<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
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] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
Notice of Annual Meeting
of Stockholders
and Proxy Statement
[LOGO]
SYSTEM THINKING
Makes the Difference/(TM)/
DATE AND TIME:
Thursday, April 22, 1999
2 p.m.
PLACE:
Owens Corning World Headquarters
One Owens Corning Parkway
Toledo, Ohio
<PAGE>
OWENS CORNING
Notice of Annual Meeting of Stockholders to be held on April 22, 1999
The annual meeting of stockholders of OWENS CORNING will be held at Owens
Corning World Headquarters, One Owens Corning Parkway, Toledo, Ohio, on
Thursday, April 22, 1999 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 2002 Annual Meeting of
Stockholders and until their successors are elected and qualified;
2. To consider a proposal to approve amended and restated Corporate
Incentive Plan Terms Applicable to Certain Executive Officers;
3. To consider a proposal to approve the action of the Board of Directors
in selecting Arthur Andersen LLP as independent public accountants for
the year 1999;
4. To consider a stockholder proposal concerning shareholder rights plan;
and
5. To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on February 23, 1999
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, Owens
Corning World Headquarters, One Owens Corning Parkway, Toledo, Ohio, for a
period of at least ten days prior to the meeting.
By Order of the Board of Directors,
MAURA J. ABELN
Secretary
Toledo, Ohio
March 17, 1999
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.......................................... 1
Biographies of Nominees and Continuing Directors......................... 2
Stock Ownership of Management............................................ 7
Section 16(a) Beneficial Ownership Reporting Compliance.................. 8
Committees and Meetings of the Board of Directors........................ 8
Directors' Compensation.................................................. 9
Transactions with Owens Corning.......................................... 10
Compensation Committee Report on Executive Compensation.................. 10
Executive Compensation................................................... 14
Retirement Benefits...................................................... 18
Employment and Severance Agreements...................................... 19
Performance Graph........................................................ 20
Proposal 2. Amendment of Corporate Incentive Plan Terms.................... 20
Proposal 3. Selection of Independent Public Accountants.................... 23
Proposal 4. Stockholder Proposal........................................... 23
Other Matters.............................................................. 25
Exhibit A.................................................................. A-1
</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 1999 Annual
Meeting of Stockholders ("Annual Meeting"), which is scheduled to take place
on April 22, 1999 at 2:00 P.M. at Owens Corning World Headquarters, One Owens
Corning Parkway, Toledo, Ohio. This proxy statement and a proxy are scheduled
to be mailed to stockholders commencing on March 17, 1999.
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, 1998 were:
<TABLE>
<CAPTION>
NAME ADDRESS SHARES %
---- ------- ------------ ----
<S> <C> <C> <C>
FMR Corp. and related entities 82 Devonshire St. 7,518,248(1) 13.6
Boston, MA 02109
Franklin Resources, Inc. and related 777 Mariners Island Blvd. 5,105,135(2) 9.2
entities San Mateo, CA 94403
Morgan Stanley Dean Witter & Co. and 1585 Broadway 5,092,379(3) 9.2
related entities New York, NY 10036
</TABLE>
- --------
(1) Sole dispositive power; sole voting power over 238,748 shares (less than
1%).
(2) Sole voting and dispositive powers; Templeton Growth Fund, Inc. held
interest in more than 5% of class.
(3)Shared dispositive power; shared voting power over 4,445,059 shares (8%).
In addition, as of February 23, 1999 ("Record Date"), Owens Corning
employees, including officers, beneficially owned 4,546,577 shares (8.2%) of
Owens Corning common stock under Owens Corning's Savings and Profit Sharing
Plan (for salaried employees) and Savings and Security Plan (for hourly
employees).
PROPOSAL 1. ELECTION OF DIRECTORS
Owens Corning's Board of Directors currently is composed of thirteen
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: Curtis H.
Barnette, John H. Dasburg, Ann Iverson, W. Walker Lewis and Furman C. Moseley,
Jr. Mr. Dasburg, a director since 1996, has decided to retire from the Board
at the Annual Meeting. The Board of Directors has nominated each of the
remaining individuals for reelection at the Annual Meeting at the
recommendation of the Board's Corporate Governance Committee, which consists
solely of outside directors. Effective as of the Annual Meeting, the Board of
Directors has set the size of the Board at twelve directors.
1
<PAGE>
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 2002
annual meeting of stockholders and until his or her successor is duly elected
and qualified.
Nominees for Election as Directors--term expiring 2002
[Photo of Curtis H. Barnette, 64. Chairman and Chief Executive
Curtis H. Officer of Bethlehem Steel Corporation, steel manufac-
Barnette] turing, Bethlehem, PA. Director since 1999.
A graduate of West Virginia University, Yale Law School
and the Advanced Management Program of the Harvard
Business School, Mr. Barnette was also a Fulbright
Scholar in International Law at the University of Man-
chester, England. Mr. Barnette has held his current po-
sition at Bethlehem Steel since 1992. Previously, he
served that company in various capacities since 1967,
including as Senior Vice President and director from
1986 and General Counsel and Secretary from 1977.
Mr. Barnette is a director of Bethlehem Steel Corpora-
tion and the Metropolitan Life Insurance Company, a
trustee of Lehigh University and a member of the Policy
Committee of the Business Roundtable and of the Busi-
ness Council. He is a director and past Chairman of the
American Iron and Steel Institute, the International
Iron and Steel Institute, the Pennsylvania Business
Roundtable, and the West Virginia University Founda-
tion. Mr. Barnette is also a member of the President's
Trade Advisory Committee and has served as a member of
the Council of the Administrative Conference of the
United States and the Coal Commission.
Among his past activities, Mr. Barnette served as Pres-
ident of the Association of General Counsel, Chairman
of the American Society of Corporate Secretaries and a
member of the Legal Advisory Committee of the New York
Stock Exchange.
2
<PAGE>
[Photo of Ann Iverson, 55. President and Chief Executive Officer
Ann Iverson] of International Link, an international consulting
firm, Scottsdale, AZ. Director since 1996.
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 Laura Ashley
Holdings plc. as Group Chief Executive in 1995. In
1998, she founded and became President and Chief Execu-
tive Officer of International Link.
[Photo of W. Walker Lewis, 54. Chairman, Devon Value Advisers,
W. Walker Lewis] financial consulting and investment banking firm,
Greenwich, CT and New York, NY. Director since 1993.
Previously, Mr. Lewis served as Senior Advisor to SBC
Warburg Dillon Read, Senior Advisor to Marakon Associ-
ates and 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 wholly-owned subsidiary of Marsh &
McLennan, which is the successor to Strategic Planning
Associates, a management consulting firm he founded in
1972. He is a graduate of Harvard College, where he was
President and Publisher of the Harvard Lampoon.
Mr. Lewis is a director of Jostens, Inc., American Man-
agement Systems, Inc. and Mrs. Fields' Original Cook-
ies, Inc. He is also a member of the Council on Foreign
Relations, the Washington Institute of Foreign Affairs,
and The Harvard Committee on University Resources.
[Photo of Furman C. Moseley, Jr., 64. Chairman of Sasquatch
Furman C. Moseley] Books, Inc., publishing, Seattle, WA. Director since
1983.
Mr. Moseley joined Simpson Paper Company in 1960 and
retired in June 1995 as Chairman of that company and
President of Simpson Investment Company.
Mr. Moseley is a director of Eaton Corporation.
3
<PAGE>
Incumbent Directors--term expiring 2001
[Photo of Gaston Caperton, 59. Director of the Institute on Edu-
Gaston Caperton] cation and Government, Teachers College, Columbia Uni-
versity, New York, NY and Chairman of The Caperton
Group, a business investment and development company,
Shepardstown, WV; former Governor of the State of West
Virginia. Director since 1997.
A graduate of the University of North Carolina, Mr.
Caperton began his career in a small insurance agency,
became its principal owner and chief operating officer,
and led the firm to become the tenth largest privately
owned insurance brokerage firm in the U.S. He also has
owned a bank and mortgage banking company. He was
elected Governor of West Virginia in 1988 and 1992 and,
under his leadership, the state significantly improved
its education system, infrastructure and economy. In
1997, Mr. Caperton taught at Harvard University as a
fellow at the John F. Kennedy Institute of Politics. He
is now teaching at Columbia University, where he serves
in his present position. He is also Chairman of The
Caperton Group.
Mr. Caperton is a director of United Bankshares, Inc.
and Energy Corporation of America. He was the 1996
Chair of the Democratic Governors' Association, and
served on the National Governors' Association executive
committee and as a member of the Intergovernmental Pol-
icy Advisory Committee on U.S. Trade. He also was
Chairman of the Appalachian Regional Commission, South-
ern Regional Education Board, and the Southern Growth
Policy Board.
[Photo of William W. Colville, 64. Retired; former Senior Vice
William W. President, General Counsel and Secretary of Owens Cor-
Colville] ning. Director since 1995.
A graduate of Yale University and the Columbia Univer-
sity Law School, Mr. Colville began his career at Owens
Corning in 1984 as Senior Vice President and General
Counsel. Prior to joining Owens Corning, he was Presi-
dent of the Sohio Processed Minerals Group from 1982 to
1984, and General Counsel of Kennecott Corporation from
1980 to 1982.
Mr. Colville is a director of Nordson Corporation.
[Photo of Landon Hilliard, 59. Partner, Brown Brothers Harriman &
Landon Hilliard] 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 Company of
New York. He joined Brown Brothers Harriman in 1974 and
became a partner in 1979.
Mr. Hilliard is a director of Norfolk Southern Corpora-
tion and Western World Insurance Company. 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.
4
<PAGE>
[Photo of Glen Glen H. Hiner, 64. Chairman of the Board and Chief Ex-
H. Hiner] 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 and The
Prudential Insurance Company of America.
Incumbent Directors--term expiring 2000
[Photo of Norman Norman P. Blake, Jr., 57. Chairman of the Board, Chief
P. Blake, Jr.] Executive Officer and President of Promus Hotel Corpo-
ration, hotel management and franchising, Memphis, TN.
Director since 1992.
A graduate of Purdue University, Mr. Blake became
Chairman, Chief Executive Officer and President of
Promus Hotel Corporation in 1998 after serving as
Chairman, Chief Executive Officer and President of
USF&G Corporation beginning in 1990. Prior to that, Mr.
Blake served as Chairman and Chief Executive Officer of
Heller International Corporation of Chicago.
Mr. Blake is a director of Promus Hotel Corporation,
The St. Paul Companies and Enron Corporation and a mem-
ber of the Community Partnership for Education. He is
also a member of the Purdue Research Foundation and
Purdue University's President's Council and Dean's Ad-
visory Council, Krannert Graduate School of Management.
He is the recipient of the degree of Doctor of Econom-
ics honoris causa from Purdue University, granted
jointly by the Krannert Graduate School of Management
and School of Liberal Arts.
[Photo of Leonard Leonard S. Coleman, Jr., 50. President, The National
S. Coleman] League of Professional Baseball Clubs, professional
sports, New York, NY. Director since 1996.
A graduate of Princeton and Harvard Universities, Mr.
Coleman became President of The National League of Pro-
fessional Baseball Clubs in 1994 after serving as Exec-
utive Director, Market Development of Major League
Baseball.
Mr. Coleman is a director of H. J. Heinz Company, the
Omnicom Group, New Jersey Resources, Avis Rent A Car,
Inc. and Cendant Corporation. He also serves as an ad-
visory director of the Martin Luther King, Jr. Center
for Non-Violent Social Change and director of The Met-
ropolitan Opera, The Schumann Fund, The Clark Founda-
tion, The Children's Defense Fund, Seton Hall Universi-
ty, and The National Urban League.
5
<PAGE>
[Photo of Jon M. Jon M. Huntsman, Jr., 38. Vice Chairman of Huntsman
Huntsman, Jr.] Corporation, manufacturer of petrochemicals, Salt Lake
City, UT, as well as President and CEO of the Huntsman
Cancer Institute. 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 1993, he held positions
as Deputy Assistant Secretary of Commerce in the Inter-
national Trade Administration and U.S. Deputy Assistant
Secretary of Commerce for East Asian and Pacific Af-
fairs.
Mr. Huntsman is a director of numerous Huntsman compa-
nies. He serves on the Board of Trustees of the Univer-
sity of Pennsylvania, where he is Chairman of the
Huntsman Program for International Studies and Busi-
ness, the Institute for Advanced Study at Princeton,
The Asia Society in New York and the National Bureau of
Asian Research. Mr. Huntsman also serves on the Inter-
national Advisory Council of the Singapore Economic De-
velopment Board and as a Branch Director of the San
Francisco Federal Reserve Bank. Additionally, he is a
founding director of the Pacific Council on Interna-
tional Policy and a member of the Council of American
Ambassadors, the National Committee on US-China Rela-
tions, the Council on Foreign Relations, and the Inter-
national Board of the Juvenile Diabetes Foundation.
Closer to home, Mr. Huntsman serves on the Board of
Governors of the Salt Lake Chamber of Commerce, Na-
tional Advisory Board of the University of Utah's
School of Business and the Board of Directors of KUED
Television, as well as Chairman of the Utah Opera
Board, Chairman of KSL Television's Family Now campaign
and a director of the Karl Malone Foundation for Kids.
He also serves on Intermountain Health Care's Board of
Directors and as trustee of its Foundation. His indus-
try involvement includes service on the Boards of both
the Chemical Manufacturers' Association and the Ameri-
can Plastics Council.
[Photo of W. Ann W. Ann Reynolds, 61. President of The University of Al-
Reynolds] abama at Birmingham, Birmingham, AL. Director since
1993.
A graduate of Kansas State Teachers College and the
University of
Iowa, Dr. Reynolds assumed her current position in
1997. Previously, she was Chancellor of City University
of New York for seven years and served eight years as
Chancellor of the twenty-campus California State Uni-
versity 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.
6
<PAGE>
Stock Ownership of Management
The following table shows information concerning beneficial ownership of
Owens Corning common stock on February 23, 1999 by all directors and nominees,
by each of the executive officers named in the Summary Compensation Table on
page 14 ("Named Executive Officers"), and by all directors and executive
officers as a group. With the exception of the ownership of Mr. Hiner (1%) and
all directors and executive officers as a group (2.7%), each ownership shown
represents less than 1% of the shares of common stock outstanding. Owens
Corning's stock ownership guidelines for directors are 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>
Maura J. Abeln.............................. 34,506(1)(2)
Curtis H. Barnette.......................... 1,000
Norman P. Blake, Jr......................... 17,034(1)(3)
Gaston Caperton............................. 4,502(1)(3)
Domenico Cecere............................. 72,733(1)(2)(4)
Leonard S. Coleman, Jr...................... 5,008(1)(3)
William W. Colville......................... 31,111(1)
Charles H. Dana............................. 225,550(1)
John H. Dasburg............................. 7,008(1)(3)
Landon Hilliard............................. 15,517(1)(3)
Glen H. Hiner............................... 550,963(1)(2)
Jon M. Huntsman, Jr......................... 12,525(1)(3)
Ann Iverson................................. 7,002(1)(3)
W. Walker Lewis............................. 13,533(1)(3)
Furman C. Moseley, Jr....................... 44,426(3)
W. Ann Reynolds............................. 14,755(1)(3)(4)
J. Thurston Roach........................... 37,903(1)(2)
All Directors and Executive Officers
(including Named
Executive Officers) (25 persons)........... 1,518,317(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: Ms. Abeln, 17,334; Mr. Blake, 10,000; Mr. Caperton, 4,000; Mr.
Cecere, 47,501; Mr. Coleman, 4,000; Mr. Colville, 25,000; Mr. Dana,
174,000; Mr. Dasburg, 6,000; Mr. Hilliard, 10,000; Mr. Hiner, 346,666; Mr.
Huntsman, 10,000; Ms. Iverson, 6,000; Mr. Lewis, 10,000; Dr. Reynolds,
10,000; Mr. Roach, 22,667; All Directors and Executive Officers (25
persons), 978,623.
(2) Includes shares over which there is sole voting power, but no investment
power, as follows: Ms. Abeln, 16,200; Mr. Cecere, 19,780; Mr. Hiner,
146,373; Mr. Roach, 15,236; All Directors and Executive Officers (25
persons), 332,216.
(3) Includes deferred shares over which there is currently no voting or
investment power, as follows: Mr. Blake, 2,534; Mr. Caperton, 502; Mr.
Coleman, 1,008; Mr. Dasburg, 1,008; Mr. Hilliard, 1,517; Mr. Huntsman,
2,025; Ms. Iverson, 502; Mr. Lewis, 2,533; Mr. Moseley, 5,076; Dr.
Reynolds, 2,025; All Directors and Executive Officers (25 persons),
18,730.
(4) Does not include shares of common stock held by family members as to which
beneficial interest is disclaimed, as follows: Mr. Cecere, 1,408; Dr.
Reynolds, 700; All Directors and Executive Officers (25 persons), 13,151.
7
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 and Securities and
Exchange Commission regulations require Owens Corning's directors, and 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 1998, except that the
exercise of options to purchase 6,700 shares of Owens Corning common stock by
Bradford Oelman, a former executive officer, was reported late due to a
clerical error.
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 10 meetings
during 1998. 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
significant accounting policies, accruals, reserves
and estimates made by management; reviews policies
and procedures for assuring accurate and complete
quarterly financial reporting, as well as compliance
with applicable laws and regulations. The Audit
Committee held 5 meetings in 1998.
Leonard S. Coleman, Jr.
Ann Iverson
W.Walker Lewis
W. Ann Reynolds
Compensation Committee
Landon Hilliard, Reviews Owens Corning's policies concerning
Chairman compensation and benefits for officers and directors;
approves the salaries and incentive opportunities 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 5 meetings in 1998.
Norman P. Blake, Jr.
John H. Dasburg
Furman C. Moseley, Jr.
W. Ann Reynolds
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 1998.
William W. Colville
Landon Hilliard
Jon M. Huntsman, Jr.
Ann Iverson
Furman C. Moseley, Jr.
8
<PAGE>
Finance Committee
Furman C. Moseley, Jr., Responsible for reviewing financial plans, structure
Chairman and policies of Owens Corning, including annual and
long-range operating plans and capital structure. Has
oversight responsibility for Owens Corning's funded
retirement plans. The Finance Committee held 3
meetings in 1998.
Gaston Caperton
William W. Colville
John H. Dasburg
Landon Hilliard
Jon M. Huntsman, Jr.
Corporate Governance Committee
W. Walker Lewis, Serves as the nominating committee for membership to
Chairman the Board of Directors; annually reviews the
appropriate skills and characteristics required of
Board members; advises the other directors about
meeting dates, the agenda and the character of
information to be presented at Board meetings;
reviews plans and personnel for management continuity
and development. The Corporate Governance Committee
held 2 meetings in 1998.
Gaston Caperton
Leonard S. Coleman, Jr.
Jon M. Huntsman, Jr.
W. Ann Reynolds
Directors' Compensation
Retainer and Meeting Fees--In 1998, Owens Corning paid each director who was
not an Owens Corning employee 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. The account is also
credited with the number of shares which dividends on the credited shares
could have purchased on dividend payment dates. Payments are made in cash
based on the value of the account, which is determined by the then fair market
value of Owens Corning 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 non-recurring grant of 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
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 may be made under the
plan after August 20, 2007, 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.
9
<PAGE>
In 1998, Messrs. Blake, Caperton, Coleman, Colville, Dasburg, Hilliard,
Huntsman, Lewis, and Moseley, Ms. Iverson and Dr. Reynolds each received (or
deferred) an annual 500 share grant valued at $20,344 on the date of grant
(based on the closing price of Owens Corning common stock as reported in the
New York Stock Exchange Composite Transactions).
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, which is funded through contributions from Owens Corning.
Contributions to the nominated charitable organizations 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 (as
well as 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. Such agreement was amended in September 1997
in connection with Mr. Colville's agreement to serve in an interim officer
capacity for the company. The amended agreement provides for Mr. Colville's
retention as a consultant for a one-year term, annually renewable at the end
of each year through 1999 unless mutually agreed by the parties. Under this
agreement, Mr. Colville receives a monthly consulting fee of $14,583
(increased to $29,167 during his service as an interim officer (September 15,
1997 through February 28, 1998)), 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 five years of service under
the agreement 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. Business units of Owens Corning
purchased approximately $5 million of materials from Huntsman companies during
1998.
Compensation Committee Report on Executive Compensation
To the Stockholders of Owens Corning
The Compensation Committee (the "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.
10
<PAGE>
Philosophy--The Committee's philosophy is to provide a total pay opportunity
for all executive officers, including Mr. Hiner, the Chairman and Chief
Executive Officer, 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. This philosophy is intended to
align executive interests with those of shareholders and to create shareholder
value. Key elements of the executive pay opportunity include base salary,
annual incentive and long-term incentive compensation. In determining
competitive levels, the Committee analyzes independent survey data from
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 below.
Deductibility of Compensation--Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Internal Revenue Code"), generally prevents Owens
Corning from claiming a tax deduction for compensation in excess of $1 million
paid to the Chairman and Chief Executive Officer and to the other four most
highly-paid executive officers of the company. This deduction limitation,
however, does not apply to performance-based compensation that satisfies
certain requirements of the Internal Revenue Code. The Committee has
determined that it is in the best interests of the company and its
shareholders to structure executive officers' compensation so it will not be
subject to the deduction limit to the extent practicable, provided that doing
so is consistent with Owens Corning's other corporate objectives. Accordingly,
the company is seeking shareholder approval at the Annual Meeting of certain
Corporate Incentive Plan Terms (see Proposal 2). In the past, however, the
Committee has structured compensatory arrangements that under certain
circumstances may be subject to the deduction limit, and may do so in the
future.
Base Salary--For each executive officer, base salaries are targeted between
the 25th and 75th percentile 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 company; support of
Owens Corning's core values of customer satisfaction, individual dignity and
shareholder value; competitive practices and the relationship of the officer's
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 increases for the
executive officers generally ranges from 10 to 18 months or more.
For 1998, Mr. Hiner received a base salary of $950,000, which represented an
increase of 5.56% over his 1996 salary, the last time his salary was adjusted.
The 1998 increase reflected a two-year aggregate increase in the Consumer
Price Index (CPI) and was intended to fall within parameters prescribed by
Section 162(m) of the Internal Revenue Code (relating to the $1 million limit
on deductible executive compensation).
Annual Incentive Compensation--Annual incentive payment "targets" for the
executive officers are generally set at the 75th percentile of the comparator
companies' actual incentive payments. The Corporate Incentive Plan (the
"Plan") terms are based upon selected financial criteria (tied to business
objectives), as determined by the Committee each year. In 1998, these criteria
and weightings were income from operations (50%) and cash flow (50%). 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 were approved by the Committee in February 1998 after a
review of key business and economic assumptions for the year. Actual business
results against the criteria determined amounts available for payments. For
1998, funding at the minimum threshold would have produced a payout of 0% of
the maximum. At maximum, funding cannot
11
<PAGE>
exceed 100% of aggregate 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 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 for 1998 was a maximum of 200% 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
participating salaries under the Plan.
For 1998 the Committee also established a special incentive opportunity
under the Plan for those individuals most directly able to influence Owens
Corning's ability to exceed each of its established goals (including the Named
Executive Officers referenced below). With 1998 being a critical year for the
company and its shareholders, it was the Committee's intent to create a
special incentive opportunity that would enable the company to exceed its
business plan for the year. This plan's terms consisted of funding based on
income from operations ("IFO"), with payment contingent on the company
surpassing the IFO target set forth in the 1998 Corporate Incentive Plan. The
specific IFO goals were approved by the Committee in February 1998. In
recognition of exceptional services during 1998 in connection with the
negotiation and implementation of Owens Corning's National Settlement Program
for asbestos claims, the Committee also approved a special one-time award for
two Named Executive Officers.
Mr. Hiner's total annual incentive compensation award for 1998 amounts to
$1,900,000. By contrast, Mr. Hiner's annual incentive compensation award for
1997 was $325,000. In determining Mr. Hiner's incentive compensation award for
1998, the Committee focused upon Owens Corning's performance in the two
measurement areas described above (cash flow and income from operations), and
the incentive award generated for Mr. Hiner by that performance. The Corporate
Incentive Plan applicable to Internal Revenue Code Section 162(m) covered
employees (which, for 1998, included Mr. Hiner and the other Named Executive
Officers identified below) was approved by shareholders in 1996 and is again
being submitted to shareholders for approval at the Annual Meeting.
Long-Term Incentive Compensation--The company's philosophy regarding the
long-term rewards to its executives is to establish a strong link between
executive compensation and pre-determined business goals which, in turn,
creates shareholder value and aligns executive interests with those of
stockholders. Long-term incentives currently consist of awards of Stock
Options and Restricted Stock provided under Owens Corning's Stock Performance
Incentive Plan ("SPIP") approved by shareholders in 1992 and amended and
approved again by shareholders in 1996, as well as restricted stock with
attendant performance criteria ("Performance Restricted Shares") or cash
equivalents provided under the Long-Term Performance Incentive Plan ("LTPIP"),
the terms of which are set forth as a component of the SPIP. The portion of
the LTPIP applicable to Internal Revenue Code Section 162(m) covered employees
was approved by shareholders in 1996. 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 the LTPIP and SPIP.
We believe that Stock Options encourage executive officers to relate their
long-term economic interests to other shareholders. The 1998 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.
12
<PAGE>
Restricted Stock is used to provide continuing incentives to increase value
to our shareholders and to retain certain executive officers. The 1998 grants
of Restricted Stock to executive officers vest one-third each in the fourth,
fifth and sixth years after date of grant.
The LTPIP has provided incentive compensation opportunities which are
directly tied to the achievement of the company's performance goals over a
period of three years, thereby strengthening the process of creating value for
shareholders. Under the LTPIP terms in effect for 1998, the executive
officers, including Mr. Hiner, 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. The Committee intends to
modify, change or terminate the LTPIP to the extent deemed necessary or
advisable to enable the company to attract and retain key executive officers
while ensuring that their compensation is appropriately tied to shareholder
value.
For the performance period beginning January 1, 1998 and ending December 31,
2000, the LTPIP performance measures are return on net assets, and earnings
per share growth. The two performance measures are weighted equally. The
historical performance of comparator companies and the companies which
constitute the Standard & Poor's 400 served as benchmarks in establishing
these performance goals.
The size of each executive officer's equity-based award granted in 1998 was
based on the individual's responsibility level as well as competitive practice
within the industry and nationally, and was targeted to be at the median of
long-term incentive values granted by other comparable companies. In addition,
each executive officer's past Stock Option, Restricted Stock and Phantom
Performance Share grants were considered as well as the Committee's assessment
of each executive's individual contributions. In 1998, Mr. Hiner was awarded
90,000 Stock Options, 8,500 shares of Restricted Stock and 17,000 Phantom
Performance Shares.
Respectfully submitted,
Compensation Committee
Landon Hilliard, Chairman
Norman P. Blake, Jr.
John H. Dasburg
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., John H. Dasburg, Furman C. Moseley, Jr. and W. Ann
Reynolds. No other persons have served on the Compensation Committee since the
beginning of 1998.
13
<PAGE>
Executive Compensation
The following tables provide information on compensation and stock-based
awards received by Owens Corning's Chief Executive Officer and the four other
highest paid individuals who were serving as executive officers of the company
at the end of 1998. These five individuals are referred to in this Proxy
Statement as the "Named Executive Officers".
Summary Compensation Table
The following table contains information about compensation paid, and
certain awards made, by Owens Corning to the Named Executive Officers for the
three-year period ended December 31, 1998.
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------
Annual Compensation Awards Payouts
---------------------------------------------------------------- --------------------- -------
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Salary Bonus Compensation Award(s) Options/ Payouts Compensation
Principal Position Year ($) ($) ($)(1) ($)(2) SARs(#)(3) ($) ($)
------------------------ ---- ------- --------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Glen H. Hiner........... 1998 950,000 1,900,000 138,360(7) 241,719 90,000 337,695 37,898(9)(10)
Chairman and Chief 1997 900,000 325,000 106,744(7) 380,375 45,000 47,599(9)(10)
Executive Officer 1996 900,000 900,000 117,954(7) 376,125 45,000 52,127(9)(10)
Maura J. Abeln(4)....... 1998 356,250 1,250,000(6) 149,771(8) 133,656 52,000 5,333(9)
Senior Vice President,
General Counsel and
Secretary
Domenico Cecere(5)...... 1998 332,917 1,020,000(6) 56,875 34,000 54,031 4,885(10)
Senior Vice President 1997 241,667 70,000 67,125 10,000 230(10)
and President, North 1996 225,000 155,000 53,700 7,500 5,250(10)
America Building
Materials Systems
Business
J. Thurston Roach
(4)(5).................. 1998 371,875 795,000(6) 84,375 68,000 3,741(10)
Senior Vice President
and Chief Financial
Officer
Charles H. Dana(5)...... 1998 362,917 680,000 56,875 30,000 89,152 2,313,283(10)(11)
Former Executive 1997 340,000 74,000 89,500 15,000 5,600(10)
Vice President 1996 326,667 220,000 88,500 15,000 5,250(10)
</TABLE>
- -------
(1) "Other Annual Compensation" includes perquisites and personal benefits,
where such perquisites and personal benefits exceed the lesser of $50,000
or 10% of the Named Executive Officer's annual salary and bonus for the
year, as well as certain other items of compensation. For 1998, none of
the Named Executive Officers received perquisites and/or personal benefits
in excess of the applicable threshold.
(2) Reflects awards of restricted stock under the Owens Corning Stock
Performance Incentive Plan. The value of the restricted stock awards shown
in the table was calculated by multiplying the number of shares awarded by
the closing price of Owens Corning common stock on the date of award (as
reported in the New York Stock Exchange Composite Transactions). The award
to Ms. Abeln consists of 4,700 shares, of which 1,500 vested on December
31, 1998; 1,500 will vest on December 31, 1999; and the remainder will
vest in 3 equal annual installments beginning February 13, 2001. The
awards to Mr. Dana, consisting of 2,000 shares in each year, vested upon
his retirement on December 31, 1998.
At the end of 1998, Mr. Hiner held a total of 79,317 shares of restricted
stock valued at $2,810,796; Ms. Abeln held a total of 3,200 shares of
restricted stock valued at $113,400; Mr. Cecere held a total of 5,900 shares
of restricted stock valued at $209,081; Mr. Roach held a total of 3,000
shares of restricted stock valued at $106,313; and Mr. Dana held no shares
of restricted stock (restrictions on
14
<PAGE>
12,700 shares of restricted stock held by Mr. Dana, valued at $450,056,
lapsed on December 31, 1998 due to Mr. Dana's retirement). The value of
these aggregate restricted stock holdings was calculated by multiplying the
number of shares held by the closing price of Owens Corning common stock on
December 31, 1998 ($35.4375 per share, as reported in the New York Stock
Exchange Composite Transactions). Dividends are paid by Owens Corning on
restricted stock held by the Named Executive Officers.
(3) Represents shares of Owens Corning common stock underlying options granted
under the Stock Performance Incentive Plan in 1996 through 1998. One-third
of each stock option award becomes exercisable in each of the first through
the third years following the grant. In most cases, vesting accelerates in
the event of death, disability, retirement, involuntary termination due to
job elimination, Change of Control (as defined in the amended Stock
Performance Incentive Plan), and in certain other events at the discretion
of the Compensation Committee. No stock appreciation rights (SARs) were
granted in 1996 through 1998.
(4) Ms. Abeln and Mr. Roach joined Owens Corning in February 1998.
(5) Prior to January 1999, Mr. Cecere served as Senior Vice President and Chief
Financial Officer and Mr. Roach served as Senior Vice President and
President, North America Building Materials Systems Business. Mr. Dana
retired as Executive Vice President at the end of 1998.
(6) Ms. Abeln received a sign-on bonus of $100,000 and a 1998 incentive bonus
of $750,000; Mr. Roach received a sign-on bonus of $100,000 and a 1998
incentive bonus of $695,000. In connection with their initial employment
with Owens Corning, Ms. Abeln and Mr. Roach were guaranteed minimum
incentive payments of $300,000 and $400,000, respectively, for each of the
years 1998 and 1999. In addition, Ms. Abeln and Mr. Cecere received special
awards of $400,000 each in recognition of their exceptional services during
1998 in connection with the negotiation and implementation of Owens
Corning's National Settlement Program for asbestos claims.
(7) Mr. Hiner's numbers reflect contractually required tax payments on income
from his Pension Preservation Trust account. The Pension Preservation Trust
is described on page 19.
(8) Ms. Abeln received $112,213 as payment of certain taxes on her sign-on
bonus and $37,558 as supplemental reimbursement of relocation expenses.
(9) Of Mr. Hiner's numbers, $32,714, $42,349, and $46,877 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 1998,
1997 and 1996, respectively. Mr. Hiner reimburses Owens Corning for the
portion of the premium which represents term life cost. Of Ms. Abeln's
number, $5,333 was the present value of split-dollar life insurance
premiums paid by Owens Corning in 1998. Ms. Abeln also reimburses Owens
Corning for the portion of the premium representing term life cost.
(10) Messrs. Hiner, Cecere, Roach and Dana had $5,184, $4,885, $3,741 and
$5,600, respectively, of contributions made to their accounts by Owens
Corning in the company's Savings and Profit Sharing Plan in 1998;
contributions of $5,250, $230, $0 and $5,600 in 1997; and contributions
of $5,250, $5,250, $0 and $5,250 in 1996.
(11) Amount includes the following items payable to Mr. Dana in connection
with his retirement: two years' base salary and average incentive
($1,149,333); an additional year of base salary plus target incentive
($565,750); a pension supplement ($550,000); accrued vacation pay
($35,100); and financial planning reimbursement ($7,500). Owens Corning's
arrangements with Mr. Dana are also described below under "Employment and
Severance Agreements".
15
<PAGE>
Option Grant Table
The following table contains information about stock options granted in 1998
to the Named Executive Officers. No stock appreciation rights (SARs) were
granted in 1998.
Option/SAR Grants in 1998
<TABLE>
<CAPTION>
Potential Realizable
Value at
Assumed Annual Rates of
Stock
Price Appreciation for
Individual Grants Option Term(3)
----------------------------------------------------------------- -------------------------
Percent
of
Total
Number of Options/
Securities SARs
Underlying Granted
Options/ to Exercise
SARs Employees or Base
Granted in Fiscal Price Expiration
Name (#) Year ($/Sh)(1) Date(2) 5% ($) 10% ($)
---- ---------- --------- --------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Glen H. Hiner........... 90,000 5.15% 28.4375 Feb. 2008 1,612,406 4,069,406
Maura J. Abeln.......... 52,000 2.98% 28.4375 Feb. 2008 931,613 2,351,213
Domenico Cecere......... 34,000 1.95% 28.4375 Feb. 2008 609,131 1,537,331
J. Thurston Roach....... 68,000 3.89% 28.125 Feb. 2008 1,204,875 3,040,875
Charles H. Dana......... 30,000 1.72% 28.4375 Jan. 2005 537,469 1,356,469
All Stockholders........ N/A N/A N/A N/A 962,046,883 2,428,023,086
</TABLE>
- --------
(1) The exercise price (the price that the Named Executive Officer must pay to
purchase each share of Owens Corning common stock that is subject to
option) is equal to the fair market value of the stock on the date of
grant of the option. All options shown were granted on February 12, 1998,
except those granted to Mr. Roach, which were granted on February 16,
1998.
(2) Options become exercisable ratably over three years from the grant date,
and expire 10 years from grant. In most cases, vesting accelerates in the
event of death, disability, retirement, involuntary termination due to job
elimination, Change of Control (as defined in the amended Stock
Performance Incentive Plan), and in certain other events at the discretion
of the Compensation Committee. The expiration date for Mr. Dana's grant
reflects the effect of his retirement at the end of 1998.
(3) 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 an assumed 10 year option term commencing February 12,
1998, and is net of the common stock closing price and actual shares
outstanding on that date. The dollar gains under these columns result from
calculations assuming 5% and 10% growth rates in stock price as prescribed
by the Securities and Exchange Commission, and are not intended to
forecast future price appreciation of Owens Corning common stock. The
gains reflect a future value based upon growth at these prescribed rates.
It is important to note that options have value to the Named Executive
Officers and to other option recipients only if the stock price increases
beyond the grant date price shown in the Table during the effective option
period.
16
<PAGE>
Option/SAR Exercises and Year-End Value Table
The following table contains information about the options for Owens Corning
common stock that were exercised in 1998 by the Named Executive Officers, and
the aggregate values of these officers' unexercised options at the end of
1998. None of the Named Executive Officers held stock appreciation rights
(SARs) at December 31, 1998.
Aggregated Option/SAR Exercises in 1998, and 12/31/98 Option/SAR Values
<TABLE>
<CAPTION>
Number of
Securities
Underlying Value of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
12/31/98 (#) 12/31/98 ($)(1)
--------------- --------------------
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
---- --------------- ------------ --------------- --------------------
<S> <C> <C> <C> <C>
Glen H. Hiner........... --0-- --0-- 286,666/135,000 1,196,892/630,000
Maura J. Abeln.......... --0-- --0-- 0/52,000 0/364,000
Domenico Cecere......... --0-- --0-- 30,334/43,166 33,125/238,000
J. Thurston Roach....... --0-- --0-- 0/68,000 0/497,250
Charles H. Dana......... --0-- --0-- 174,000/0 803,875/0
</TABLE>
- --------
(1) The value of unexercised in-the-money options was calculated by
multiplying the number of underlying shares by the difference between the
closing price of Owens Corning common stock on December 31, 1998 ($35.4375
per share, as reported in the New York Stock Exchange Composite
Transactions) and the corresponding option exercise price.
Long-Term Incentive Plans--Awards in Last Fiscal Year
The following table sets forth the awards made to each of the Named
Executive Officers in 1998 under the Owens Corning Long-Term Performance
Incentive Plan, which is a component of the company's Stock Performance
Incentive Plan.
Long-Term Performance Incentive Plan-Awards in 1998
<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 (#)(1) or Payout (#) (#) (#)
---- ------------ ----------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
Glen H. Hiner................. 17,000 3 Years 8,500 17,000 25,500
Maura J. Abeln................ 3,500 3 Years 1,750 3,500 5,250
Domenico Cecere............... 4,000 3 Years 2,000 4,000 6,000
J. Thurston Roach............. 6,000 3 Years 3,000 6,000 9,000
Charles H. Dana............... 4,000 3 Years 666 1,333 2,000
</TABLE>
- --------
(1) Each award shown 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. In the event these
"maximum" performance goals are not attained, then the Named Executive
Officers may earn 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 aggregate
17
<PAGE>
performance goal that applies to each award is based one-half on average
return on net assets ("RONA") and one-half on average annual earning per
share ("EPS") growth. 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, 2000. If employment terminates during the performance period
by death or disability, a prorated award will be paid after the performance
period, based on the level of performance attained. If employment
terminates during the performance period by reason of retirement, the
Compensation Committee may, in its discretion, approve a prorated award as
described in the previous sentence. The estimated future payouts shown for
Mr. Dana reflect the effect of his retirement at the end of 1998. 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.
Retirement Benefits
Owens Corning maintains a tax-qualified Cash Balance Plan covering certain
of its salaried and hourly employees in the United States, including each of
the Named Executive Officers, in lieu of the qualified Salaried Employees'
Retirement Plan maintained prior to 1996 ("Prior Plan"), 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 tax-qualified retirement plan and
those benefits which would have been payable except for limitations imposed by
the Internal Revenue Code. Messrs. Hiner, Cecere and Dana were eligible to
receive benefits under both the Cash Balance Plan and the ESBP as of December
31, 1998.
Cash Balance Plan--Under the Cash Balance Plan, each covered employee's
earned retirement benefit under the Prior Plan (including the 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
December 31, 1995 ("Grandfathered Employees"), including Mr. Dana, 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 Prior Plan (in
each case including the ESBP).
The estimated annual annuity amounts payable under the Cash Balance Plan
(including the ESBP) to the Named Executive Officers at age 65 (or, in the
case of Mr. Dana, upon his retirement at the end of 1998) are: Mr. Hiner,
$99,957; Ms. Abeln, $98,235; Mr. Cecere, $56,796; Mr. Roach, $17,903; and Mr.
Dana, $305,235. Except for Mr. Dana, these amounts assume continued employment
and current levels of covered pay through age 65, and are based on estimated
interest rates.
Supplemental Executive Retirement Plan--Owens Corning maintains a
Supplemental Executive Retirement Plan ("SERP") covering certain executive
officers, including Ms. Abeln, who join the company in mid-career. The SERP
provides for a lump sum payment following termination of employment equal to a
multiple of the covered employee's Cash Balance Plan balance minus an
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<PAGE>
offset equal to the present value of retirement benefits attributible to prior
employment. The applicable multiplier for each covered employee ranges from 0
to 4 (determined by the covered employee's age when first employed by Owens
Corning) and is 1.7 in the case of Ms. Abeln. The estimated annual annuity
amount payable to Ms. Abeln to satisfy the lump sum obligation under this plan
at age 65, under the assumptions described in the preceding paragraph, is
$166,709, less the annualized offset (not yet calculable by the company) due
to her prior employment.
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 until retirement). 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 to provide Mr. Cecere a supplemental pension
providing a benefit, under the pension plan formula in existence on his
employment date, determined as if he had earned two additional years of
credited service for each year employed until age 55. Mr. Cecere is now 49.
In 1992, Owens Corning established a Pension Preservation Trust for amounts
payable under the ESBP as well as under the individual pension arrangements
described above. The Compensation Committee determines (except with respect to
Mr. Hiner, where payments are contractually determined) any 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 1998, no payments were made to the Trust on behalf of any of the Named
Executive Officers. 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 defined by the terms of
the 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 in a later year. Mr. Hiner is also to receive a contractual bonus
of up to 130% of base pay based upon mutually agreed entry, target and maximum
company performance objectives. For 1998, these performance objectives were
the same as those applicable to Owens Corning's other executive officers under
the company's Corporate Incentive Plan. Owens Corning and Mr. Hiner have
renewed the agreement, effective July 31, 1999, through the date of the
company's Annual Meeting of Stockholders in 2002.
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 bonuses (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) plus continuation of insurance benefits for a period of two years
(three years in the case of Mr. Dana), and, in the case of Messrs. Cecere and
Dana, a payment equal to the additional lump sum pension benefit that would
have accrued had such individuals been three years older, with three
additional years of service, at the time of employment termination. Pursuant
to his release and separation agreement, Mr. Dana will also receive an
additional year of base pay and target incentive award, reimbursement of
accrued vacation, and financial planning for 1999. The base salaries as of
December 31, 1998 of these Named Executive Officers are as follows: Ms. Abeln
$450,000, Mr. Cecere $450,000, Mr. Roach $425,000, and Mr. Dana $365,000.
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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>
<CAPTION>
[GRAPH APPEARS HERE]
CUMULATIVE TOTAL RETURN
Based upon an initial investment of $100 on December 31, 1993
with dividends reinvested
- ---------------------------------------------------------------------------
Dec-93 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Owens Corning $100 $ 72 $101 $ 96 $ 78 $ 81
- ---------------------------------------------------------------------------
S & P 500(R) $100 $101 $139 $171 $229 $294
- ---------------------------------------------------------------------------
Dow Jones Building
Materials Index $100 $ 80 $109 $131 $160 $184
- ---------------------------------------------------------------------------
</TABLE>
PROPOSAL 2. APPROVAL OF AMENDED AND RESTATED CORPORATE INCENTIVE PLAN TERMS
APPLICABLE TO CERTAIN EXECUTIVE OFFICERS
Under Section 162(m) of the Internal Revenue Code, the amount which Owens
Corning may deduct on its tax returns for compensation paid to certain
"covered employees" (typically the chief executive officer and the next four
highest paid executive officers) 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 goals under which the compensation is to be paid must
be disclosed to and approved by stockholders.
Corporate Incentive Plan terms applicable to certain executive officers were
submitted to, and approved by, Owens Corning stockholders at its 1996 annual
meeting ("Prior Terms"). In order to provide additional flexibility in
structuring its incentive programs for executive officers that may be subject
to Section 162(m) of the Internal Revenue Code while maximizing Owens
Corning's tax advantages, Owens Corning has amended and restated the Corporate
Incentive Plan Terms applicable to such executive officers to broaden the
criteria upon which performance goals may be based and to increase the limit
on the maximum awards that may be paid under the plan. The Amended and
Restated Corporate Incentive Plan Terms that are set forth in Exhibit A to
this Proxy Statement ("CIP Terms") are being submitted to stockholders for
approval so that any compensation
20
<PAGE>
paid pursuant to those terms will qualify as "performance-based" and will be
deductible by Owens Corning. 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 A.
Payment of any awards pursuant to the CIP Terms is contingent on stockholder
approval of this Proposal 2. Such stockholder approval is being sought to
preserve the tax deductible status of the compensation income realized in
connection with awards under the Corporate Incentive Plan. If the CIP Terms
are not approved by stockholders, the Prior Terms will remain in effect.
The persons who are eligible to be selected to participate in the CIP Terms
are executive officers of Owens Corning, including members of the Board of
Directors who are executive officers, whose annual compensation may not be
deductible by Owens Corning in whole or in part unless such compensation
qualifies as "performance-based" under Section 162(m)(4)(C) of the Internal
Revenue Code. Under the CIP Terms, the Compensation Committee of the Board of
Directors ("Committee") selects participants and determines the amount of
their award opportunities. At the present time, 5 executive officers are
eligible to participate. However, approximately 1,100 other officers and
employees of Owens Corning are eligible to participate in similar annual
incentive plans under terms that are generally less restrictive than the CIP
Terms.
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 after the Committee certifies that the
performance goals for the year have been satisfied. However, the Committee may
provide for all or part of 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 beginning on or
after January 1, 1999 (or by such other deadline as may apply under Section
162(m)(4)(C) of the Internal Revenue 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 that each
participant will be paid if the 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, 1999 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.
The dollar amount that may be paid to any participant under the CIP Terms
for any year cannot exceed $4 million. Under the Prior Terms, the maximum was
the smaller of 200% of the participant's annual rate of salary or $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, business unit or individual level, as the Committee may
determine: sales, net asset turnover, earnings per share, cash flow, cash flow
from operations, operating profit, net operating profit, net income, income
from operations, operating margin, net income margin, return on net assets,
return on total assets, return on common equity, return on total capital,
shareholder value added, total shareholder return, common stock price
appreciation, total shareholder return relative to a defined marketplace,
receivables growth, debt to equity ratios, earnings to fixed charges ratios,
introduction of new products and/or services, or
21
<PAGE>
developing and/or implementing action plans or strategies. The foregoing terms
shall have any reasonable definitions that the Committee may specify at the
time such criteria are adopted, 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. Extraordinary items, such as
capital gains and losses, which affect any performance criterion applicable to
the award and which are required to be taken into account for purposes of
Owens Corning's financial statements under generally accepted accounting
principles, will be either excluded or included in determining the extent to
which the corresponding performance goal has been achieved so that the
integrity and intent of the performance goal are maintained.
The performance goals that were established by the Committee for 1999 are
based on income from operations and shareholder value added.
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 Owens Corning's amended
Stock Performance Incentive Plan) 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 awards that will be paid in 2000 to the
Named Executive Officers, and to all current executive officers as a group,
pursuant to the CIP Terms if the performance goals established by the
Committee for 1999 are attained at target/plan level and there is no
interruption of the executive officer's employment during 1999 (other than Mr.
Dana, who retired at the end of 1998 and is not eligible for an award). Awards
in excess of those provided under the Prior Terms are payable only if
stockholders approve this Proposal.
New Plan Benefits
CIP Terms
<TABLE>
<CAPTION>
Dollar Value ($)
-----------------
1999 Target/Plan
Name and Position Award Opportunity
- ----------------- -----------------
<S> <C>
Glen H. Hiner, Chairman and Chief Executive Officer.......... 946,562*
Maura J. Abeln, Senior Vice President, General Counsel and
Secretary................................................... 337,500*
Domenico Cecere, Senior Vice President and President, North
America Building Materials Systems Business................. 371,250*
J. Thurston Roach, Senior Vice President and Chief Financial
Officer..................................................... 350,625*
Charles H. Dana, Former Executive Vice President............. 0
Executive Group (5 persons).................................. 2,265,312*
</TABLE>
22
<PAGE>
- --------
* Represents the award opportunity at target/plan level for plan year 1999
if there is no interruption in the executive officer's employment (other
than Mr. Dana) and specified target levels of performance are attained
but not exceeded. If maximum levels of performance are attained or
exceeded, the award opportunities for the Named Executive Officers and
executive group will equal 320% of their respective amounts shown in the
table. If minimum levels of performance are not attained, none of the
amounts shown in the table will be earned. Amounts earned are subject to
reduction at the discretion of the Committee.
Any other amounts that will be received by or allocated to any person in
future years pursuant to the CIP Terms are not determinable at the present
time, as all such determinations will be based on the establishment of
performance objectives and the degree of attainment of those objectives, as
determined by the Committee in its sole discretion, subject to the provisions
of the CIP Terms.
The CIP Terms will be approved if this proposal receives the affirmative
vote of a majority of the votes cast at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 2.
PROPOSAL 3. 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 1999. 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 consider selecting and employing
some other firm of well-known independent public accountants for 1999.
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 3.
PROPOSAL 4. STOCKHOLDER PROPOSAL CONCERNING SHAREHOLDER RIGHTS PLAN
Owens Corning has been notified that the Central Pension Fund of the
International Union of Operating Engineers and Participating Employers intends
to present the shareholder proposal set forth below for consideration at the
Annual Meeting. Owens Corning will promptly furnish the address and stock
ownership of such proponent to any stockholder who requests same by oral or
written request to the Secretary of Owens Corning at Owens Corning World
Headquarters, Toledo, Ohio 43659.
Approval of Proposal 4 requires the affirmative vote of a majority of the
votes cast at the Annual Meeting. The Board of Directors recommends that you
vote against this proposal for the reasons described in its Statement in
Opposition, which is set forth immediately below the text of the proponent's
proposal and supporting statement.
"SHAREHOLDER PROPOSAL
BE IT RESOLVED: That the shareholders of Owens Corning Inc. ("Company")
urge the Board of Directors to redeem the shareholder rights issued
pursuant to the Shareholder Rights Plan (adopted by the Board of Directors
in December, 1996) unless said Plan is approved by a majority of the voting
shares at a meeting of shareholders held as soon as is practical.
23
<PAGE>
SUPPORTING STATEMENT
We strongly believe that the Company's financial performance is closely
linked to its corporate governance policies and procedures, and the level
of management accountability they impose. The Company's Shareholder Rights
Plan (commonly know as a "poison pill") is a powerful anti-takeover device
which effectively prevents a change in control of the Company without the
approval of the board of directors, despite a level of performance which
may adversely affect shareholder value.
Owens Corning's poison pill inhibits a potential bidder of Company stock
when they own, or announce that they will acquire, 15% or more of the
outstanding common stock of the Company. Triggering the poison pill has the
effect of substantially injuring the bidder by allowing our Board to
unilaterally cut by 50% the value of Company shareholdings held by such a
person. Such a situation, we believe, precludes shareholders of Owens
Corning from exercising their ownership rights in assessing offers from
potential bidders.
The poison pill forces potential investors to negotiate acquisitions with
management, instead of making their offer directly to shareholders. We
strongly believe that it is the shareholders (who are the owners of the
Company), not the directors and managers (who merely act as agents for the
owners), who should have the right to decide what is or is not a fair price
for their shareholdings.
The argument that our directors need a poison pill in order to negotiate
a better offer from potential bidders or prevent so-called "abusive
takeover practices" is unpersuasive. In the past several years, proposals
to redeem or allow shareholder votes on poison pills have received majority
support at numerous U.S. publicly-traded companies including Advanced Micro
Devices, Intel, Ryder and Wellman. Moreover, since 1990 Philip Morris, Time
Warner, United Technologies and Lockheed have voluntarily redeemed their
poison pills. None of these companies have experienced any adverse impact
attributable to redemption of their poison pills.
Poison pills can pose such an obstacle to a takeover that management
becomes entrenched. We believe that the entrenchment of management, and the
lack of accountability that results, can adversely affect shareholder
value. While it is impossible to assess the degree to which the poison pill
may inhibit performance, it is indisputable that a poison pill effectively
deters attempts by shareholders to remove the current board and its
management team for nonperformance. Redemption of Owens Corning's pill
would allow shareholders to consider all tender offers, not just those
endorsed by incumbent management.
We urge you to VOTE FOR this proposal."
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO PROPOSAL 4
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST PROPOSAL 4 FOR THE
FOLLOWING REASONS:
The purpose of Owens Corning's shareholder rights plan is to preserve and
maximize the company's value for all stockholders. The plan is designed to
protect stockholder interests in the event that Owens Corning is confronted
with coercive or unfair takeover tactics in connection with an unsolicited
offer to acquire the company. The plan offers protection from offers that do
not treat all stockholders equally, acquisitions in the open market of shares
constituting control without offering fair value to all stockholders, and
other coercive or unfair takeover tactics that could impair the Board of
Directors' ability to represent stockholder interests fully. The plan is not
intended to prevent a takeover on terms that are fair and equitable to all
stockholders, nor is it intended as a deterrent to a stockholder's initiation
of a proxy contest.
24
<PAGE>
Shareholder rights plans similar to Owens Corning's have been adopted by a
majority of the companies in the S&P 500. According to a study released in
November 1997 by Georgeson & Company Inc., a nationally recognized proxy
solicitation and investor relations firm, shareholders of companies with
shareholder rights plans received $13 billion in additional takeover premiums
during the five-year period from 1992 to 1996, and shareholders of companies
without shareholder rights plans gave up $14.5 billion in potential value. The
study also found that (1) premiums paid to acquire target companies with
shareholder rights plans were on average 8 percentage points higher than
premiums paid for target companies that did not have such plans, (2) the
presence of a shareholder rights plan at a target company did not increase the
likelihood of the defeat of a hostile takeover bid nor the withdrawal of a
friendly bid, and (3) shareholder rights plans did not reduce the likelihood
that a company would become a takeover target.
Owens Corning stockholders in fact have actually benefited because Owens
Corning had a shareholder rights plan. In 1986, Owens Corning was the subject
of a hostile takeover bid. As the result of the existence of the shareholder
rights plan then in effect, the Board of Directors had sufficient time to
evaluate the bid, to explore possible alternatives, and ultimately to develop
and propose to stockholders a financially superior recapitalization plan that
included continued stockholder ownership of the company. The hostile takeover
bid was withdrawn by the bidder following announcement of the Board's
recapitalization plan, which was subsequently approved by Owens Corning's
stockholders. The cash and securities received by the company's stockholders
under the recapitalization plan, valued on November 6, 1986, the first trading
day after the recapitalization, was more than 10% higher than would have been
received under the takeover bid. The Board of Directors believes that if the
shareholder rights plan had not been in effect in 1986, it would not have had
adequate time to develop the recapitalization plan and, accordingly, it is
likely that the hostile bid would have been successful, with the result that
the bidder, rather than Owens Corning's stockholders, would have enjoyed the
full value of the company.
Consequently, the Board of Directors believes that the value and wisdom of a
shareholder rights plan to Owens Corning has been proven. The Board believes
that the appropriate time to consider redemption of the rights issued under
Owens Corning's shareholder rights plan would be at the time, and in the
context, of a specific acquisition proposal and that to redeem the rights at
this time would leave Owens Corning's stockholders unprotected in the face of
any unsolicited takeover attempt and could reduce long-term value for the
company's stockholders.
FOR THE REASONS OUTLINED ABOVE, THE BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE AGAINST PROPOSAL 4.
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.
Stockholder Proposals For 2000 Annual Meeting
In order to be considered for inclusion in Owens Corning's proxy statement
and form of proxy relating to the 2000 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 18,
1999. Under Owens Corning's by-laws, notice of a stockholder proposal
submitted outside the processes of Rule 14a-8 under the Securities Exchange
Act of 1934 is untimely if delivered to the Secretary of Owens Corning at the
address shown above less than 60 days prior to the meeting. 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.
25
<PAGE>
Annual Report
An annual report including financial statements for the year ended December
31, 1998 ("Annual Report to Stockholders") has been mailed to all stockholders
of record as of February 23, 1999, 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 23, 1999 a copy of Owens Corning's Annual
Report on Form 10-K for 1998, as filed with the Securities and Exchange
Commission. Requests should be addressed to Owens Corning, Document Center 3,
One Owens Corning Parkway, Toledo, Ohio 43659.
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 Annual Report to Stockholders 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 & Company Inc. to assist in soliciting
proxies at a fee of $12,000, 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, 3 and 4, shares will be voted for or against, or abstained from
voting, as specified on each proxy. If no choice is indicated, a proxy will be
voted for Proposals 2 and 3 and against Proposal 4. Broker non-votes and
abstentions will have no effect on the outcome of the Proposals.
Voting Securities
Stockholders of record at the close of business on February 23, 1999 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 54,351,085 shares were
outstanding on the Record Date. Each share outstanding on the Record Date will
be entitled to one vote.
26
<PAGE>
EXHIBIT A
OWENS CORNING
Corporate Incentive Plan Terms Applicable to Certain Executive Officers
(As amended and restated, January 1, 1999)
1. Application
Set forth below are the annual incentive plan terms applicable to those
employees of Owens Corning (the "Company"), its subsidiaries and affiliates
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, 1999 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
Section162(m)(4)(C) of the Code. To the extent permitted by law, the Committee
may delegate its administrative authority with respect to the Corporate
Incentive Plan and, in the event of any such delegation of authority, the term
"Committee" as used in this Plan shall be deemed to refer to the Committee's
delegate as well as to the Committee. 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, 1999 (or by 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
A-1
<PAGE>
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 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, 1999 (or by 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 operating
profit, net income, income from operations, operating margin, net income
margin, return on net assets, return on total assets, return on common equity,
return on total capital, shareholder value added, total shareholder return,
common stock price appreciation, total shareholder return relative to a
defined marketplace, receivables growth, debt to equity ratios, earnings to
fixed charges ratios, introduction of new products and/or services, or
developing and/or implementing action plans or strategies. The foregoing
criteria shall have any reasonable definitions that the Committee may specify
at the time such criteria are adopted, 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. 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) and which are required to be taken into
account for purposes of Owens Corning's financial statements under generally
accepted accounting principles, shall be excluded or included in determining
the extent to which the corresponding performance goal has been achieved so
that the integrity and intent of the performance goal are maintained.
5. Maximum Award
The maximum dollar amount that may be paid to any participant under the Plan
for any year is $4 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
and restated on January 1, 1999 ("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
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<PAGE>
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 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 adverse 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
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<PAGE>
"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.
A-4
<PAGE>
_______________________________________________________________________________
INSTRUCTION CARD [LOGO OF OWENS CORNING]
ANNUAL MEETING OF STOCKHOLDERS, APRIL 22, 1999
OWENS CORNING
Savings and Profit Sharing Plan
Savings and Security Plan
To Fidelity Management Trust Company, Trustee* of the Plans:
Receipt of proxy soliciting material for above meeting is acknowledged. You
are directed to vote the number of shares reflecting my interest in each of
the Plans on February 23, 1999, the record date for the meeting and any ad-
journment thereof, and to effect that vote by executing a proxy or proxies in
the form solicited by the Board of Directors of Owens Corning, as indicated on
the reverse side.
THIS INSTRUCTION CARD IS CONTINUED ON THE REVERSE SIDE
PLEASE SIGN AND RETURN PROMPTLY
The Trustee of each Plan will vote shares for which an executed Instruction
Card is not received in the same proportion as the shares for which instruc-
tions have been received for such Plan. Card must be received by April 19,
1999.
*ChaseMellon has been appointed Agent to tally the votes.
(Continued, and to be marked, dated and signed, on the other side)
- -------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
<PAGE>
- --------------------------------------------------------------------------------
INSTRUCTION CARD
Please mark
your votes as
indicated in
this example [X]
The Board of Directors recommends a vote FOR Items 1, 2 and 3.
Item 1-Election of the following nominees FOR WITHHELD FOR ALL
as Directors: Curtis H. Barnette, Ann Iverson, [_] [_]
W. Walker Lewis, and Furman C. Moseley, Jr.
WITHHELD FOR: (Write that nominee's name in the space provided below).
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote AGAINST Item 4.
Item 2-To approve the amended and restated FOR AGAINST ABSTAIN
Corporate Incentive Plan Terms Applicable [_] [_] [_]
To Certain Executive Officers.
Item 3-To approve the action of the Board of FOR AGAINST ABSTAIN
Directors in selecting Arthur Andersen LLP as [_] [_] [_]
independent public accountants for the year 1999.
Item 4-Stockholder proposal concerning FOR AGAINST ABSTAIN
shareholder rights plan. [_] [_] [_]
Item 5-To act in their discretion on such other
matters as may come before said meeting or any
adjournment thereof.
I hereby authorize Fidelity Management Trust Company, as Trustee under the
Owens Corning Savings and Profit Sharing Plan and Savings and Security Plan, to
vote the shares of Owens Corning Common Stock held for my account under said
Plans.
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.
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
TO PARTICIPANTS IN SAVINGS PLANS [LOGO OF OWENS CORNING]
HOLDING OWENS CORNING COMMON STOCK
The Annual Meeting of Owens Corning Stockholders will be held Thursday, April
22, 1999, 2 p.m., at One Owens Corning Parkway, Toledo, Ohio.
Through your plan participation, you are the beneficial owner of Owens
Corning stock. As a participant in the plan, you have the right to instruct
your Trustee to vote your shares in accordance with your wishes. Your voting
instructions are completely confidential. The above instruction card is
provided for this purpose.
I look forward to seeing you at our annual meeting, Thursday, April 22, 1999
in Toledo.
Sincerely,
/s/ [SIGNATURE LOGO]
<PAGE>
_______________________________________________________________________________
PROXY [LOGO OF OWENS CORNING]
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, APRIL 22, 1999
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 22, 1999, 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 and 3 and against the Proposal referred to in Item 4.
(Continued, and to be marked, dated and signed, on the other side)
- -------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
<PAGE>
- --------------------------------------------------------------------------------
PROXY
Please mark
your votes as
indicated in
this example [X]
The Board of Directors recommends a vote FOR Items 1, 2 and 3.
Item 1-Election of the following nominees as FOR WITHHELD FOR ALL
Directors: Curtis H. Barnette, Ann Iverson, [_] [_]
W. Walker Lewis, and Furman C. Moseley, Jr.
WITHHELD FOR: (Write that nominee's name in the space provided below).
- ------------------------------------------------------------------------------
The Board of Directors recommends a vote AGAINST Item 4.
Item 2-To approve the amended and restated FOR AGAINST ABSTAIN
Corporate Incentive Plan Terms Applicable [_] [_] [_]
To Certain Executive Officers.
Item 3-To approve the action of the Board of FOR AGAINST ABSTAIN
Directors in selecting Arthur Andersen LLP as [_] [_] [_]
independent public accountants for the year 1999.
Item 4-Stockholder proposal concerning FOR AGAINST ABSTAIN
shareholder rights plan. [_] [_] [_]
Item 5-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.
- -------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
