) of the Code or the Treasury regulations thereunder), the
Committee will select the persons who will participate in the CIP Terms in
such year and establish in writing the performance goals for that year as well
as the method for computing the amount of compensation which each such
participant will be paid if such performance goals are attained in whole or in
part. Such method will be stated in terms of an objective formula or standard
that precludes discretion to increase the amount that will be due upon
attainment of the goals. Participants pay no cash consideration for awards
under the CIP Terms, except par value of any shares of common stock awarded.
The CIP Terms apply to the year commencing January 1, 1995 and they will
continue to apply to subsequent years unless and until terminated by the
Committee in accordance with the provisions of the CIP Terms. An eligible
employee may (but need not) be selected to participate each year.
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The maximum dollar amount that may be paid to any participant under the CIP
Terms for any year is equal to 200% of the participant's annual rate of salary
at the time the Committee establishes the performance goal for the year or, if
later, on January 1 of the year. The maximum dollar amount that may be paid
under the CIP Terms is reduced by the amount of any annual incentive
compensation to which the participant is contractually entitled for the year
and may not exceed $1.9 million.
Under the CIP Terms, the performance goals for any year may be based on any
of the following criteria, either alone or in any combination, and on either a
consolidated or business unit level, as the Committee may determine: sales,
net asset turnover, earnings per share, cash flow, cash flow from operations,
operating profit, net income, operating margin, net income margin, return on
net assets, return on total assets, return on common equity, return on total
capital, and total shareholder return. The foregoing terms shall have any
reasonable definitions that the Committee may specify, which may include or
exclude any or all of the following items, as the Committee may specify:
extraordinary, unusual or non-recurring items; effects of accounting changes;
effects of currency fluctuations; effects of financing activities (e.g.,
effect on earnings per share of issuance of convertible debt securities);
expenses for restructuring or productivity initiatives; other non-operating
items; spending for acquisitions; effects of divestitures; and effects of
asbestos activities and settlements. Any of the foregoing criteria may apply
to a participant's award opportunity for any year in its entirety or to any
designated portion of the award opportunity, as the Committee may specify.
Unless the Committee determines otherwise at any time prior to payment of a
participant's award under the CIP Terms for any year, extraordinary items,
such as capital gains and losses, which affect any performance criterion
applicable to the award will be either excluded or included in calculating the
award earned, whichever will produce the higher award. This provision is
included in the CIP Terms because awards may qualify as "performance-based
compensation" under Section 162(m) of the Code if the Committee has discretion
to reduce an award, but not if the Committee has discretion to increase an
award.
The performance goals that were established by the Committee for 1995 were
based on sales, cash flow, and earnings per share. The performance goals that
the Committee has established for 1996 are also based on those criteria.
Awards may be paid under the CIP Terms for any year only if and to the
extent the awards are earned on account of the attainment of the performance
goals applicable to such year (including continued employment during the
year). The only exceptions to this rule apply if employment terminates by
reason of death or disability during a year, in which case a prorated award
may be paid, or if a Change of Control (as defined in the amended SPIP) occurs
during a year, in which case an award equal to one half of the participant's
participating salary (as determined by the Committee) or, if higher, an award
based on projected performance will be paid. If a participant's employment
terminates for any reason other than death or disability during a year, any
award for such year will be forfeited. However, a prorated award may also be
paid after the year if employment terminates by retirement during the year,
but only if such a payment will not prevent awards from qualifying as
"performance-based" compensation in the absence of any termination of
employment. The Committee may not increase the amount of compensation payable
under the CIP Terms upon attainment of the performance goals.
The Committee may amend or terminate the CIP Terms without stockholder
approval at any time.
The following table sets forth the award that will be paid pursuant to the
CIP Terms for 1995, as well as the award that will be paid pursuant to the CIP
Terms in 1997 if the target performance goals established by the Committee for
1996 are attained and there is no interruption of Mr. Hiner's
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employment during that year. These awards are payable only if stockholders
approve this Proposal 4.
NEW PLAN BENEFITS
CIP Terms
<TABLE>
<CAPTION>
DOLLAR VALUE ($)
-----------------------
1996 TARGET
1995 AWARD
NAME AND POSITION AWARD OPPORTUNITY
- ----------------- ----------- -----------
<S> <C> <C>
Glen H. Hiner, Chairman and Chief Executive Officer..... $1,400,000* $764,400**
Executive Group (1 person).............................. $1,400,000* $764,400**
</TABLE>
- --------
*Represents the award earned for plan year 1995. Under the CIP Terms, the
amount payable will be reduced by $1,064,700, the amount to which Mr. Hiner
is contractually entitled pursuant to his employment agreement. These
amounts are reflected in the Summary Compensation Table that appears on
page 13 of this proxy statement.
**Represents the target award opportunity for plan year 1996 based upon Mr.
Hiner's current salary if there is no interruption in Mr. Hiner's
employment and specified target levels of performance are attained but not
exceeded. If maximum levels of performance are attained or exceeded, Mr.
Hiner's opportunity will equal 200% of the amount shown in the table. If
minimum levels of performance are not attained, none of the amount shown in
the table will be earned. Amounts earned are subject to reduction at the
discretion of the Compensation Committee and are also reduced by the amount
of any annual incentive compensation to which Mr. Hiner may be
contractually entitled pursuant to his employment agreement.
Any other amounts that will be received by or allocated to any person in the
future pursuant to the CIP Terms are not determinable at the present time, as
all such determinations are to be made by the Committee in its sole
discretion, subject to the provisions of the CIP Terms.
The CIP Terms will be approved if they receive the affirmative vote of the
holders of a majority of the common stock represented in person or by proxy
and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 4.
PROPOSAL 5. APPROVAL OF THE ACTION OF THE BOARD OF DIRECTORS IN SELECTING
ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors upon the recommendation of the Audit Committee has
selected the firm of Arthur Andersen LLP as independent public accountants for
Owens Corning for the year 1996. That firm has acted as independent public
accountants for Owens Corning since 1938. If the stockholders do not approve
this selection, the Board of Directors will select and employ some other firm
of well-known independent public accountants for 1996.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting. They will have an opportunity to make a statement if they
desire to do so and are expected to be available to respond to stockholders'
questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 5.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than those mentioned above. However, if other matters
come before the meeting, it is intended that the holders of the proxies will
vote on them in their discretion.
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STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
In order to be considered for inclusion in Owens Corning's proxy statement
and form of proxy relating to the 1997 annual meeting of stockholders, a
stockholder proposal must be received by the Secretary of Owens Corning at
Owens Corning World Headquarters, Toledo, Ohio 43659 on or before November 21,
1996. The Corporate Governance Committee will consider nominees for the Board
recommended by stockholders. Any stockholder desiring to recommend a nominee
should write to the Secretary of Owens Corning at the address shown above.
ANNUAL REPORT
An annual report including financial statements for the year ended December
31, 1995 has been mailed to all stockholders of record as of February 21,
1996, the Record Date for the Annual Meeting.
FORM 10-K REPORT
OWENS CORNING WILL PROVIDE WITHOUT CHARGE TO ANY PERSON WHO WAS A BENEFICIAL
OWNER OF COMMON STOCK ON FEBRUARY 21, 1996 A COPY OF OWENS CORNING'S ANNUAL
REPORT ON FORM 10-K FOR 1995, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. REQUESTS SHOULD BE ADDRESSED TO CUSTOMER SERVICE, OWENS CORNING,
DOCUMENT CENTER 3, 801 WASHINGTON, TOLEDO, OHIO 43624-1905.
SOLICITATION OF PROXIES
Proxies will be solicited on behalf of the Board of Directors by mail,
telephone, or in person. Solicitation costs will be paid by Owens Corning.
Copies of proxy material and of the 1995 Annual Report will be supplied to
banks, brokerage houses and other custodians, nominees and fiduciaries for the
purpose of soliciting proxies from beneficial owners. Owens Corning will
reimburse such parties for their reasonable expenses in this effort.
Owens Corning has employed Georgeson & Co., Inc. to assist in soliciting
proxies at a fee of $15,000, plus distribution costs and other expenses.
VOTING PROCEDURES
The holders of a majority of shares entitled to vote at the Annual Meeting
must be present in person or represented by proxy in order to constitute a
quorum. All shares represented by duly executed proxies will be voted for the
election of the nominees named in Proposal 1 as directors unless authority to
vote for the proposed slate of directors or any individual director has been
withheld. If for any unforeseen reason any of such nominees should not be
available as a candidate for director, the proxies will be voted in accordance
with the authority conferred in the proxy for such other candidate or
candidates as may be nominated by the Board of Directors. With respect to
Proposals 2 through 5, all such shares will be voted for or against, or not
voted, as specified on each proxy. If no choice is indicated, a proxy will be
voted for each such proposal. Broker non-votes will have no effect on the
outcome of Proposals 1 through 5. Abstentions will have no effect on Proposals
1 and 5 but will have the same effect as votes against with respect to
Proposals 2 through 4.
VOTING SECURITIES
Stockholders of record at the close of business on February 21, 1996 will be
eligible to vote at the Annual Meeting. The voting securities of Owens Corning
consist of its $0.10 par value common stock, of which 51,417,297 shares were
outstanding on the Record Date. Each share outstanding on the Record Date will
be entitled to one vote.
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EXHIBIT (A)
OWENS-CORNING FIBERGLAS CORPORATION
STOCK PERFORMANCE INCENTIVE PLAN
(AS AMENDED ON JUNE 15, 1995)
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1 Establishment of the Plan. Owens-Corning Fiberglas Corporation, a
Delaware corporation (hereinafter referred to as the "Company"), hereby
establishes an incentive compensation plan to be known as the "Owens-Corning
Fiberglas Corporation Stock Performance Incentive Plan" (such Plan as amended
from time to time being hereinafter referred to as the "Plan"), as set forth
in this document. The Plan permits the grant of Nonqualified Stock Options,
Incentive Stock Options, and Stock Bonuses (including Phantom Stock Bonuses
and Restricted Stock).
The Board of Directors of the Company approved the Plan on January 23, 1992,
subject to ratification by an affirmative vote of a majority of Shares of
Common Stock present and entitled to vote at the 1992 Annual Stockholders
Meeting. Following such ratification, the Plan became effective May 1, 1992
(the "Effective Date"). The Board of Directors of the Company thereafter
amended the Plan on June 15, 1995, subject to stockholder approval of the
amendments at the 1996 Annual Stockholders Meeting. Provided such approval is
obtained, the Plan as so amended is effective as of June 15, 1995, and shall
remain in effect as provided in Section 1.3 herein.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the success
and enhance the value of the Company by linking the personal interests of
Participants to those of Company stockholders. The Plan is further intended to
provide flexibility to the Company in its ability to motivate, attract, and
retain the services of Participants upon whose judgment, interest, and special
effort the successful conduct of its operation largely is dependent.
1.3 Duration of the Plan. The Plan shall commence on the Effective Date, as
described in Section 1.1 herein, and shall remain in effect, subject to the
right of the Board of Directors to terminate the Plan at any time pursuant to
Article 9 herein, until all Shares subject to it shall have been purchased or
acquired according to the Plan's provisions. However, in no event may an Award
be granted under the Plan on or after the tenth anniversary of the Plan's
Effective Date.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
2.1 Definitions. Whenever used in the Plan, the following terms shall have
the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
(a) "Affiliates" means any corporation (other than a Subsidiary),
partnership, joint venture, or any other entity in which the Company owns,
directly or indirectly, at least a ten percent (10%) Beneficial Ownership
interest.
(b) "Award" means, individually or collectively, a grant under this Plan
of Nonqualified Stock Options, Incentive Stock Options or Stock Bonuses
(including Phantom Stock Bonuses and Restricted Stock).
(c) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
(d) "Board" or "Board of Directors" means the Board of Directors of
Owens-Corning Fiberglas Corporation.
(e) "Cause" means a felony conviction of a Participant or the failure of
a Participant to contest prosecution for a felony, or a Participant's
willful misconduct or dishonesty, any of which
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is directly and materially harmful to the business or reputation of the
Company, including any Subsidiary, Parent, or Affiliate.
(f) "Change of Control" of the Company shall be deemed to have occurred
as of the first day any one or more of the following conditions shall have
been satisfied:
(i) Any Person (other than the Company, any Company employee benefit
plan (including its trustee), any Person acting on behalf of the
Company in a distribution of stock to the public, or any entity owned
directly or indirectly by the stockholders (immediately prior to such
transaction) of the Company in substantially the same proportions as
their ownership of the Company) is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing
fifteen percent (15%) or more of the combined voting power of the then
outstanding securities of the Company entitled to vote generally in the
election of Directors; or
(ii) The occurrence of any transaction or event relating to the
Company that is required to be reported in response to the requirements
of Item 5(f) of Schedule 13E-3 of Regulation 13A of the Exchange Act;
or
(iii) When, during any period of two (2) consecutive years during the
existence of the Plan, the individuals who, at the beginning of such
period, constitute the Board of Directors of the Company, cease for any
reason other than death to constitute at least a majority thereof,
unless each Director who was not a Director at the beginning of such
period was elected by, or on the recommendation of, at least two-thirds
( 2/3rds) of the Directors at the beginning of such period, provided
that any Director elected by or on the recommendation of at least two-
thirds ( 2/3rds) of the Directors at the beginning of any such two (2)
year period shall be treated as if he or she had been a Director at the
beginning of such period; or
(iv) The occurrence of a transaction requiring stockholder approval
for the acquisition of the Company by an entity other than the Company
or a Subsidiary through purchase of assets, or by merger, or otherwise.
(g) "Change-of-Control Price" means the highest price per Share of
Company Common Stock paid in any transaction reported on the New York Stock
Exchange Composite Tape, or paid in any transaction related to a Potential
or actual Change of Control of the Company at any time during the preceding
sixty (60) calendar day period, as determined by the Committee.
(h) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(i) "Committee" means the committee of two (2) or more Directors
appointed by the Board to administer the Plan, as further provided in
Article 3 herein. When used herein, "Committee" shall also include any
person or persons to whom the Committee's authority has been lawfully
delegated pursuant to Article 3.
(j) "Company" means Owens-Corning Fiberglas Corporation, a Delaware
corporation, and any successor thereto as provided in Article 14 herein.
(k) "Director" means any individual who is a member of the Board of
Directors of the Company.
(l) "Disability" or "Disabled" means disability as determined under the
long-term disability program of the Company, a Subsidiary or Affiliate
applicable to the Employee.
(m) "Employee" means any employee of the Company or a Subsidiary,
including part time employees and employees who are represented by a
collective bargaining agent with respect to such employment.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor Act thereto.
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(o) "Fair Market Value" means, as of any given date, (i) with respect to
Incentive Stock Options, the closing sale price of the Stock on such date
on the New York Stock Exchange Composite Tape; and (ii) with respect to
Nonqualified Stock Options and any other Awards under the Plan not related
to Incentive Stock Options, the closing sale price of the Stock on such
date on the New York Stock Exchange Composite Tape, or, if (and only if)
the Committee in its discretion so specifies, the average on such date of
the closing price of the Stock on each day on which the Stock is traded
over a period of up to 20 trading days immediately prior to such date.
However, if the foregoing method of determining Fair Market Value is not
consistent with any then applicable regulations of the U.S. Secretary of
the Treasury, then Fair Market Value shall be determined in accordance with
those regulations.
(p) "Incentive Stock Options" or "ISO" means an option to purchase
Shares, granted under Article 6 herein, which the Committee designates as
an Incentive Stock Option and is intended by the Committee to qualify for
the tax treatment applicable to incentive stock options under Section 422
of the Code.
(q) "Insider" shall mean an Employee whose transactions in equity
securities of the Company are, at the time an Award is made under this
Plan, subject to Section 16 of the Exchange Act.
(r) "Nonqualified Stock Option" or "NQSO" means an option to purchase
Shares, granted under Article 6 herein, which is not intended by the
Committee to qualify for the tax treatment applicable to incentive stock
options under Section 422 of the Code.
(s) "Option" or "Stock Option" means an Incentive Stock Option or a
Nonqualified Stock Option granted under Article 6 herein.
(t) "Option Price" means the price at which a Share may be purchased by a
Participant pursuant to an Option, as determined by the Committee, and as
further described in Section 6.3 herein.
(u) "Parent" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Exchange Act.
(v) "Participant" means a current or former eligible Employee who has
outstanding an Award granted under the Plan.
(w) "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock is limited in some way (based on the passage of
time, the achievement of performance goals, or upon the occurrence of other
events as determined by the Committee, at its discretion), and the Shares
are subject to a substantial risk of forfeiture, as provided in Article 7
herein.
(x) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d)(3) and 14(d)(2)
thereof, including a "group" as defined in Section 13(d).
(y) "Phantom Stock Bonus Award" means an amount of cash that is
determined by reference to the Fair Market Value of a designated number of
Shares, which is paid to an Employee or which the Committee agrees to pay
to an Employee in the future in lieu of, or as a supplement to, any other
compensation that may have been earned by services rendered prior to the
payment date, subject to such terms and conditions (if any) as the
Committee may impose. Phantom Stock Bonus Awards are a specific type of
Stock Bonus Award.
(z) "Potential Change of Control" of the Company shall mean the
occurrence of one or more of the following:
(i) The entering into an agreement by the Company, the consummation
of which would result in a Change of Control; or
(ii) The acquisition of Beneficial Ownership, directly or indirectly,
by any Person (other than the Company, any Company employee benefit
plan (including its trustee), any Person
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acting on behalf of the Company in a distribution of stock to the
public, or any entity owned directly or indirectly by the stockholders
(immediately prior to the acquisition) of the Company in substantially
the same proportions as their ownership of the Company) of securities
of the Company representing five percent (5%) or more of the combined
voting power of the Company's then outstanding securities, and the
adoption by the Board of Directors of a resolution to the effect that a
Potential Change of Control of the Company has occurred for purposes of
this Plan.
(aa) "Restricted Stock" means an Award granted to a Participant pursuant
to Article 7 herein.
(bb) "Retirement" means termination of employment with the Company, its
Subsidiaries and Affiliates at or after attainment of age 55 with a vested
retirement benefit under a pension plan of the Company, a Subsidiary or
Affiliate.
(cc) "Share(s)" or "Stock" means the Shares of common stock, $0.10 par
value, of Owens-Corning Fiberglas Corporation.
(dd) "Stock Bonus Award" means Shares, or an amount of cash that is
determined by reference to the Fair Market Value of Shares, which is
distributed or paid to an Employee or which the Committee agrees to
distribute or pay in the future in lieu of, or as a supplement to, any
other compensation that may have been earned by services rendered prior to
the distribution or payment date, subject to such terms and conditions (if
any) as the Committee may impose. The amount of any Stock Bonus Award
payable in Shares may but need not be determined by reference to the Fair
Market Value of Stock. Phantom Stock Bonus Awards and Restricted Stock
Awards are specific types of Stock Bonus Awards.
(ee) "Subsidiary" means any corporation in which the Company owns,
directly or indirectly, at least fifty percent (50%) of the total combined
voting power of all classes of stock, or any other entity (including, but
not limited to, partnerships and joint ventures) in which the Company owns
at least fifty percent (50%) of the combined equity thereof.
(ff) "Year" or "Plan Year" means each consecutive twelve (12) month
period beginning January 1 and ending December 31.
2.2 Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.
2.3 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
ARTICLE 3. ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the Compensation
Committee of the Board, or by any other Committee appointed by the Board
consisting of not less than two (2) Directors who are not Employees. Unless
the Board determines otherwise, the Committee shall be comprised exclusively
of Directors who are not Employees and who (i) qualify to administer the Plan
under Rule 16b-3 under the Exchange Act as such Rule may be in effect from
time to time ("SEC Rule 16b-3"), and (ii) are "outside directors" within the
meaning of Section 162(m)(4)(C) of the Code. The members of the Committee
shall be appointed from time to time by, and shall serve at the discretion of,
the Board of Directors.
3.2 Authority of the Committee. The Committee shall have full power, subject
to the provisions herein, to select Employees to whom Awards are granted; to
determine the size, types, and frequency of Awards granted hereunder; to
determine the terms and conditions of such Awards in a manner consistent with
the Plan; to establish and administer any performance goals applicable to
awards
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hereunder and to certify that any such goals are attained; to construe and
interpret the Plan and any agreement or instrument entered into under the
Plan; to establish, amend, or waive rules and regulations for the Plan's
administration; and to amend the terms and conditions of any outstanding Award
to the extent such terms and conditions are within the discretion of the
Committee as provided in the Plan. Further, the Committee shall make all other
determinations which may be necessary or advisable for the administration of
the Plan. To the extent permitted by law, and to the extent allowable by SEC
Rule 16b-3, the Committee may delegate its authorities as identified
hereunder.
3.3 Rule 16b-3 Requirements; Code Section 162(m). Any provision of the Plan
to the contrary notwithstanding: (i) the Committee may impose such conditions
on any Award as it may determine, on the advice of counsel, are necessary or
desirable to satisfy any exemption from Section 16 of the Exchange Act for
which the Company intends transactions by Insiders to qualify, including
without limitation SEC Rule 16b-3; (ii) transactions by or with respect to
Insiders shall comply with any applicable conditions of SEC Rule 16b-3 unless
the Committee determines otherwise; (iii) transactions with respect to persons
whose remuneration would not be deductible by the Company but for compliance
with the provisions of Section 162(m)(4)(C) of the Code shall conform to the
requirements of Section 162(m)(4)(C) of the Code unless the Committee
determines otherwise; (iv) the Plan is intended to give the Committee the
authority to grant awards that qualify as performance-based compensation under
Code Section 162(m)(4)(C) as well as awards that do not so qualify; and (v)
any provision of the Plan that would prevent the Committee from exercising the
authority referred to in clause (iv) above or that would prevent an award that
the Committee intends to qualify as performance-based compensation under Code
Section 162(m)(4)(C) from so qualifying or that would prevent any transaction
by or with respect to an Insider from complying with any applicable condition
of SEC Rule 16b-3 with which the Committee intends such transaction to comply,
or that would prevent any transaction by or with respect to an Insider from
qualifying for any exemption from Section 16 of the Exchange Act for which the
Company intends such transaction to qualify (including SEC Rule 16b-3), shall
be administered, interpreted and construed to carry out such intention and any
provision that cannot be so administered, interpreted and construed shall to
that extent be disregarded.
3.4 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders or
resolutions of the Board of Directors shall be final, conclusive, and binding
on all persons, including the Company, its stockholders, Employees,
Participants, and their estates and beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.2
herein, the total number of Shares available for grant under the Plan in each
calendar year, during any part of which the Plan is effective, shall be two
percent (2%) of the total outstanding Shares as of the first day of such
calendar year; provided, however, that Shares not granted in any calendar year
may be carried forward and granted in any of the three immediately subsequent
calendar years (in addition to the new Shares made available in those years).
The maximum number of Shares with respect to which Options may be granted to
any Employee in any calendar year shall be twenty-five percent (25%) of the
total number of Shares available for grant under the Plan in such calendar
year.
No more than 500,000 Shares may be issued or transferred pursuant to
Incentive Stock Options granted under this Plan. No more than one-half percent
(.5%) of the total outstanding Shares as of the first day of any calendar year
may be granted in that year in the form of Stock Bonuses (including Phantom
Stock Bonuses and Restricted Stock). However, unused Shares carried forward
from previous years shall retain their character such that this one-half
percent (.5%) limitation shall increase in direct relationship to those unused
Shares reserved for Stock Bonuses in the prior three years.
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The Company may increase the Shares available for Awards in any calendar
year through an advance of up to twenty-five percent (25%) of the subsequent
year's allocation (determined by using twenty-five percent (25%) of the
current year's allocation), with such Shares retaining their character as to
Stock Bonus grant availability. Any Shares granted hereunder may consist, in
whole, or in part, of authorized and unissued Shares or Treasury Shares or
Shares purchased in the open market or in private transactions for purposes of
the Plan.
4.2 Adjustments in Authorized Shares. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation,
stock dividend, stock split, Share combination, or other change in the
corporate structure of the Company affecting the Shares, a substitution or
adjustment shall be made in the number and class of Shares which may be
delivered under the Plan, and in the number and class of and/or price of
Shares subject to outstanding Options and Stock Bonus awards (including any
Restricted Stock granted hereunder), as may be determined to be appropriate
and equitable by the Committee, in its sole discretion, to prevent dilution or
enlargement of rights; and further provided that the number of Shares subject
to any Award shall always be a whole number.
4.3 Charging of Shares. If any Shares subject to an Award or, in the case of
a Phantom Stock Bonus Award, the cash value of any Shares on which such Award
is based, shall not be issued, transferred or paid to an Employee and shall
cease to be issuable, transferable or payable to an Employee because of the
termination, expiration or cancellation, in whole or in part, of such Award or
for any other reason, or if any such Shares shall, after issuance or transfer,
be reacquired by the Company because of an Employee's failure to comply with
or satisfy the terms and conditions of an Award, the Shares not so issuable or
transferable or, in the case of a Phantom Stock Bonus Award, the Shares the
cash value of which has ceased to be payable, or the Shares so reacquired by
the Company, as the case may be, shall no longer be charged against the
limitations provided for in section 4.1 above, may again be made subject to
Awards, and shall be added to the number of Shares available for grant under
the Plan in the calendar year in which the Shares cease to be issuable or
transferable, the cash value ceases to be payable or the Shares are reacquired
(as the case may be).
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 Eligibility. All Employees shall be eligible to be selected to
participate in this Plan, including Employees who are Directors but excluding
Directors who are not Employees.
5.2 Actual Participation. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Employees, those to
whom Awards shall be granted and shall determine the nature and amount of each
Award. Awards may be made on a stand-alone basis or in conjunction with other
Awards hereunder. Except as provided otherwise in Section 6.1 below, the grant
of any award may be effective on the date on which the Committee acts to grant
the award or on any earlier or subsequent date specified by the Committee, and
the effective date specified by the Committee shall be considered the date of
grant of the award for all purposes of this Plan.
ARTICLE 6. STOCK OPTIONS
6.1 Grant of Options. Subject to the terms and provisions of the Plan, the
Committee may grant Options under this Plan to eligible Employees at any time
and from time to time, whether or not they are eligible to receive similar or
dissimilar incentive compensation under any other plan or arrangement of the
Company. Options may be granted in the form of ISOs, NQSOs or a combination
thereof. Nothing in this Article 6 shall be deemed to prevent the grant of
NQSOs in excess of the maximum established by Section 422 of the Code. The
grant of any option may be effective on the
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date on which the Committee acts to grant the option or on any subsequent date
specified by the Committee, and the effective date specified by the Committee
shall be considered the date of grant of the option for all purposes of this
Plan.
6.2 Options to be in Writing. Each Option grant shall be evidenced in a
writing signed by a representative of the Company duly authorized to do so,
that shall specify or incorporate by reference the Option Price, the duration
of the Option, the number of Shares to which the Option pertains, and such
other provisions as are provided hereunder and any other terms and conditions
that may be imposed by the Committee. The Option instrument also shall specify
whether the Option is an Incentive Stock Option or a Nonqualified Stock
Option.
6.3 Option Price. In no case shall the Option Price of any Option granted
under this Plan be less than one hundred percent (100%) of the Fair Market
Value of a Share on the date the Option is granted.
6.4 Duration of Options. Each Option shall expire at such time as determined
at the time of grant; provided, however, that no Option shall be exercisable
later than the tenth (10th) anniversary date of its grant.
6.5 Exercise of Options. Options granted under the Plan shall be exercisable
at such times and be subject to such restrictions, terms and conditions as the
Committee shall in each instance approve, which need not be the same for each
grant or for each Participant. However, except as provided in Article 8
herein, in no event may any Option granted under this Plan become exercisable
prior to six (6) months following the date of its grant.
Options shall be exercised by the delivery of a written notice of exercise
to the Company, or by giving the Company notice of such exercise by such other
means as the Company may permit in accordance with applicable law, setting
forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment.
The Option Price upon exercise of any Option shall be payable to the Company
in full either: (a) in cash or its equivalent; or (b) by tendering previously
acquired Shares having a Fair Market Value at the time of exercise equal to
the total Option Price (provided that the Shares which are tendered must have
been held by the Participant for at least six (6) months prior to their tender
or for such other period of time, if any, as the Committee may direct); or (c)
by a combination of (a) and (b).
The Option Price shall also be deemed fully paid if and when the Company
receives documentation that it determines satisfies the cashless exercise
provisions of the Federal Reserve Board's Regulation T, or when the Option
Price is paid by any other means which the Committee determines to be
consistent with the Plan's purpose and applicable law.
As soon as practicable after receipt of notification of exercise acceptable
to the Company and full payment (including tax withholding requirements, if
any, as further provided in Article 12 herein), the Company shall deliver to
the Participant, in the Participant's name, in the name of the Participant and
another person as joint tenants with rights of survivorship, or in nominee or
street name on behalf of the Participant (as the Participant may direct and
the Committee may permit) Share certificates in an appropriate amount based
upon the number of Shares purchased under the Option(s).
6.6 Restrictions. At the time of grant, restrictions may be imposed on any
Shares acquired pursuant to the exercise of an Option under the Plan,
including, without limitation, restrictions under applicable Federal
securities laws, under the requirements of any stock exchange or market upon
which such Shares are then listed and/or traded, and under any blue sky or
state securities laws applicable to such Shares.
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6.7 Termination of Employment Due to Death, Disability, or Retirement.
(a) Termination by Death. In the event the employment of a participant with
the Company and its Subsidiaries is terminated by reason of death, any
outstanding Options may thereafter be immediately exercised, to the extent
then exercisable (or on such accelerated basis as the Committee shall
determine at or after grant), by the legal representative of the estate or by
the legatee of the optionee under the will of the optionee, for a period of
three years and six months (or such shorter period as the Committee shall
specify at or after grant) from the date of such death or until the expiration
of the stated term of such Option, whichever period is shorter.
(b) Termination by Disability. If a Participant's employment with the
Company and its Subsidiaries terminates by reason of Disability, any Stock
Option held by such Participant may thereafter be exercised, to the extent it
was exercisable at the time of termination due to Disability (or on such
accelerated basis as the Committee shall determine at or after grant), but may
not be exercised after (i) three years and six months (or such shorter period
as the Committee shall specify at or after grant) from the date of such
termination of employment, or (ii) the expiration of the stated term of such
Stock Option, whichever period is shorter; provided, however, that, if the
Participant dies within such three-year-and-six-month period (or such shorter
period as the Committee shall specify at or after grant), any unexercised
Stock Option held by such Participant shall thereafter be exercisable to the
extent to which it was exercisable at the time of death for a period of twelve
months (or such shorter period as the Committee shall specify at or after
grant) from the date of such death or for the stated term of such Stock
Option, whichever period is shorter. If an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of
Section 422 of the Code, such Stock Option shall thereafter be treated as a
Nonqualified Stock Option.
(c) Termination by Retirement. If a Participant's employment with the
Company and its Subsidiaries is terminated by reason of Retirement, any Stock
Option held by such Participant may thereafter be exercised to the extent it
was exercisable at the time of such Retirement (or on such accelerated basis
as the Committee shall determine at or after grant), but may not be exercised
after five years (or such shorter period as the Committee shall specify at or
after grant) from the date of such termination of employment or the expiration
of the stated term of such Stock Option, whichever period is shorter;
provided, however, that, if the Participant dies within such five year period
(or such shorter period as the Committee may specify at or after grant), any
unexercised Stock Option held by such Participant shall thereafter be
exercisable, to the extent to which it was exercisable at the time of death,
for the shorter of (i) and (ii) where (i) is a period of twelve months (or
such shorter period as the Committee shall specify at or after grant) from the
date of such death or, if longer, the remainder of such five year (or shorter)
period from the date of such termination of employment, and (ii) is the
expiration of the stated term of the Stock Option. In the event of termination
of employment by reason of Retirement, if an Incentive Stock Option is
exercised after the expiration of the exercise periods that apply for purposes
of Section 422 of the Code, such Stock Option shall thereafter be treated as a
Nonqualified Stock Option.
6.8 Termination of Employment for Other Reasons. Unless otherwise determined
by the Committee at or after grant, if a Participant's employment with the
Company and its Subsidiaries terminates voluntarily (other than by reason of
Retirement or under circumstances constituting Cause), the Stock Option shall
thereupon terminate, except that such Stock Option may be exercised to the
extent it was exercisable at the time of termination of employment for the
lesser of one year (or such shorter period as the Committee may specify at or
after grant) from the date of employment termination or the balance of such
Stock Option's term. If a Participant's employment with the Company and its
Subsidiaries is involuntarily terminated by the Company without Cause, the
Option shall thereupon terminate, except that it may thereafter be exercised
to the extent it was exercisable at the time of termination of employment (or
on such accelerated basis as the Committee shall determine at or after grant)
for the lesser of three years and six months (or such shorter period as the
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Committee may specify at or after grant) from the date of employment
termination or the balance of such Stock Option's term.
If the employment of a Participant shall terminate for Cause, all
outstanding Options held by the Participant immediately shall be forfeited to
the Company and no additional exercise period shall be allowed, regardless of
the vested status of the Options.
6.9 Nontransferability of Options. No Option granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, all
Options granted to a Participant under the Plan shall be exercisable during
his or her lifetime only by such Participant. Notwithstanding the foregoing
and any other provision of the Plan to the contrary, if the Committee so
permits, Options may be transferred, following the death of a Participant, to
a beneficiary designated by the Participant in accordance with Article 10
below.
6.10 Hardship Withdrawal Provision. No Employee shall make any elective
contribution or employee contribution to the Plan (within the meaning of
Treasury Regulation section 1.401(k)-1(d)(2)(iv)(B)(4)) during the balance of
the calendar year after the Employee's receipt of a hardship distribution from
a plan of the Company or a related party within the provisions of Code
sections 414(b), (c), (m) or (o) containing a cash or deferred arrangement
under section 401(k) of the Code, or during the following calendar year. The
preceding sentence shall not apply if and to the extent that the Company
determines it is not necessary to qualify any such plan as a cash or deferred
arrangement under section 401(k) of the Code.
ARTICLE 7. RESTRICTED STOCK
7.1 Grant of Restricted Stock. Subject to the terms and provisions of the
Plan, Restricted Stock may be granted to eligible Employees at any time and
from time to time, whether or not they are eligible to receive similar or
dissimilar incentive compensation under any other plan or arrangement of the
Company. The purchase price for Shares of Restricted Stock shall be equal to
their par value per Share.
7.2 Restricted Stock Agreement. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Agreement that shall specify the Period of
Restriction, or Periods, the number of Restricted Stock Shares granted, and
such other provisions as provided hereunder or as the Committee may impose.
7.3 Nontransferability of Restricted Stock. Except as provided in this
Article 7, the Shares of Restricted Stock granted hereunder may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until
the end of the applicable Period of Restriction as specified in the Restricted
Stock Agreement and the satisfaction of any conditions determined at the time
of grant and specified in the Restricted Stock Agreement. However, except as
provided in Article 8 herein, in no event may any Restricted Stock granted
under the Plan become vested in a Participant prior to six (6) months
following the date of its grant. All rights with respect to the Restricted
Stock granted to a Participant under the Plan shall be available during his or
her lifetime only to such Participant.
7.4 Other Restrictions. The Committee shall impose such other restrictions
on any Shares of Restricted Stock granted pursuant to the Plan as it may deem
advisable including, without limitation, a required purchase price imposed
upon Participants, restrictions based upon the achievement of specific
performance goals (Company-wide, divisional, and/or individual), and/or
restrictions under applicable Federal or state securities laws; and may legend
the certificates representing Restricted Stock to give appropriate notice of
such restrictions. Further, the Committee at its discretion, may
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require that the Shares evidencing such Restricted Stock grants be held in
custody by the Company until any or all restrictions thereon shall have
lapsed.
7.5 Certificate Legend. In addition to any legends placed on certificates
pursuant to Section 7.4 herein, each certificate representing Shares of
Restricted Stock granted pursuant to the Plan shall bear the following legend:
"The sale or other transfer of the Shares of Stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is
subject to certain restrictions on transfer as set forth in the Owens-
Corning Fiberglas Corporation Stock Performance Incentive Plan, and in the
related Restricted Stock Agreement. A copy of the Plan and such Restricted
Stock Agreement may be obtained from the Secretary of Owens-Corning
Fiberglas Corporation."
7.6 Removal of Restrictions. Except as otherwise provided in this Article 7,
Shares of Restricted Stock covered by each Restricted Stock grant made under
the Plan shall become freely transferable by the Participant after the last
day of the Period of Restriction, provided the applicable conditions to
vesting of such Shares have been fulfilled. Once the Shares are released from
the restrictions, the Participant shall be entitled to have the legend
required by Section 7.5 removed from his or her Share certificate.
7.7 Voting Rights. During the Period of Restriction and prior to any
forfeiture of the Shares, Participants holding Shares of Restricted Stock
granted hereunder may exercise full voting rights with respect to those
Shares.
7.8 Dividends and Other Distributions. During the Period of Restriction and
prior to any forfeiture of the Shares, Participants holding Shares of
Restricted Stock granted hereunder shall be entitled to receive all dividends
and other distributions paid with respect to those Shares while they are so
held. If any such dividends or distributions are paid in Shares, the Shares
shall be subject to the same restrictions on transferability and
forfeitability as the Shares of Restricted Stock with respect to which they
were paid.
7.9 Termination of Employment. The Committee may but need not provide at or
after the grant of Restricted Stock for the restrictions on all or any
designated portion of the Shares of Restricted Stock to lapse in the event of
death, Disability, Retirement or other designated termination of employment.
ARTICLE 7A. STOCK BONUSES
7A.1 Except as otherwise provided in section 15.3, Stock Bonus Awards shall
be subject to the following provisions:
(a) An eligible Employee may be granted a Stock Bonus Award whether or
not he is eligible to receive similar or dissimilar incentive compensation
under any other plan or arrangement of the Company.
(b) Shares subject to a Stock Bonus Award (other than a Phantom Stock
Bonus Award) may be issued or transferred to an Employee, and the cash
value of the Shares on which a Phantom Stock Bonus Award is based may be
paid to an Employee, at the time such Award is granted, or at any time
subsequent thereto, or in installments from time to time, and subject to
such terms and conditions, as the Committee shall determine. In the event
that any such issuance, transfer or payment shall not be made to the
Employee at the time such Award is granted, the Committee may but need not
provide for payment to such Employee, either in cash or Shares, from time
to time or at the time or times such Shares shall be issued or transferred
or cash shall be paid to such Employee, of amounts not exceeding the
dividends which would have been payable to such Employee in respect of such
Shares (as adjusted under section 4.2) if such Shares had been issued or
transferred to such Employee at the time such Award was granted.
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(c) Any Stock Bonus Award may, in the discretion of the Committee, be
settled in cash, on each date on which Shares would otherwise have been
delivered or become unrestricted, in an amount equal to the Fair Market
Value on such date of the Shares which would otherwise have been delivered
or become unrestricted. A Phantom Stock Bonus Award shall be payable only
in the form of cash. Subject to Section 4.3 above, the Shares subject to a
Stock Bonus Award (including a Phantom Stock Bonus Award) shall be deducted
from the number of Shares available for grant under the Plan, whether the
Award is settled in the form of cash or Shares.
(d) Stock Bonus Awards shall be subject to such terms and conditions,
including, without limitation, restrictions on the sale or other
disposition of any Shares to be issued or transferred pursuant to such
Award, and conditions calling for forfeiture of the Award or the Shares
issued or transferred or cash paid pursuant thereto in designated
circumstances, as the Committee shall determine; provided, however, that
upon the issuance or transfer of Shares to an Employee pursuant to any such
Award, the recipient shall, with respect to such Shares, be and become a
shareholder of the Company fully entitled to receive dividends, to vote and
to exercise all other rights of a stockholder except to the extent
otherwise provided in the Award. All or any portion of a Stock Bonus Award
may but need not be made in the form of a Restricted Stock Award or a
Phantom Stock Bonus Award.
(e) Each Stock Bonus Award shall be evidenced in a writing, signed by a
representative of the Company duly authorized to do so, which shall be
consistent with and subject to this Plan.
ARTICLE 8. Change of Control
8.1 Acceleration and Cashout. Subject to the provisions of Section 8.2
herein, upon the occurrence of a Change of Control of the Company, or, if and
to the extent so determined by the Committee in writing at or after grant
(subject to any right of approval expressly reserved by the Committee at the
time of such determination), in the event of a Potential Change of Control of
the Company, unless specifically prohibited by the terms of Article 15 herein:
(a) Any Stock Options awarded under the Plan immediately shall become
fully vested and exercisable;
(b) Any restrictions and other conditions pertaining to outstanding Stock
Bonuses (including Phantom Stock Bonuses and Restricted Stock), including
but not limited to vesting requirements, immediately shall lapse; and
(c) The value of all outstanding Stock Options and Stock Bonuses
(including Phantom Stock Bonuses and Restricted Stock) shall, to the extent
determined by the Committee at or after grant, be cashed out by the Company
on the basis of the Change-of-Control Price (or, in the case of Incentive
Stock Options, Fair Market Value) as of the date the Change of Control
occurs, or Potential Change of Control is determined to have occurred, or
such other date as the Committee may determine prior to the occurrence of
the Change of Control or Potential Change of Control.
Notwithstanding the foregoing provisions of this Section 8.1, the Committee
may determine, in its sole discretion, that no Change of Control or Potential
Change of Control shall be deemed to have occurred with respect to a
Participant (i) by reason of any actions or events ("Interested Actions") in
which the Participant acts in a capacity other than as a director, officer or
employee of the Company (or a Subsidiary or Affiliate, where applicable), or
(ii) with respect to any such action or event occurring within 90 days
following the public announcement of any Interested Actions, regardless of
whether the Participant is interested in such action or event.
8.2 Award Replacement. Notwithstanding Section 8.1 herein, no acceleration
of vesting and exercisability, nor lapse of restrictions and other conditions,
nor cashout shall occur (pursuant to Sections 8.1(a), (b), and (c) herein) for
outstanding Awards granted hereunder if the Committee reasonably determines in
good faith, prior to the Change of Control or Potential Change of Control,
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that such Awards shall be honored or assumed, or new rights substituted
therefor (such honored, assumed, or substituted award hereinafter called an
"Alternative Award") by a Participant's employer (or the parent or a
subsidiary of such employer) simultaneous with or immediately following the
Change of Control or Potential Change of Control, provided, however, that any
such Alternative Award must:
(a) In the event of Stock Options and Stock Bonuses:
(i) Be based on stock which is traded on an established securities
market, or which will be so traded within thirty (30) days of the
Change of Control or Potential Change of Control; or
(ii) Have a value based directly upon an objective standard of
valuation (including, but not limited to, a publicly reported stock
index) acceptable to the Committee under the circumstances and provide
each Participant, subject to requirements as to vesting or lapse of
restrictions, with an opportunity to put the Shares or other securities
covered by the Award to his or her employer (or the parent, general
partner, or a subsidiary of such employer) for purchase with payment to
be made in cash within ten (10) business days of receipt of such
employee's put;
(b) For all Awards:
(i) Provide such Participant (or each Participant in a class of
Participants) with rights and entitlements substantially equivalent to
or better than the rights, terms, and conditions applicable under such
Awards, including, but not limited to, an identical or better vesting
schedule and identical or better timing and methods of payment;
(ii) Have substantially equivalent economic value to such Awards
(determined at the time of the Change of Control or Potential Change of
Control);
(iii) Have terms and conditions which provide that in the event the
Participant's employment is involuntarily terminated without Cause or
constructively terminated:
(A) Any conditions on a Participant's rights under, or any
restrictions on transfer or exercisability applicable to, each such
Alternative Award shall be waived or shall lapse, as the case may
be; and
(B) Each Participant shall have the right to surrender such
Alternative Awards within thirty (30) days following such
termination in exchange for a payment in cash equal to the excess of
the Fair Market Value of the stock subject to the Alternative Award
over the price, if any, that a Participant would be required to pay
to exercise such Alternative Award.
For this purpose, a constructive termination shall mean a termination by a
Participant following a material reduction in the Participant's compensation,
a reduction in the Participant's responsibilities, or the relocation of the
Participant's principal place of employment to another location, in each case
without the Participant's advance written consent.
8.3 Excise Tax Reimbursement. In the event that any accelerations, lapse of
restrictions, cashouts, Award replacements, and/or any other event under this
Plan will cause a Participant to be subject to the tax (the "Excise Tax")
imposed by Section 4999 of the Code (or any similar tax that may hereafter be
imposed), the Company shall pay to the Participant at the time specified below
an additional amount (the "Gross-up Payment") such that the net amount
retained by the Participant, after deduction of any Excise Tax on the Total
Payments (as hereinafter defined) and any Federal, state, and local income tax
and Excise Tax upon the Gross-up Payment provided for by this Section 8.3, but
before deduction for any Federal, state, or local income tax on the Total
Payments, shall be equal to the Total Payments.
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For purposes of determining whether any Participant will be subject to the
Excise Tax and the amount of such Excise Tax:
(a) Any other payments or benefits received or to be received by a
Participant in connection with a Change of Control of the Company or a
Participant's termination of employment (whether pursuant to the terms of
this Plan or any other plan, arrangement, or agreement with the Company,
any Person whose actions result in a Change of Control of the Company or
any Person affiliated with the Company or such Person) (which together with
the benefits and/or payments provided hereunder, shall constitute the
"Total Payments") shall be treated as "parachute payments" within the
meaning of Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code shall be
treated as subject to the Excise Tax unless, in the opinion of tax counsel
selected by the Committee, such other payments or benefits (in whole or in
part) do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable compensation for
services actually rendered within the meaning of Section 280G(b)(4) of the
Code in excess of the base amount within the meaning of Section 280G(b)(3)
of the Code or are otherwise not subject to the Excise Tax;
(b) The amount of the total Payments which shall be treated as subject to
the Excise Tax shall be equal to the lesser of: (A) the total amount of the
Total Payments; or (B) the amount of excess parachute payments within the
meaning of Section 280G(b)(1) of the Code (after applying clause (a)
above); and
(c) The value of any noncash benefits or any deferred payment or benefit
shall be determined by the Company's independent auditors in accordance
with the principles of Section 280G(d)(3) of the Code.
For purposes of determining the amount of the Gross-Up Payment, a Participant
shall be deemed to pay Federal income taxes at the highest marginal rate of
Federal income taxation for the calendar year in which the Gross-Up Payment is
to be made and the applicable state and local income taxes at the highest
marginal rate of taxation for the calendar year in which the Gross-Up Payment
is to be made, net of the maximum reduction in Federal income taxes which
could be obtained from deduction of such state and local taxes. In the event
that the Excise Tax is subsequently determined to be less than the amount
taken into account hereunder at the time the Gross-Up Payment is made, a
Participant shall repay to the Company at the time that the amount of such
reduction in Excise Tax is finally determined the portion of the Gross-Up
Payment attributable to such reduction (plus the portion of the Gross-Up
Payment attributable to the Excise Tax and Federal, state and local income tax
imposed on the portion of the Gross-Up Payment being repaid by a Participant
if such repayment results in a reduction in Excise Tax and/or a Federal,
state, and local income tax deduction), plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the
event that the Excise Tax is determined to exceed the amount taken into
account hereunder at the time the Gross-Up Payment is made (including by
reason of any payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), the Company shall make an additional Gross-
Up Payment in respect of such excess (plus any interest payable with respect
to such excess) at the time that the amount of such excess is finally
determined.
The Gross-Up Payment or portion thereof provided for in this Section 8.3
shall be paid no later than the thirtieth (30th) calendar day following
payment of any amounts under this section, provided, however, that if the
amount of such Gross-Up Payment or portion thereof cannot be finally
determined on or before such day, the Company shall pay to a Participant on
such day an estimate, as determined in good faith by the Company, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined, but in no event later
than the forty-fifth (45th) calendar day after payment of any amounts under
this Section 8.3. In the event that the amount
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of the estimated payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company to each
Participant, payable on the fifth (5th) calendar day after demand by the
Company (together with interest at the rate provided in Section 1274(b)(2)(B)
of the Code).
ARTICLE 9. AMENDMENT, MODIFICATION AND TERMINATION
9.1 Amendment and Termination. The Board may, at any time and from time to
time, amend or modify the Plan in any respect without stockholder approval,
unless stockholder approval of the amendment or modification in question is
required under Delaware law, the Code (including without limitation Code
section 162(m)(4) and Code Section 422 and Treasury regulations issued or
proposed thereunder), any applicable exemption from Section 16 of the Exchange
Act (including without limitation SEC Rule 16b-3) for which the Company
intends transactions by Insiders to qualify, any national securities exchange
or system on which the Stock is then listed or reported, by any regulatory
body having jurisdiction with respect to the Plan, or under any other
applicable laws, rules or regulations. The Board may also terminate the Plan
at any time. The Committee may amend the terms of any Award granted under the
Plan, prospectively or retroactively, but no such amendment shall impair the
rights of any Participant without such Participant's consent.
9.2 Awards Previously Granted. No termination, amendment or modification of
the Plan shall in any manner adversely affect any Award previously granted
under the Plan, without the written consent of the Participant holding such
Award
ARTICLE 10. BENEFICIARY DESIGNATION
The Committee may (but need not) permit a Participant, from time to time and
subject to such terms and conditions as it may impose, to name a beneficiary
or beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or
she receives any or all of such benefit. Each such designation shall revoke
all prior designations by the same Participant, shall be in a form prescribed
by the Company, and will be effective only when filed by the Participant in
writing with the Human Resource Department of the Company during the
Participant's lifetime. In the absence of any such designation, benefits
remaining unpaid at the Participant's death shall be paid to the Participant's
estate.
ARTICLE 11. RIGHTS OF EMPLOYEES; OTHER PLANS AND ARRANGEMENTS
11.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of
the Company.
For purposes of the Plan, transfer of employment of a Participant between
the Company and any one of its Subsidiaries or Affiliates (or between
Subsidiaries and Affiliates) shall not be deemed a termination of employment.
11.2 Participation. No Employee shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected
to receive a future Award.
11.3 Transferability Restriction. Any derivative security issued under this
Plan (within the meaning of SEC Rule 16b-3(a)(2)) is not transferable by the
participant other than by will or the laws of descent and distribution.
Notwithstanding the foregoing and any other provision of the Plan to the
contrary, if the Committee so permits, an award under this Plan may be
transferred, following the death of a Participant, to a beneficiary designated
by the Participant in accordance with Article 10 above.
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11.4 Other Plans and Arrangements. Nothing in this Plan is intended to be a
substitute for, or shall preclude or limit the establishment or continuation
of, any other plan, practice or arrangement for the payment of compensation or
fringe benefits to directors, officers, or employees generally, or to any
class or group of such persons, which the Company or any Subsidiary now has or
may hereafter lawfully put into effect, including, without limitation, any
incentive compensation, retirement, pension, group insurance, restricted
stock, stock purchase, stock bonus, stock incentive or stock option plan.
ARTICLE 12. WITHHOLDING
12.1 Tax Withholding. A Participant shall remit to the Company an amount
sufficient to satisfy any taxes the Company determines are required by law to
be withheld with respect to any grant, exercise, or payment made under or as a
result of this Plan.
12.2 Share Withholding. With respect to withholding required upon the
exercise of Options, upon the lapse of restrictions on Restricted Stock, or
upon any other taxable event hereunder, the Committee may permit or require
Participants, subject to such terms and conditions as it may impose, to
satisfy the withholding requirement, in whole or in part, by having the
Company withhold Shares having a Fair Market Value on the date the tax is to
be determined equal to the maximum marginal total tax which could be imposed
on the transaction or such greater or lesser amount as the Committee may
permit. If the Committee so provides, such Shares withheld may be already
owned Shares which the Participant tenders in satisfaction of the withholding
requirement or Shares issuable by the Company in connection with the exercise
of Options, the lapse of restrictions on Restricted Stock or the other taxable
event hereunder, or Shares from any other source.
ARTICLE 13. INDEMNIFICATION
No member of the Board or the Committee, nor any officer or employee of the
Company acting on behalf of the Board or the Committee, shall be personally
liable for any action, determination, or interpretation taken or made in good
faith with respect to the Plan, and all members of the Board or the Committee
and each and any officer or employee of the Company acting on their behalf
shall, to the extent permitted by law, be fully indemnified and protected by
the Company in respect of any such action, determination or interpretation.
ARTICLE 14. SUCCESSORS
All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether
the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.
ARTICLE 15. REQUIREMENTS OF LAW
15.1 Requirements of Law. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges, as the Company may determine apply.
15.2 Governing Law. To the extent not preempted by Federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Delaware, without reference to the
principles of conflicts of laws of that State.
15.3 Non-U.S. Laws. In the event the laws of a foreign country, in which the
Company, a Subsidiary or Affiliate has Employees, prescribe certain
requirements for stock incentives to qualify
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for advantageous treatment under the tax or other laws or regulations of that
country, the proper officers of the Company, may restate, in whole or in part,
this Plan and may include in such restatement additional provisions for the
purpose of qualifying the restated plan and stock incentives granted
thereunder under such laws and regulations; provided, however, that (a) the
terms and conditions of any stock-based incentive granted under such restated
plan may not be more favorable to the recipient than would be permitted if
such stock-based incentive had been granted under the Plan as herein set
forth, (b) all Shares allocated to or utilized for the purposes of such
restated plan shall be subject to the limitations of Article 4, and (c) the
provisions of the restated plan may give the Board less but not more
discretion to amend or terminate such restated plan than is provided with
respect to this Plan by the provisions of Article 9 hereof
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EXHIBIT (B)
OWENS CORNING
LONG-TERM PERFORMANCE INCENTIVE PLAN TERMS
APPLICABLE TO CERTAIN EXECUTIVE OFFICERS
Set forth below are the Rules and Regulations of the Compensation Committee,
promulgated under the Stock Performance Incentive Plan as amended on June 15,
1995, that constitute the long-term performance incentive plan terms
applicable to those employees of the Company and its Subsidiaries who are
executive officers of the Company and whose remuneration for any performance
period hereunder the Committee anticipates would not be deductible by the
Company in whole or in part but for compliance with section 162(m)(4)(C) of
the Internal Revenue Code of 1986 as amended ("162(m) Covered Employee"),
including members of the Board of Directors who are such employees. Such long-
term performance incentive plan terms are hereafter referred to as the "Long-
Term Performance Incentive Plan", the "Plan" or the "LTPIP".
1. All 162(m) Covered Employees shall be eligible to be selected to
participate in this Long-Term Performance Incentive Plan. The Committee shall
select the 162(m) Covered Employees who shall participate in this Plan in any
performance period no later than 90 days after the commencement of the
performance period (or no later than such earlier or later date as may be the
applicable deadline for any compensation payable to such 162(m) Covered
Employee hereunder for such performance period to qualify as "performance-
based" under section 162(m)(4)(C) of the Internal Revenue Code of 1986 as
amended (the "Code")). Selection to participate in this Plan in any
performance period does not require the Committee to, or imply that the
Committee will, select the same person to participate in the LTPIP in any
subsequent performance period.
2. Being selected to participate in the Long-Term Performance Incentive Plan
in any performance period means that the individual is being granted the
opportunity to earn a cash award equal to the Fair Market Value of up to a
specified number of shares of Company common stock if the Company attains
performance goals established by the Committee for such performance period and
the participant's employment by the Company, its Subsidiaries and Affiliates
continues without interruption during that period ("phantom performance
shares"). Payment for each phantom performance share that is earned shall be
based on the Fair Market Value of a share of Company common stock on the date
on which the Committee certifies (in accordance with paragraph 10 below) that
the performance goals and any other material terms applicable to such phantom
performance share were in fact satisfied. Phantom performance shares may be
redeemed only for cash and may not be redeemed for equity securities in lieu
of cash, and are not transferable by the participant other than by will or the
laws of descent and distribution (within the meaning of SEC Rule 16b-3(a)(2)).
If (and only if) the Committee expressly so provides at the time an eligible
employee is selected to participate in the LTPIP in any performance period,
the participant's award for such performance period may be paid in the form of
shares of Company common stock rather than cash, in which case all provisions
of this LTPIP applicable to phantom performance shares (other than the
preceding sentence) shall likewise apply to the participant's opportunity to
earn such shares of Company common stock.
3. No later than 90 days after the commencement of each performance period
(or than such earlier or later date as may be the applicable deadline for
compensation payable hereunder for such performance period to qualify as
"performance-based" under section 162(m)(4)(C) of the Code), the Committee
shall establish in writing the method for computing the number of phantom
performance shares which each participant in the Plan for such performance
period will earn under the Plan for such performance period if the performance
goals established by the Committee for such performance period are attained in
whole or in part and if the participant's employment by the
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Company, its subsidiaries and affiliates continues without interruption during
that performance period. Such method shall be stated in terms of an objective
formula or standard that precludes discretion to increase the amount of the
award that would otherwise be due upon attainment of the goals. No provision
hereof is intended to preclude the Committee from exercising negative
discretion within the meaning of the Treasury regulations under Code section
162(m).
No later than 90 days after the commencement of each performance period (or
than such earlier or later date as may be the applicable deadline for
compensation payable hereunder for such performance period to qualify as
"performance-based" under section 162(m)(4)(C) of the Code), the Committee
shall establish in writing the performance goals for such performance period,
which shall be based on any of the following performance criteria, either
alone or in any combination, and on either a consolidated or business unit
level, as the Committee may determine: sales growth, earnings per share
growth, cash flow, cash flow from operations, operating profit growth, net
income growth, operating margin, net income margin, return on net assets,
return on total assets, return on common equity, return on total capital, and
total shareholder return. The foregoing criteria shall have any reasonable
definitions that the Committee may specify, which may include or exclude any
or all of the following items as the Committee may specify: extraordinary,
unusual or non-recurring items; effects of accounting changes; effects of
currency fluctuations; effects of financing activities (e.g., effect on
earnings per share of issuance of convertible debt securities); expenses for
restructuring or productivity initiatives; other non-operating items; spending
for acquisitions; effects of divestitures; and effects of asbestos activities
and settlements. Any such performance criterion or combination of such
criteria may apply to the participant's award opportunity in its entirety or
to any designated portion or portions of the award opportunity, as the
Committee may specify. Unless the Committee determines otherwise at any time
prior to payment of a participant's award for any performance period
hereunder, extraordinary items, such as capital gains and losses, which affect
any performance criterion applicable to the award (including but not limited
to the criterion of net income) shall be excluded or included in determining
the extent to which the corresponding performance goal has been achieved,
whichever will produce the higher award.
4. The first performance period under the LTPIP shall be the period
commencing on July 1, 1995 and ending on December 31, 1997. New performance
periods of three years' duration each shall commence on January 1, 1996 and on
each subsequent anniversary of that date.
5. No later than 90 days after the commencement of a performance period (or
than such earlier or later date as may be the applicable deadline for
compensation hereunder for such performance period to qualify as "performance-
based" under section 162(m)(4)(C) of the Code), the Committee shall establish
in writing the number of phantom performance shares which each person selected
to participate in the LTPIP in such performance period shall be granted the
opportunity to earn if the performance goals applicable to such performance
period are achieved in whole or in part. In no event shall any participant be
granted the opportunity to earn more than 50,000 shares (or the cash
equivalent thereof) with respect to any performance period hereunder. (The
foregoing amount represents the highest number of shares (or equivalent amount
of cash) which any participant may be granted the opportunity to earn
hereunder for any performance period if the maximum performance objectives for
such performance period are attained). The foregoing amount shall be
appropriately adjusted to reflect a change in corporate capitalization, such
as a stock split or dividend, or a corporate transaction, such as any merger,
consolidation, separation (including a spinoff or other distribution of
property), reorganization, or partial or complete liquidation.
6. Any phantom performance shares granted under this Plan shall be paid
solely on account of the attainment of the performance goals established by
the Compensation Committee with respect to such phantom performance shares,
within the meaning of applicable Treasury regulations. Payment of any such
phantom performance shares shall also be contingent on continued employment by
the Company, its Subsidiaries and Affiliates during the performance period to
which such phantom
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performance shares relate. The only exceptions to these rules apply in the
event of termination of employment by reason of death or Disability (within
the meaning of the Stock Performance Incentive Plan as amended by the Board of
Directors on June 15, 1995 (SPIP)), or in the event of a Change of Control of
the Company (within the meaning of the SPIP), during a performance period, in
which case the following provisions shall apply. In the event that the
employment of a participant who has been granted phantom performance shares
with respect to a performance period terminates by reason of death or
Disability during such performance period, the participant shall be paid the
cash value of the number of phantom performance shares, if any, that the
participant would have earned for such performance period if the participant's
employment had not terminated prior to the end of the performance period,
multiplied by a fraction the numerator of which shall be the number of full
calendar months elapsed in the performance period prior to the termination of
employment and the denominator of which shall be 30, in the case of the first
performance period, or 36, in the case of subsequent performance periods. Such
fractional amount shall be paid at the time payment would have been made if
the participant's employment had not terminated prior to the end of the
performance period. In the case of a Change of Control during a performance
period, all phantom performance shares then outstanding shall become fully
vested, earned and payable as if maximum performance levels were attained and
shall be cashed out by the Company as of the date the Change of Control
occurs, if and to the extent so provided in Article 8 of the SPIP. An
additional exception shall apply in the event of termination of employment by
reason of Retirement during a performance period, but only if and to the
extent it will not prevent any award payable hereunder (other than an award
payable in the event of death, Disability, Change of Control or Retirement)
from qualifying as "performance-based compensation" under the section
162(m)(4)(C) of the Code. Subject to the preceding sentence, in the event that
the employment of a participant who has been granted phantom performance
shares with respect to a performance period terminates by reason of Retirement
during such performance period, the participant may but need not (as the
Committee may determine) be paid the cash value of the number of phantom
performance shares, if any, that the participant would have earned for such
performance period if the participant's employment had not terminated prior to
the end of the performance period, multiplied by a fraction the numerator of
which shall be the number of full calendar months elapsed in the performance
period prior to termination of employment and the denominator of which shall
be 30, in the case of the first performance period, or 36, in the case of
subsequent performance periods. Any such payment shall be made at the time
payment would have been made if the participant's employment had not
terminated prior to the end of the performance period. A participant whose
employment terminates prior to the end of a performance period for any reason
not excepted above shall not be entitled to any payment for phantom
performance shares granted to such participant for that performance period.
7. With respect to any phantom performance share granted hereunder, in no
event shall the Committee have discretion to increase the amount of
compensation payable that would otherwise be due upon attainment of the
performance goals applicable to such phantom performance share. This provision
shall be administered in accordance with any applicable Treasury regulations
under Code section 162(m).
8. Payment and vesting any awards granted under this LTPIP shall be
contingent upon stockholder approval at the 1996 Annual Meeting of
Stockholders of the amendments to the Stock Performance Incentive Plan that
were adopted by the Board of Directors on June 15, 1995. Unless and until such
shareholder approval is obtained, no LTPIP award shall vest or be paid.
9. Payment of any awards granted under this LTPIP shall be contingent upon
shareholder approval, prior to payment, of the material terms of the
performance goals under which such awards are to be paid, in accordance with
applicable Treasury regulations under Code section 162(m). Unless and until
such shareholder approval is obtained, no such award shall be paid.
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10. Subject to the provisions of paragraph 6 above relating to death,
Disability, Change of Control and Retirement, payment of any award granted
under this LTPIP shall also be contingent upon the Compensation Committee's
certifying in writing that the performance goals and any other material terms
applicable to such award were in fact satisfied, in accordance with applicable
Treasury regulations under Code section 162(m). Unless and until the Committee
so certifies, such award shall not be paid.
11. Any amount payable to a participant hereunder shall be in addition to
any other compensation to which the participant may be contractually entitled
for such performance period pursuant to an employment agreement with the
Company, unless such employment agreement provides otherwise.
12. All phantom performance shares are intended to constitute Stock Bonus
Awards within the meaning of the SPIP, and are granted under and subject to
the terms and conditions of the SPIP, which shall control in the event of any
conflict. All phantom performance shares shall be documented by a written
instrument issued to the participant and signed by a duly authorized
representative of the Company. The Plan is not intended to confer any rights
upon any individual to any phantom performance share or with respect to any
phantom performance share. All such rights, if any, shall be governed by and
determined exclusively in accordance with the written instrument issued to the
participant in accordance with the foregoing provisions of this paragraph.
13. Capitalized terms which are used but not defined in the Plan shall have
the meanings ascribed to such terms in the SPIP, unless the context requires
otherwise.
14. The Committee may amend or terminate the Plan at any time, provided that
no such amendment or termination shall adversely affect any outstanding
phantom performance share without the written consent of the participant.
15. Any provision of this Plan to the contrary notwithstanding, (a) awards
under this Plan are intended to qualify as performance-based compensation
under Code Section 162(m)(4)(C), and (b) any provision of the Plan that would
prevent an award under the Plan from so qualifying shall be administered,
interpreted and construed to carry out such intention and any provision that
cannot be so administered, interpreted and construed shall to that extent be
disregarded.
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EXHIBIT (C)
OWENS CORNING
CORPORATE INCENTIVE PLAN TERMS APPLICABLE TO CERTAIN EXECUTIVE OFFICERS
1. APPLICATION
Set forth below are the annual incentive plan terms applicable to those
employees of Owens-Corning Fiberglas Corporation (the "Company") and its
subsidiaries who are executive officers of the Company and whose annual
incentive compensation for any taxable year of the Company commencing on or
after January 1, 1995 the Committee (as hereafter defined) anticipates would
not be deductible by the Company in whole or in part but for compliance with
section 162(m)(4)(C) of the Internal Revenue Code of 1986 as amended ("162(m)
Covered Employee"), including members of the Board of Directors who are such
employees. Such terms are hereafter referred to as the "Plan" or "Corporate
Incentive Plan".
2. ELIGIBILITY
All 162(m) Covered Employees shall be eligible to be selected to participate
in this Corporate Incentive Plan. The Committee shall select the 162(m)
Covered Employees who shall participate in this Plan in any year no later than
90 days after the commencement of the year (or no later than such earlier or
later date as may be the applicable deadline for the compensation payable to
such 162(m) Covered Employee for such year hereunder to qualify as
"performance-based" under section 162(m)(4)(C) of the Internal Revenue Code of
1986 as amended (the "Code")). Selection to participate in this Plan in any
year does not require the Committee to, or imply that the Committee will,
select the same person to participate in the Plan in any subsequent year.
3. ADMINISTRATION
The Plan shall be administered by the Compensation Committee of the Board of
Directors (the "Board"), or by another committee appointed by the Board
consisting of not less than two (2) Directors who are not Employees (the
"Committee"). The Committee shall be comprised exclusively of Directors who
are not Employees and who are "outside directors" within the meaning of
Section 162(m)(4)(C) of the Code. The Committee shall, subject to the
provisions herein, select employees to participate herein; establish and
administer the performance goals and the award opportunities applicable to
each participant and certify whether the goals have been attained; construe
and interpret the Plan and any agreement or instrument entered into under the
Plan; establish, amend, or waive rules and regulations for the Plan's
administration; and make all other determinations which may be necessary or
advisable for the administration of the Plan. Any determination by the
Committee pursuant to the Plan shall be final, binding and conclusive on all
employees and participants and anyone claiming under or through any of them.
4. ESTABLISHMENT OF PERFORMANCE GOALS AND AWARD OPPORTUNITIES
No later than 90 days after the commencement of each year commencing on or
after January 1, 1995 (or than such earlier or later date as may be the
applicable deadline for compensation payable hereunder for such year to
qualify as "performance-based" under section 162(m)(4)(C) of the Code), the
Committee shall establish in writing the method for computing the amount of
compensation which will be payable under the Plan to each participant in the
Plan for such year if the performance goals established by the Committee for
such year are attained in whole or in part and if the participant's employment
by the Company, its subsidiaries and affiliates continues without interruption
during that year. Such method shall be stated in terms of an objective formula
or standard that precludes discretion to increase the amount of the award that
would otherwise be due upon attainment of the
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goals. No provision hereof is intended to preclude the Committee from
exercising negative discretion with respect to any award hereunder, within the
meaning of the Treasury regulations under Code section 162(m).
No later than 90 days after the commencement of each year commencing on or
after January 1, 1995 (or than such earlier or later date as may be the
applicable deadline for compensation payable hereunder for such year to
qualify as "performance-based" under section 162(m)(4)(C) of the Code), the
Committee shall establish in writing the performance goals for such year,
which shall be based on any of the following performance criteria, either
alone or in any combination, and on either a consolidated or business unit
level, as the Committee may determine: sales, net asset turnover, earnings per
share, cash flow, cash flow from operations, operating profit, net income,
operating margin, net income margin, return on net assets, return on total
assets, return on common equity, return on total capital, and total
shareholder return. The foregoing criteria shall have any reasonable
definitions that the Committee may specify, which may include or exclude any
or all of the following items as the Committee may specify: extraordinary,
unusual or non-recurring items; effects of accounting changes; effects of
currency fluctuations; effects of financing activities (e.g., effect on
earnings per share of issuance of convertible debt securities); expenses for
restructuring or productivity initiatives; other non-operating items; spending
for acquisitions; effects of divestitures; and effects of asbestos activities
and settlements. Any such performance criterion or combination of such
criteria may apply to the participant's award opportunity in its entirety or
to any designated portion or portions of the award opportunity, as the
Committee may specify. Unless the Committee determines otherwise at any time
prior to payment of a participant's award hereunder for any year,
extraordinary items, such as capital gains and losses, which affect any
performance criterion applicable to the award (including but not limited to
the criterion of net income) shall be excluded or included in determining the
extent to which the corresponding performance goal has been achieved,
whichever will produce the higher award.
5. MAXIMUM AWARD
The maximum dollar amount that may be paid to any participant under the Plan
for any year is equal to the excess of (a) an amount equal to 200% of the
participant's annual rate of salary at the time the performance goal is
established by the Committee for such year or, if later, on January 1 of such
year, over (b) the amount of any annual incentive compensation to which the
participant is contractually entitled for such year pursuant to any employment
agreement with the Company, and may not exceed $1.9 million.
6. ATTAINMENT OF PERFORMANCE GOALS REQUIRED
Awards shall be paid under this Plan for any year solely on account of the
attainment of the performance goals established by the Committee with respect
to such year, within the meaning of applicable Treasury regulations. Awards
shall also be contingent on continued employment by the Company, its
subsidiaries and affiliates during such year. The only exceptions to these
rules apply in the event of termination of employment by reason of death or
Disability, or in the event of a Change of Control of the Company (as such
terms are defined in the Company's Stock Performance Incentive Plan as amended
on June 15, 1995 ("SPIP")), during such year, in which case the following
provisions shall apply. In the event of termination of employment by reason of
death or Disability during a Plan year, an award shall be payable under this
Plan to the participant or the participant's estate for such year, which shall
be adjusted, pro-rata, for the period of time during the Plan year the
participant actually worked. In the event of a Change of Control during a Plan
year and prior to any termination of employment, incentive awards shall be
paid under the Plan at the higher of (a) one half of participating salary for
such year (as determined by the Committee), or (b) projected performance for
the year, determined at the time the Change of Control occurs. An additional
exception shall apply in the event of termination of employment by reason of
Retirement (as defined in the SPIP) during a
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Plan year, but only if and to the extent it will not prevent any award payable
hereunder (other than an award payable in the event of death, Disability,
Change of Control or Retirement) from qualifying as "performance-based
compensation" under section 162(m)(4)(C) of the Code. Subject to the preceding
sentence, in the event of termination of employment by reason of Retirement
during a Plan year an award may but need not (as the Committee may determine)
be payable under this Plan to the participant, which shall be adjusted, pro-
rata, for the period of time during the Plan year the participant actually
worked. A participant whose employment terminates prior to the end of a Plan
year for any reason not excepted above shall not be entitled to any award
under the Plan for that year.
7. SHAREHOLDER APPROVAL AND COMMITTEE CERTIFICATION CONTINGENCIES; PAYMENT OF
AWARDS
Payment of any awards under this Plan shall be contingent upon shareholder
approval, prior to payment, of the material terms of the performance goals
under which the awards are to be paid, in accordance with applicable Treasury
regulations under Code section 162(m). Unless and until such shareholder
approval is obtained, no award shall be paid pursuant to this Plan. Subject to
the provisions of paragraph 6 above relating to death, Disability, Change of
Control and Retirement, payment of any award under this Plan shall also be
contingent upon the Compensation Committee's certifying in writing that the
performance goals and any other material terms applicable to such award were
in fact satisfied, in accordance with applicable Treasury regulations under
Code section 162(m). Unless and until the Committee so certifies, such award
shall not be paid. Unless the Committee provides otherwise, (a) earned awards
shall be paid promptly following such certification, and (b) such payment
shall be made in cash (subject to any payroll tax withholding the Company may
determine applies). Any amount payable to a participant hereunder shall be in
addition to any annual incentive compensation to which the participant may be
contractually entitled for such year pursuant to an employment agreement with
the Company, unless such employment agreement provides otherwise.
8. AMENDMENT OR TERMINATION
The Committee may amend, modify or terminate this Plan at any time, provided
that a termination or modification shall only become effective 30 days after
written notice thereof is given to each participant. Each participant shall be
eligible to receive the incentive compensation to which the participant would
have been otherwise entitled but for such termination or modification, pro-
rata for the period of the Plan year prior to the termination or modification.
9. INTERPRETATION AND CONSTRUCTION
Any provision of this Plan to the contrary notwithstanding, (a) awards under
this Plan are intended to qualify as performance-based compensation under Code
Section 162(m)(4)(C), and (b) any provision of the Plan that would prevent an
award under the Plan from so qualifying shall be administered, interpreted and
construed to carry out such intention and any provision that cannot be so
administered, interpreted and construed shall to that extent be disregarded.
No provision of the Plan, nor the selection of any eligible employee to
participate in the Plan, shall constitute an employment agreement or affect
the duration of any participant's employment, which shall remain "employment
at will" unless an employment agreement between the Company and the
participant provides otherwise. Both the participant and the Company shall
remain free to terminate employment at any time to the same extent as if the
Plan had not been adopted.
10. GOVERNING LAW
The terms of this Plan shall be governed by the laws of the State of
Delaware, without reference to the conflicts of laws principles of that state.
54
<PAGE>
[LOGO]
OWENS CORNING WORLD HEADQUARTERS
FIBERGLAS TOWER
TOLEDO, OHIO 43659
<PAGE>
PROXY [OWENS CORNING LOGO]
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, APRIL 18, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OWENS CORNING
The undersigned stockholder(s) of Owens Corning hereby appoints GLEN H. HIN-
ER, W. WALKER LEWIS and FURMAN C. MOSELEY, JR., and each of them, with full
power of substitution and revocation (the action of a majority of them or
their substitutes present and acting, or if only one be present and acting
then the action of such one, to be in any event controlling), proxies of the
undersigned with all powers which the undersigned would possess if personally
present at the Annual Meeting of Stockholders of Owens Corning to be held
April 18, 1996, or any adjournment thereof, hereby revoking any other proxy
heretofore given.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED ON
THE REVERSE SIDE BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR THE NOMINEES NAMED IN ITEM 1 AND THE PROPOSALS
REFERRED TO IN ITEMS 2, 3, 4, AND 5.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
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FOLD AND DETACH HERE
<PAGE>
- --------------------------------------------------------------------------------
PROXY
Please mark
your votes as
indicated in
this example [X]
Item 1-Election of the following nominees as Directors: John H. Dasburg, Ann
Iverson, W. Walker Lewis, Furman C. Moseley, Jr.
FOR [_] WITHHELD FOR ALL [_]
WITHHELD FOR: (Write that nominee's name in the space provided below).
- --------------------------------------------------------------------------------
Item 2-Proposal to approve the amendments to the Stock Performance Incentive
Plan adopted by the Board of Directors.
FOR [_] AGAINST [_] ABSTAIN [_]
Item 3-Proposal to approve the Long-Term Performance Incentive Plan.
FOR [_] AGAINST [_] ABSTAIN [_]
Item 4-Proposal to approve the Corporate Incentive Plan.
FOR [_] AGAINST [_] ABSTAIN [_]
Item 5-Proposal to approve the action of the Board of Directors in selecting
Arthur Andersen LLP as independent public accountants for the year 1996.
FOR [_] AGAINST [_] ABSTAIN [_]
Item 6-To act in their discretion on such other matters as may come before said
meeting or any adjournment thereof.
Signature(s) ________________________________________ Date ________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
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