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[LOGO] PITNEY BOWES
NOTICE OF THE 1996
ANNUAL MEETING
AND
PROXY STATEMENT
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Pitney Bowes Inc.
World Headquarters
Stamford, Connecticut 06926-0700
(203) 356-5000
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[LOGO] PITNEY BOWES
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TO THE STOCKHOLDERS:
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Stockholders attending the annual meeting in Stamford on May 13, 1996, are
cordially invited to join us for a continental breakfast, served from 8 a.m.
until the meeting begins at 10 a.m.
We look forward to welcoming many stockholders to the meeting and will make it
as interesting and informative as possible.
Sincerely yours,
George B. Harvey
Chairman and President
Stamford, Connecticut
March 29, 1996
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[LOGO] PITNEY BOWES
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NOTICE OF MEETING:
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The annual meeting of stockholders of Pitney Bowes Inc. will be held on May 13,
1996, at 10 a.m. at the company's facility on Walter Wheeler, Jr. Drive,
Stamford, Connecticut. Parking areas will be provided at the company's World
Headquarters at One Elmcroft Road, Stamford, Connecticut, and transportation
will be provided for the short distance to Walter Wheeler, Jr. Drive. Directions
to Pitney Bowes' World Headquarters are set forth on the back cover page of the
Proxy Statement; a map is on the inside back cover.
The items of business at the annual meeting are:
1. Election of four directors.
2. Appointment of independent accountants for 1996.
3. Adoption of a new Employee Stock Purchase Plan.
4. Adoption of an amendment to the 1991 Stock Plan.
5. Adoption of an amendment to the Key Employees' Incentive Plan.
6. Such other matters as may properly come before the meeting, including any
continuation of the meeting caused by any adjournment, or any postponement
of the meeting.
All holders of record of Pitney Bowes common stock and $2.12 convertible
preference stock as of the close of business on March 15, 1996, are entitled to
vote at the meeting or any continuation of the meeting caused by any
adjournment, or any postponement of the meeting.
It is important that all stockholders be represented at the meeting.
Stockholders are urged to sign and promptly return the enclosed proxy in the
accompanying envelope, which requires no postage if mailed in the United States.
Amy C. Corn
Corporate Secretary and
Senior Associate General Counsel
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[LOGO] PITNEY BOWES
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PROXY STATEMENT
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This statement is furnished in connection with the solicitation of proxies by
the board of directors of Pitney Bowes Inc. (the "board") for use at the annual
meeting of stockholders to be held on May 13, 1996, and at any continuation of
the meeting caused by any adjournment, or any postponement of the meeting.
Proxies may be revoked at any time before they are voted at the annual meeting
by (i) submitting to the corporate secretary of the company a written
revocation, or (ii) in the case of a stockholder of record, by (a) submitting a
later-dated proxy, or (b) attending the meeting, revoking the prior proxy and
voting at the annual meeting. Each proxy not revoked will be voted at the
meeting and will be voted in accordance with the instructions given in the proxy
or, if no instructions are given, will be voted consistent with the
recommendations of the board of directors. The votes of the holders of Pitney
Bowes common stock and $2.12 convertible preference stock ("$2.12 preference
stock") will be aggregated for each agendum item. Each share of common stock
will be entitled to one vote and each share of $2.12 preference stock will be
entitled to eight votes for each agendum item.
Votes cast by proxy or in person at the annual meeting will be tabulated by the
election inspectors appointed for the meeting and will determine whether or not
a quorum is present. The election inspectors will treat abstentions as shares
that are present and entitled to vote for purposes of determining the presence
of a quorum, but will treat them as unvoted for purposes of determining the
approval of any matter submitted to the stockholders for a vote. If a broker
indicates on a proxy that it does not have discretionary authority as to certain
shares to vote on a particular matter, those shares will not be considered as
present and entitled to vote with respect to that matter.
At the close of business on March 15, 1996, the record date for the annual
meeting, there were 149,835,860 shares of common stock outstanding and 92,836
shares of $2.12 preference stock outstanding.
The company's headquarters is in Stamford, Connecticut. This proxy statement and
the enclosed proxy are being mailed to stockholders on or about March 29, 1996.
ELECTION OF DIRECTORS
Under the company's Restated Certificate of Incorporation and its Bylaws, there
are three classes of directors numbering as near to equal in number as possible.
Each class is elected for a three-year term.
Four directors, Ms. Alvarado, Mr. Breslawsky, Mr. Campbell, and Mr. Hugel, were
elected last year to three-year terms expiring in 1998. Mr. Butler, Mr. Kimball,
Mr. Nunery and Mr. Taylor were elected in 1994 to three-year terms expiring in
1997. Mr. Harvey and Mrs. Sewell were elected in 1993 to three-year terms
expiring in 1996, and Mr. Critelli was elected by the board in 1994 to fill a
vacancy in the class of directors whose terms expire in 1996.
As previously announced by the company, in November 1995 the Nominating and
Organization Affairs Committee (consisting of four nonemployee directors whose
names are set forth on page 6) recommended, and the board approved, increasing
the number of directors by one, to a total of twelve, and electing Michael I.
Roth to the board. In compliance with the requirement contained in the company's
Restated Certificate of Incorporation and in its Bylaws that the classes of
directors be as near to equal in number as possible, Mr. Roth was elected to the
class of directors whose terms expire in 1996.
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As also previously announced by the company, in February 1996 Mr. Critelli was
elected vice chairman and chief executive officer, and Mr. Breslawsky was
elected president and chief operating officer, effective as of May 13, 1996. Mr.
Harvey will remain chairman through December 31, 1996 when, in accordance with
the company's retirement policy, he will retire. Mr. Critelli has also been
elected chairman, effective January 1, 1997, subject to his being re-elected as
a director by the stockholders.
The Nominating and Organization and Affairs Committee recommended, and the board
approved, that Mr. Critelli, Mr. Harvey, Mr. Roth, and Mrs. Sewell be presented
to the stockholders for reelection to three-year terms expiring in 1999. It is
expected that Mr. Harvey will resign from the board as of December 31, 1996, in
accordance with the company's previously announced succession plan, as described
above.
Should you choose not to vote for a nominee, you may list on the proxy the name
of the nominee for whom you choose not to vote and mark your proxy under
Proposal No. 1 for all other nominees. Should any nominee become unable to
accept nomination or election as a director (which is not now anticipated), the
persons named in the enclosed proxy will vote for such substitute nominee as may
be selected by the board of directors, unless the board reduces the number of
members of the board below twelve directors, which is not currently being
contemplated. The affirmative vote of a plurality of the votes cast by the
holders of issued and outstanding shares of Pitney Bowes common and $2.12
preference stock (each share of $2.12 preference stock counting as eight votes
of common stock) in person or by proxy at the annual meeting is required to
elect directors. Information about each nominee for director and each incumbent
director, including the nominee's or incumbent's age as of February 29, 1996, is
set forth below. Unless otherwise indicated, each nominee or incumbent has held
his or her present position for at least five years.
NOMINEES FOR ELECTION
TO TERMS EXPIRING AT THE 1999 ANNUAL MEETING
MICHAEL J. CRITELLI, 47, vice chairman, since 1994, of Pitney Bowes Inc.
Formerly president of Pitney Bowes Financial Services, 1993-1994, and vice
president, secretary & general counsel and chief personnel officer of Pitney
Bowes Inc., 1990-1993. Director since 1994.
GEORGE B. HARVEY, 64, chairman, president and chief executive officer of Pitney
Bowes Inc. Director since 1980. (Also a director of Massachusetts Mutual Life
Insurance Co.; Merrill Lynch & Co., Inc.; Pfizer, Inc.; and McGraw Hill, Inc.)
MICHAEL I. ROTH, 50, since 1994, chairman and chief executive officer of Mutual
of New York. Formerly chairman, president and chief executive officer,
1993-1994, and president and chief operating officer, 1991-1993, with Mutual of
New York. Director since 1995. (Also a director of Enterprise Group; Promus
Hotel Corporation; Enterprise Foundation.)
PHYLLIS SHAPIRO SEWELL, 65, retired senior vice president of Federated
Department Stores, Inc. Director since 1987. (Also a director of Lee
Enterprises, Inc.; and Sysco Corporation.)
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INCUMBENT DIRECTORS WHOSE
TERMS EXPIRE AT THE 1998 ANNUAL MEETING
LINDA G. ALVARADO, 44, president, since 1974, of Alvarado Construction, Inc., a
Denver-based commercial and industrial general contractor. Director since 1992.
(Also a director of Cyprus Amax Minerals Company; and Engelhard Corp.)
MARC C. BRESLAWSKY, 53, vice chairman, since 1994, of Pitney Bowes Inc., and
since 1990, president of Pitney Bowes Office Systems. Director since 1994. (Also
a director of United Illuminating Company.)
COLIN G. CAMPBELL, 60, president of Rockefeller Brothers Fund, a philanthropic
organization. Former president of Wesleyan University from 1970 to 1988.
Director since 1977. (Also director of Hartford Steam Boiler Inspection &
Insurance Company; Sysco Corporation; and Rockefeller Financial Services.)
CHARLES E. HUGEL, 67, retired chairman and chief executive officer of Combustion
Engineering, Inc., a company whose principal products are power generation and
process equipment and systems. Director since 1987. (Also a director of Eaton
Corporation.)
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INCUMBENT DIRECTORS WHOSE
TERMS EXPIRE AT THE 1997 ANNUAL MEETING
WILLIAM E. BUTLER, 64, retired chairman and chief executive officer (1991-1995),
and director of Eaton Corporation, a manufacturer of engineered products serving
the automotive, industrial, commercial, and military markets. President and
chief operating officer of Eaton Corporation from 1989 to 1991. Director since
1991. (Also a director of Bearings, Inc.; Zurn Industries, Inc.; The Goodyear
Tire and Rubber Co.; and Ferro Corporation.)
DAVID T. KIMBALL, 68, retired chairman and chief executive officer of General
Signal Corporation, a manufacturer of instrumentation and control systems and
industrial equipment. Director since 1983.
LEROY D. NUNERY, 40, vice president, human resources of the National Basketball
Association since 1993. Formerly director and sector head of the Public Finance
Sector, Merchant Banking Group, 1991-1993; and vice president, Corporate Banking
Group, 1987-1991, of Swiss Bank Corporation. Director since 1991. (Mr. Nunery is
vice president of Leroy Nunery & Sons, Inc., a family owned electrical
contracting busi-ness which filed for protection under Chapter 11 of the U.S.
Bankruptcy Laws on October 27, 1995.)
ARTHUR R. TAYLOR, 60, chairman of Arthur Taylor & Company, an investment firm,
and, since 1992, president of Muhlenberg College in Allentown, Pennsylvania.
Dean of the faculty of Business, Fordham University from 1985 to 1992. Director
since 1982. (Also a director of Louisiana Land and Exploration Company; Nomura
Pacific Basin Fund, Inc.; Japan OTC Fund, Inc.; Korea Equity Fund, Inc.; and
Jakarta Growth Fund Inc.)
COMMITTEES OF THE BOARD OF DIRECTORS
The board met nine times in 1995 and each director attended at least 75 percent
of the aggregate number of board meetings and meetings held by the board
committees on which he or she served during 1995.
Members of the board serve on one or more of the seven committees described
below. Except for Mr. Harvey, who is a member of the Executive Committee,
directors who are also employees of the company do not serve on board
committees.
The AUDIT COMMITTEE, which met three times in 1995, monitors the financial
reporting standards and practices of the company and the company's internal
financial controls to ensure compliance with the policies and objectives
established by the board of directors. To further the foregoing, the Audit
Committee recommends to the board for stockholder approval an independent
accounting firm to conduct the annual audit, and discusses with the company's
independent accountants the scope of their examinations, with particular
attention to areas where either the committee or the independent accountants
believe special emphasis should be directed. The committee reviews the annual
financial statements and independent accountants' report, invites the
accountants' recommendations on internal controls and on other matters, and
reviews the evaluation given and corrective action taken by management. It
reviews the independence of the accountants and their fees. It also reviews
Pitney Bowes' internal accounting controls and the scope and results of the
5
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company's internal auditing activities, and submits reports and proposals on
these matters to the board. Members are Charles E. Hugel (Chairman), Linda G.
Alvarado, Colin G. Campbell, and Arthur R. Taylor.
The CORPORATE RESPONSIBILITY COMMITTEE, which met three times in 1995, monitors
the company's policies and programs concerning stockholders, cus-tomers,
employees, and the communities in which the company operates. The policies and
programs that the committee monitors include employee relations, investor
relations, environmental protection, customer satisfaction, postal and
governmental relations, employee safety and product safety. Members are William
E. Butler (Chairman), Linda G. Alvarado, Michael I. Roth, and Phyllis Shapiro
Sewell.
The EXECUTIVE COMMITTEE, which did not meet in 1995, can act, to the extent
permitted by Delaware corporation law and the company's Restated Certificate of
Incorporation and its Bylaws, on all matters concerning management of the
business which may arise between scheduled board of directors meetings, unless
otherwise limited by the committee's charter. Members are George B. Harvey
(Chairman), Colin G. Campbell, and Arthur R. Taylor.
The EXECUTIVE COMPENSATION COMMITTEE, which met five times in 1995, oversees the
company's executive compensation program, including establishing the company's
executive compensation policies and undertaking an annual review of all
components of compensation to ensure that the company's objectives are
appropriately achieved. The committee is also responsible for certain
administrative aspects of the company's compensation plans (see "Executive
Officer Compensation" beginning on page 10) and the 1984 Pitney Bowes Employee
Stock Purchase Plan, and recommends changes in such plans. It also establishes
performance targets, and grants, or recommends for grant, incentives in the
forms permitted under the Pitney Bowes Key Employees' Incentive Plan, and
recommends grants of incentives under the Pitney Bowes 1991 Stock Plan. Grants
recommended by the Executive Compensation Committee are approved by the
independent directors of the board. Members are Phyllis Shapiro Sewell
(Chairman), William E. Butler, and David T. Kimball.
The FINANCE COMMITTEE, which met six times in 1995, reviews the company's
financial condition and evaluates significant financial policies and investment
decisions, advises management and recommends financial action to the board. The
committee's duties include monitoring the company's current and projected
financial condition and reviewing and approving major investment decisions.
Members are Arthur R. Taylor (Chairman), Colin G. Campbell, Charles E. Hugel,
Leroy D. Nunery, and Michael I. Roth.
The NOMINATING AND ORGANIZATION AFFAIRS COMMITTEE, which met eight times in
1995, recommends directors for nomination by the board for election to the board
of directors, recommends membership and duties of the board committees, reviews
officers' potential for growth, and, with the chief executive officer, is
responsible for succession planning and ensuring management continuity. The
committee reviews and evaluates the effectiveness of corporate administration
and its governing documents. The committee will consider director nominations
made by the company's stockholders. Stockholder recommendations must be in
writing, addressed to the Chairman of the Nominating and Organization Affairs
Committee, c/o Corporate Secretary of the company at the address set forth on
the cover of this proxy statement, and should include a statement describing the
qualifications and experience of the proposed candidate and the basis for
nomination. Members are Colin G. Campbell (Chairman), William E. Butler, Charles
E. Hugel, and Phyllis Shapiro Sewell.
The RETIREMENT ADVISORY COMMITTEE, which met three times in 1995, oversees the
financial operations of the company's retirement, savings, and post-retirement
benefit plans and retirement funds to ensure that plan liabilities are
adequately funded and plan assets are prudently managed. The committee
recommends for approval by the board the establishment of new plans and any
amendments that materially affect cost, benefit coverages, or liabilities of the
plans. With respect to major retirement plans, the committee appoints and
removes plan trustees and investment managers, sets the managers' investment
return objectives, and approves contributions to such plans. It reports to the
board on the operations of all plans and the management of funds established
thereunder. Members are David T. Kimball (Chairman), Linda G. Alvarado, and
Leroy D. Nunery.
6
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SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of March 15, 1996, the number of shares of
common stock (rounded to the nearest whole number) held by each director, each
nominee for director, each of the five executive officers named in the Summary
Compensation Table (Table I) on page 11, and all directors and executive
officers as a group (19 persons). The directors and executive officers as a
group are beneficial owners of less than one percent of the aggregate shares of
common stock and $2.12 preference stock. Directors and executive officers are
required by the Securities Exchange Act of 1934, as amended, to file forms with
the Securities and Exchange Commission to report their holdings of and
transactions in the company's securities and to furnish the company with copies
of such forms. It is the practice of the company to file such forms on behalf of
its directors and executive officers. Based solely upon a review of such forms
filed with the company, the company believes that all such forms have been
timely filed.
As of December 31, 1995, the only persons or groups known to the company to be
beneficial owners of more than five percent of any class of the company's voting
securities are The Capital Group Companies, Inc. and FMR Corp., as more fully
described below. The following information is based solely upon Schedules 13G
filed by The Capital Group Companies, and FMR Corp., respectively, with the
Securities and Exchange Commission.
Certain operating subsidiaries of The Capital Group Companies, Inc. exercised
investment discretion over various institutional accounts which, as of December
29, 1995, held 17,075,740 shares of the company's outstanding common stock
(representing 11.3 percent of the outstanding shares of the class). Capital
Guardian Trust Company, a bank, and one of such operating companies, exercised
investment discretion over 5,150,440 of said shares. Capital Research and
Management Company, a registered investment adviser, and Capital International
Limited and Capital International, S.A., other operating subsidiaries, had
investment discretion with respect to 11,615,000, 235,700 and 74,600 shares,
respectively, of the above shares. The Capital Group Companies, Inc. has an
office at 333 South Hope Street, Los Angeles, CA 90071.
Certain operating subsidiaries of FMR Corp. exercised investment discretion over
various institutional accounts which, as of December 31, 1995, held 9,167,880
shares (representing 6.05 percent) of the company's outstanding common stock.
Fidelity Management and Research Company, a wholly-owned subsidiary of FMR
Corp., and a registered investment advisor, exercised investment discretion over
8,131,727 of said shares. Fidelity Management Trust Company, a bank, and
Fidelity International Limited, other operating subsidiaries, exercised
investment discretion with respect to 1,018,153, and 18,000 shares,
respectively. FMR Corp. has an office at 82 Devonshire Street, Boston, MA
02109-3614.
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SECURITY OWNERSHIP
SHARES OPTIONS
DEEMED TO EXERCISABLE
TITLE OF BE BENEFICIALLY WITHIN
CLASS OF STOCK NAME OF BENEFICIAL OWNER OWNED (a) (b) 60 DAYS (c)
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Common Linda G. Alvarado 2,610 --
Common William E. Butler 3,000 --
Common Colin G. Campbell 6,000 --
Common Charles E. Hugel 3,000 --
Common David T. Kimball 23,500 --
Common Leroy D. Nunery 2,156 --
Common Michael I. Roth 2,000 --
Common Phyllis Shapiro Sewell 6,000 --
Common Arthur R. Taylor 9,276 --
Common Carmine F. Adimando 44,509 15,566
Common Marc C. Breslawsky 74,431 118,515
Common Michael J. Critelli 52,550 32,798
Common George B. Harvey 346,892 186,865
Common Carole F. St. Mark 38,472 68,382
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Common All executive officers and 629,891 456,810
directors as a group (19)
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(a) Some of the holdings shown include shares required to be reported as
beneficially owned by the directors or executive officers even though
beneficial ownership of certain of those shares has been disclaimed. The
number of common shares so reported are 4,000 in the case of Mr. Campbell,
1,500 in the case of Mr. Kimball, 1,500 in the case of Mr. Adimando, and
7,000 in the case of all executive officers and directors as a group.
(b) The shares beneficially owned by any director or executive officer, or by
all directors and executive officers as a group, represent in each case
less than one percent of the class.
(c) The executive officer has the right to acquire beneficial ownership of
this number of shares within 60 days of the record date for the annual
meeting (March 15, 1996) by exercising outstanding stock options which
would require the payment of substantial amounts to cover the exercise
price of such options. See footnote 2 to Table III on page 13. These
shares are required to be reported as beneficially owned by the executive
officer.
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DIRECTORS' COMPENSATION
DIRECTORS' FEES. In 1995, each nonemployee director received a fee of $24,000
per year (pro-rated) and $1,100 for each board and committee meeting attended
through June 30, 1995. Effective July 1, 1995, the director's fee was increased
to $30,000 per year (pro-rated) and committee chairpersons received a fee of
$1,500 for each committee meeting that they chaired. The fee for other meetings
remained at $1,100 for each committee meeting (non-chairpersons) and each board
meeting attended. Directors were also reimbursed for their out-of-pocket
expenses incurred in attending board and committee meetings. Directors may elect
to defer receipt of fees, in which event they receive interest on the amount
deferred at the rate then payable on Standard & Poor's AA-rated bonds. Directors
who are also employees of the company receive no additional compensation for
serving as a director of the company.
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DIRECTORS' STOCK PLAN. At the 1991 annual meeting, the company's stockholders
adopted a Directors' Stock Plan pursuant to which each nonemployee director is
granted 400 shares of Pitney Bowes restricted common stock annually as part of
his or her compensation. On May 8, 1995, an aggregate of 3,600 such shares was
awarded, with each of the nine nonemployee directors then serving receiving 400
shares of restricted common stock. The shares carry full voting and dividend
rights but may not be transferred or alienated until the later of (1)
termination of service as a director, or, if earlier, the date of a change of
control, or (2) the expiration of the six-month period following the grant of
such shares. Ownership of such shares is reflected in the table on page 8
showing security ownership of executive officers and directors.
DIRECTORS' RETIREMENT PLAN. The company maintains a Directors' Retirement Plan.
Under this plan, there is no benefit paid to a director who serves for less than
five years. A director with five years of service will receive an annual
retirement benefit calculated as 50 percent of the director's retainer in effect
at the time of such director's retirement, and a director with more than five
years of service at retirement will receive an additional 10 percent of such
retainer for each year of service over five, to a maximum of 100 percent of such
retainer for ten or more years of service. The current annual retainer fee paid
to an active director who is not an employee of the company is $30,000. The
annual benefit is paid for life to a director who (i) leaves the board at or
after age 60, or (ii) leaves the board prior to age 60 but defers commencement
of receipt of benefits until age 60. A director who leaves the board and who
elects receipt of benefits before age 60 will receive the annual benefit only
during a period equal to the number of years that the director served on the
board. Individuals who are eligible for pension benefits as prior employees of
the company are not eligible under the Directors' Retirement Plan, unless they
serve as nonemployee directors for at least five years.
STOCK PERFORMANCE GRAPH
The following line graph compares the cumulative total return on an investment
in the company's common stock over the five-year period ending December 31,
<TABLE>
<CAPTION>
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COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG PITNEY BOWES INC., THE S&P 500 COMPOSITE INDEX, AND THE COMPANIES
INCLUDED IN THE S&P OFFICE EQUIPMENT AND SUPPLIES INDEX AND THE
S&P COMPUTER SYSTEMS INDEX
*Based on an initial investment of $100 on December 31, 1990, with reinvestment
of dividends.
[The following table presents the plot points used in creating the line graph
which appears in the printed version.]
Pitney Bowes Inc. S&P 500(R) S&P Off. Eq./Comp. Sys.
---------------- ---------- -----------------------
<S> <C> <C> <C>
1990 100 100 100
1991 163 130 101
1992 210 140 87
1993 223 155 96
1994 176 157 119
1995 268 215 165
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</TABLE>
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1995, with that of (i) the Standard & Poor's ("S&P(R)") 500 Composite Index and
(ii) a combination of the companies included in the S&P Office Equipment and
Supplies Index and the S&P Computer Systems Index at December 31, 1995, over the
same five-year period.
Both the S&P 500 Composite Index and the index that reflects the combined
returns of companies in the S&P Office Equipment and Supplies and the S&P
Computer Systems indices are market-value weighted indices. All information
shown above is based upon data provided to the company by three separate
independent organizations, all of which have been licensed by Standard & Poor's
Corporation to use its official total return calculation.
The graph shows that on a total return basis, assuming reinvestment of all
dividends, $100 invested in the company's common stock on December 31, 1990
would have grown to $268 by December 31, 1995. By comparison, $100 invested in
the S&P 500 Composite Index would have grown to $215 by December 31, 1995.
Additionally, $100 invested in the index that reflects the combined returns of
companies in the S&P Office and Equipment Index and the S&P Computer Systems
Index would have been worth $165 on December 31, 1995.
EXECUTIVE OFFICER COMPENSATION
The Executive Compensation Committee (the "Committee"), which is composed of
three independent (nonemployee) directors, oversees the company's executive
compensation programs and establishes its executive compensation policies. (A
description of the Committee's duties appears on page 6.) The Committee reports
on executive compensation to all of the independent directors of the Board (the
"Independent Directors") and makes recommendations to the Independent Directors
regarding specific executive officer compensation matters with respect to which
the Independent Directors have final approval. (See "Report on Executive
Compensation by the Independent Directors" beginning on page 14.)
SUMMARY COMPENSATION TABLE. The following table, Table I, shows all compensation
paid or granted, during or with respect to the 1995 fiscal year and the two
previous fiscal years, to the chief executive officer and the four other highest
paid executive officers for services rendered in all capacities while an
executive officer. (Persons in this group are referred to herein individually as
a "Named Executive Officer" and collectively as the "Named Executive Officers,"
and the titles listed are the titles held as of the end of the 1995 fiscal
year.) This table shows all cash compensation, including Performance Based
Compensation (hereinafter referred to as "PBC Incentive"), which is an annual
cash incentive granted under the Pitney Bowes Key Employees' Incentive Plan (the
"KEIP"), which plan was approved by the company's stockholders. This table also
shows the number of stock options granted during each such year and the value of
previously granted long-term incentives that were paid in each year as a result
of the achievement of the related three-year performance objectives.
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<TABLE>
<CAPTION>
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TABLE I
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------- ------------------------------
GRANTS PAYOUTS
------ -------
LONG-TERM
INCENTIVE
PBC OTHER ANNUAL STOCK PLAN ALL OTHER
SALARY INCENTIVE COMPENSATION OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)(2) ($)(3)
--------------------------------- ---- --------- -------- ------------- ------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
George B. Harvey (1).................. 1995 767,083 1,150,600 -- 45,950 1,151,817 3,750
Chairman, President & Chief 1994 730,417 660,000 -- 37,050 1,012,822 26,960
Executive Officer 1993 676,667 585,000 -- 14,550 1,067,943 32,066
Michael J. Critelli (1)............... 1995 500,000 550,000 __ 15,650 328,117 3,750
Vice Chairman 1994 348,010 284,600 __ 19,050 244,431 3,000
1993 267,862 194,600 __ 3,500 260,061 5,500
Marc C. Breslawsky (1)................ 1995 500,000 550,000 __ 15,650 514,216 7,884
Vice Chairman 1994 445,625 443,200 __ 31,900 450,771 5,952
1993 404,375 322,700 __ 6,250 484,913 6,767
Carole F. St. Mark.................... 1995 413,333 396,800 __ 9,050 514,216 3,750
President - 1994 392,517 274,800 __ 6,900 397,085 3,000
Pitney Bowes Business Services 1993 354,223 276,000 __ 6,250 422,892 6,552
Carmine F. Adimando................... 1995 365,750 307,200 __ 5,800 361,223 6,567
Vice President - Finance and 1994 343,250 250,600 -- 4,200 309,976 7,623
Administration, and Treasurer 1993 317,500 233,800 -- 3,800 316,082 6,659
</TABLE>
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(1) As previously announced by the company, Mr. Critelli has been elected vice
chairman and chief executive officer, and Mr. Breslawsky has been elected
president and chief operating officer, effective May 13, 1996. Mr. Harvey
will remain chairman through December 31, 1996, when, in accordance with
the company's succession plan, he will retire. Mr. Critelli has also been
elected chairman as of January 1, 1997, subject to his being re-elected as
a director by the stockholders. See pages 3 and 4 for further biographical
information on Messrs. Harvey, Critelli and Breslawsky, respectively.
(2) The value shown for 1995 is the aggregate of the value of the payout of
Cash Incentive Units ("CIUs") granted on June 14, 1993 and the December 31,
1995 market value of restricted stock granted on June 14, 1993. Payout
under the CIUs was based on the magnitude of achievement against the
financial performance criteria over the three-year period ending December
31, 1995. (See footnote 1 to Table IV on page 14.) The restrictions on the
stock were released due to the attainment of the three-year performance
objectives. (See footnote 2 to Table IV.)
(3) Includes imputed income relating to company-paid life insurance and amounts
contributed to the Pitney Bowes Deferred Investment Plan on behalf of
Messrs. Harvey, Critelli, and Breslawsky, Ms. St. Mark and Mr. Adimando.
The plan is a tax-qualified plan under Section 401(k) of the Internal
Revenue Code.
- --------------------------------------------------------------------------------
11
<PAGE>
OTHER COMPENSATION TABLES. Tables II through IV which follow show additional
detail about Executive Officer compensation, specifically cash-based and
stock-based long-term incentives granted under the company's compensation plans.
Long-term incentives in the form of options granted during the three fiscal
years covered by Table I are shown in that table. The outstanding options were
granted under the 1979 Pitney Bowes Stock Option Plan (the "1979 Plan"), which
provides only for the granting of options, and the Pitney Bowes 1991 Stock Plan
(the "1991 Plan"), which provides for the granting of various stock-based
incentives, including options; both plans were approved by the company's
stockholders. (The 1979 Plan, the 1991 Plan and the KEIP are sometimes
collectively referred to herein as the "Incentive Plans.")
The following table, Table II, shows additional detail regarding options
granted during 1995 pursuant to the 1991 Plan.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
TABLE II
STOCK OPTION GRANTS IN 1995
NET POTENTIAL
REALIZABLE VALUE AT
PERCENTAGE OF ASSUMED ANNUAL RATES
OPTIONS TOTAL OPTIONS EXERCISE OR OF STOCK PRICE
GRANTED GRANTED TO BASE PRICE APPRECIATION FOR
IN 1995 EMPLOYEES ($/SHARE) OPTION TERM (2)
-------------------
NAME (#) IN 1995 (1) EXPIRATION DATE 5% ($) 10% ($)
----------------------------- ------- --------- --------- ------------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
George B. Harvey................. 45,950 9.45 33.5625 Feb. 12, 2005 969,880 2,457,866
Michael J. Critelli.............. 15,650 3.22 33.5625 Feb. 12, 2005 330,329 837,119
Marc C. Breslawsky............... 15,650 3.22 33.5625 Feb. 12, 2005 330,329 837,119
Carole F. St. Mark............... 9,050 1.86 33.5625 Feb. 12, 2005 191,021 484,085
Carmine F. Adimando.............. 5,800 1.19 33.5625 Feb. 12, 2005 122,422 310,242
</TABLE>
- ----------
(1) The exercise price equals the market price of a share of the company's
common stock on the date of grant. These options become exercisable in
installments over a three-year period: one-third after the first year, an
additional one-third after the second year, and the remaining one-third
after the third year.
(2) The 5 and 10 percent growth rates, which are specified by the Securities
and Exchange Commission, illustrate that the potential future value of the
options to the Named Executive Officer is linked directly to the future
growth of the price of the company's common stock. Because the exercise
price for options granted equaled the market price of the common stock on
the date of grant, no gain to the Named Executive Officer is possible
without an increase in the stock price, which would benefit the company's
stockholders as a whole. Zero growth in the stock price will result in zero
realizable value to the Named Executive Officers. The 5 and 10 percent
growth rates are intended for illustration only and are not intended to be
predictive of future growth; the actual value, if any, that may be realized
by any Named Executive Officer will depend on the market price of the
common stock on the date of exercise.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
12
<PAGE>
Shown in Table III below is information regarding the exercise of options in
1995 by the Named Executive Officers and information regarding their total
outstanding options as of December 31, 1995.
- ---------------------------------------------------------------------------------------------------------------
TABLE III
OPTIONS EXERCISED IN 1995 AND 1995 YEAR-END OPTION VALUES
NUMBER OF
SHARES SECURITIES UNDERLYING NET VALUE OF
ACQUIRED NET VALUE UNEXERCISED OPTIONS UNEXERCISED IN-THE-MONEY
ON EXERCISE REALIZED AT YEAR-END (#) (1) OPTIONS AT YEAR-END ($) (2)
------------------------ --------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------- ---------- -------- ---------- ------------ --------- -------------
<S> <C> <C> <C> <C> <C> <C>
George B. Harvey 102,376 2,912,059 171,549 75,501 3,313,885 820,510
Michael J. Critelli 2,000 32,937 27,582 29,518 469,600 386,650
Marc C. Breslawsky 0 0 113,299 39,001 2,418,702 505,661
Carole F. St. Mark 0 0 65,366 15,734 1,311,397 164,885
Carmine F. Adimando 37,400 909,080 13,633 9,867 184,227 104,272
- ----------
(1) These columns show the aggregate totals of options granted during the
period 1987 through 1995. The number of shares subject to the options has
been adjusted to reflect the 1992 two-for-one stock split. All options
granted prior to 1993 become exercisable in installments over a three-year
period, 25 percent after the first year, an additional 25 percent after the
second year, and the remaining 50 percent after the third year; and options
granted after 1993 become exercisable one-third after the first year, an
additional one-third after the second year, and the remaining one-third
after the third year.
(2) These values are based on $47.00 per share, the market price of a share of
common stock as of December 31, 1995, net of exercise prices, which range
from $19.5938 to $42.6785 per share (adjusted to reflect the 1992 stock
split). In all cases, the exercise price equaled the market price of a
share at the date of grant.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
Table IV, which follows, shows detailed information regarding long-term
incentives other than options granted under the Incentive Plans in 1995.
Long-term incentives are contingent upon the attainment of one or more specified
performance objectives. The company is obligated, under the terms of these
incentives, to make the specified payments, if any, only to the extent that the
stated performance objectives are achieved. In 1995, two types of long-term
incentives were granted: restricted stock (shares of the company's common stock,
the full ownership of which is contingent on the attainment of a performance
objective over a three-year period and which is subject to forfeiture); and Cash
Incentive Units ("CIUs") (which represent a defeasible right to receive cash,
the receipt and amount of which are contingent upon the extent to which
specified performance objectives are attained during the related three-year
period).
13
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
TABLE IV
1995 LONG-TERM INCENTIVE PLAN GRANTS
NUMBER OF ESTIMATED FUTURE PAYOUTS UNDER
SHARES, UNITS OR PERFORMANCE OR OTHER NON-STOCK PRICE-BASED PLANS
--------------------------------------------------
OTHER RIGHTS PERIOD UNTIL THRESHOLD TARGET MAXIMUM
--------------- ---------- --------------- ---------------
CIUS R/S MATURATION OR CIU R/S CIU R/S CIU R/S
NAME (1) (2) PAYOUT (1) (2) ($) (#) ($) (#) ($) (#)
- ----------------------- -------- ---- ----------------- --- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
George B. Harvey.......... 588,000 11,050 December 31, 1997 0 5,525 588,000 11,050 918,750 11,050
Michael J. Critelli....... 340,000 6,250 December 31, 1997 0 3,125 340,000 6,250 531,250 6,250
Marc C. Breslawsky........ 340,000 6,250 December 31, 1997 0 3,125 340,000 6,250 531,250 6,250
Carole F. St. Mark........ 250,250 4,500 December 31, 1997 0 2,250 250,250 4,500 391,016 4,500
Carmine F. Adimando....... 198,830 2,950 December 31, 1997 0 1,475 198,830 2,950 310,672 2,950
- ----------
(1) CIUs granted under the Pitney Bowes KEIP represent a defeasible right to
receive cash payments if certain earnings per share and return on
stockholders' equity performance criteria are achieved over the three-year
period ending December 31, 1997. CIUs that will mature on December 31, 1997
will pay $0/CIU if the threshold levels are not exceeded. The CIUs will
have a value of $.0075 to $1.5625 per unit if the earnings per share and
return on stockholders' equity performance criteria are met, depending on
the actual magnitude of achievement.
(2) Restricted stock granted under the Pitney Bowes 1991 Stock Plan is subject
to forfeiture if certain minimum earnings per share performance criteria
are not achieved over a three-year period or if the individual is not
employed with the company on the specified determination date. If the
threshold level of growth is achieved, 50 percent of the restricted stock
will be released. If the target level is achieved or exceeded, 100 percent
of the restricted stock will be released. A prorated amount will be
released for achievement between the threshold and the target level of
growth. Outstanding shares of restricted stock were granted to the Named
Executive Officers on February 14, 1994, and February 13, 1995, as follows:
Mr. Harvey, 7,500 and 11,050 shares, respectively; Mr. Critelli, 1,700
shares, and 6,250, respectively; and 150 shares on September 12, 1994, and
4,400 shares on December 12, 1994; Mr. Breslawsky, 3,200, and 6,250 shares,
respectively; and 3,050 shares on December 12, 1994; Ms. St. Mark, 3,200
and 4,500 shares, respectively; and Mr. Adimando, 1,950 and 2,950 shares,
respectively. The aggregate number of shares of restricted stock held by
the Named Executive Officers as of December 31, 1995 (exclusive of shares
that were released to the Named Executive Officers after such date), and
the aggregate fair market value of such shares is as follows: Mr. Harvey,
18,550 shares ($871,850); Mr. Critelli, 12,500 shares ($587,500); Mr.
Breslawsky, 12,500 shares ($587,500); Ms. St. Mark, 7,700 shares
($361,900); and Mr. Adimando, 4,900 shares ($230,300). (Market value is
calculated at $47.00 per share, the market price of the common stock on
December 31, 1995.) The value of shares released after December 31, 1995 is
included in Table I under the heading "Long-Term Incentive Plan Payouts."
Individuals granted restricted stock in 1994 and 1995 have voting rights
and receive dividends with respect to the stock during the restricted
period.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
REPORT ON EXECUTIVE COMPENSATION BY THE INDEPENDENT DIRECTORS
INTRODUCTION
The executive compensation policies and programs of the company are the
responsibility of the Executive Compensation Committee (the "Committee"), which
consists of three independent directors. The Committee, in turn, recommends
certain policies, programs and specific actions to all of the independent
directors of the board (the "Independent Directors") for final approval.
14
<PAGE>
The company's philosophy is to compensate employees fairly and competitively at
the average or median level in the markets in which it competes for talent when
performance meets goals. Thus, it has developed a strategy which is designed to
attract, motivate, and retain the best people to achieve the company's business
objectives. The design of the compensation program permits recognition of
individual contributions as well as results of the respective business units.
The company's executive compensation program has been designed with four main
objectives: (1) To provide total compensation which is competitive when compared
to various markets in which the company competes for executive talent; (2) To
place a portion of annual compensation at risk subject to performance against
objectives; (3) To divide total compensation between annual and long-term
components with a significant portion represented by long-term performance
related components; and (4) To align long-term compensation with stockholder
interests.
In 1995, the Committee considered all features of the executive compensation
program to ensure that, when combined, the individual components still meet the
objectives of the program, and to ensure that total compensation is competitive
as it relates to the responsibilities and performance of the executives. This
review included consideration and discussion of material prepared by the
company's primary executive compensation consulting firm and other such firms,
and covered in detail the competitiveness of base salary, total annual
compensation, and total long-term compensation. The company's compensation
information was compared to that of companies deemed to be in its industry
group, including some of the companies in the S&P 500 as well as companies in
the S&P Office Equipment and Supplies Index, or the S&P Computer Systems Index
referenced in the performance graph shown on page 9. The company's compensation
information was also compared to that of other companies of similar or larger
revenue size and in different geographical areas because the Committee believes
that the competing marketplace for executive talent is a larger universe of
companies than those in the company's industry group. During this review, the
Committee assessed the levels of compensation; the mix of compensation; the
individual and financial performance objectives for PBC Incentives, CIUs and
restricted stock; the competitiveness of the individual and combined components;
and the effectiveness of compensation in supporting the achievement of the
company's objectives.
The executive compensation program and established objectives described above
are applied to all the company's executives. Although some executives are not
eligible to receive every long-term incentive described below as part of his or
her compensation, the compensation provided each executive reflects the
company's objectives of linking a portion of compensation to performance and of
providing an incentive for long-term achievement.
The Committee reviews and recommends to the Independent Directors the
compensation of the most highly compensated executives (approximately 0.1
percent of the total employees in the company, referred to herein as "Key
Executives"), including the compensation of the Named Executive Officers
presented in the preceding compensation tables (see Tables I through IV on pages
11-14 above). It also establishes the policies for and reviews the annual PBC
Incentive and stock options granted to executives who comprise approximately 1
percent of the total employees of the company (referred to herein as "All
Executives"). This comprehensive review by the Committee is designed to ensure
equity, consistency, fairness, and the appropriateness of the total value of
compensation.
Based upon this review, the Committee concluded that the company's compensation
programs were functioning as intended; that significant portions of total
compensation were earned based on performance; and that overall total
compensation opportunities were positioned well in relation to the external
market and in line with Pitney Bowes compensation philosophies and strategies.
ANNUAL COMPENSATION
BASE SALARY. In general, the company establishes base pay for All Executives at
what it believes to be, in the aggregate, less than competitive levels based on
information provided by the company's consultants. The company, however,
believes its PBC Incentive opportunity at target to be slightly more than
competitive, thus providing compensation that is competitive overall when
objectives are met, but which generally places more annual pay at risk subject
to performance.
15
<PAGE>
The determination of an individual Named Executive Officer's base pay is based
on the executive's level of experience, position in the salary range, individual
performance against annually established financial and nonfinancial unit and
individual objectives (such as revenue, net income, long-term strategic
objectives, introduction of new products or services, customer satisfaction, and
work force diversity), competitive market rates for similar positions, and the
established annual criteria for merit increases. While all factors are
significant, the heaviest weighting is applied to the financial objectives. The
above considerations apply similarly to All Executives.
As of February 1, 1995, Mr. Harvey's annual base salary was increased from
$735,000 to $770,000, a 4.76 percent increase. This increase was recommended by
the Committee following review and discussion of compensation analyses presented
at its regular meeting in February 1995 and approved by the Independent
Directors at the February board meeting. The increase recognized Mr. Harvey's
successful 1994 accomplishments against various corporate objectives, which were
similar to, but more extensive than, the objectives set forth above for All
Executives. The Committee and the Independent Directors considered salaries of
chief executives of comparable companies in recommending the increase in Mr.
Harvey's base salary. However, the company continues to place more emphasis on
PBC Incentive and long-term incentives, which vary based on performance, than on
base salary.
PERFORMANCE BASED COMPENSATION INCENTIVE. All Executives, including the Named
Executive Officers, are eligible for PBC Incentives for achieving specific,
significant annual business unit and/or individual objectives.
For performance which meets objectives established at the beginning of the year,
PBC Incentives are paid at target percentage amounts; maximum amounts are paid
for performance which is exceptional; reduced amounts are paid for acceptable
but less than expected performance; and no amount is paid for performance that
is unsatisfactory. The target PBC Incentives are designed so that when combined
with base salaries, which the Committee believes are lower than competitive,
more pay is at risk than is the competitive average. The Committee intends that
payment of base salary plus a target PBC Incentive in the aggregate will be
competitive with total annual compensation paid in the marketplace. For
performance which is exceptional against the pre-established objectives, the
Committee intends that the total annual compensation will be higher than
average.
The PBC Incentives for the Named Executive Officers are reviewed by the
Committee and approved by the Independent Directors. The consideration of the
recommended PBC Incentives follows a detailed discussion of the company's and
the individual's performance for that year against objectives which were
established at the beginning of that fiscal year.
For 1995, the Independent Directors determined that Mr. Harvey's performance was
exceptional against several financial and non-financial objectives of short-term
and long-term significance that had been established by the Independent
Directors at the beginning of the year. These objectives were similar to the
financial and other objectives described above under "Base Salary," with the
objectives having long-term significance receiving the greatest weighting. As a
result, Mr. Harvey received $1,150,600 as a PBC Incentive for his 1995
performance. This represents a 74 percent increase over his 1994 PBC Incentive.
LONG-TERM INCENTIVES
In 1995, the company utilized three types of long-term incentives: CIUs,
restricted stock, and stock options. The Committee uses these performance-driven
components to link executive compensation to internal company performance and to
external market performance of the company's stock price. These incentives also
enable the company to provide the Named Executive Officers with an economic
interest in the long-term future growth of the company's business and of the
market price of its stock, and to provide an incentive for the Named Executive
Officers to continue their employment with the company. Grants of all three
components are recommended by the Committee and approved by the Independent
Directors. The combination of these long-term incentives granted during 1995 was
16
<PAGE>
compared to the various long-term incentives granted by comparable companies to
ensure that the total for Pitney Bowes executives was competitive. The mix of
the three long-term incentive components differs from the market mix, i.e. fewer
options are granted, because the Committee believes there should be more
emphasis placed on those incentives that are more directly connected to the
company's long-term financial results. The potential value of, or right to
receive, two of these incentive components -- CIUs and restricted stock -- is
contingent upon the attainment of one or more specified long-term performance
objectives. Amounts are paid, or rights given, only to the extent, if any, that
the stated performance objectives are achieved. The potential future value of
stock options, which are granted with an exercise price equal to the market
price of the stock on the date of grant, is dependent solely upon the future
increase in the price of the company's stock.
CASH INCENTIVE UNITS. In 1995, CIUs were granted to Key Executives, including
the Named Executive Officers. CIUs represent the right to receive cash only if
certain specified long-term financial performance objectives are achieved. The
amount paid pursuant to CIUs is linked to the attainment of certain
earnings-per-share growth and rates of return on stockholder equity over a
three-year period. Hence, the potential value of the CIUs is directly linked to
the company's performance.
If the company's performance on the two financial measures equals the
pre-established growth rate objectives, CIUs pay at a rate of $1.00 per CIU. For
performance below the growth rate targets, the CIUs pay at a rate from $.99 to
$.0075 per CIU, and payment decreases to zero if the performance slips to 75
percent or less of the earnings per share growth rate objective. Payment reaches
a maximum payout of $1.5625 per CIU when the performance equals or exceeds 150
percent of the target growth rate objectives.
In 1995, Mr. Harvey was granted 588,000 CIUs which are subject to the attainment
of cumulative earnings per share and return on stockholder equity objectives to
be measured over the three-year performance period ending December 31, 1997. For
the three-year performance period ending on December 31, 1995, the payout of
previously granted CIUs was at the rate of $1.5625 per unit because the maximum
financial growth rate objectives established in 1993 were far exceeded. Both the
targets and the results of the performance period ending December 31, 1995
included the results of Monarch Marking Systems and Dictaphone Corporation,
which were divested during 1995.
STOCK-BASED INCENTIVES
In 1995, the company also granted, under its long-term incentive program, two
types of stock-based incentives which serve to provide Key Executives, including
the Named Executive Officers, with a direct interest in the stock price and the
long-term growth of the company. These two incentives are shares of restricted
stock and stock options.
RESTRICTED STOCK. Restricted stock granted in 1995 is subject to both a
financial performance and a tenure requirement. The restrictions on the shares
are released, in total or in part, only if the executive is still employed by
the company at the end of the performance period and if the performance
objective of growth in compound earnings per share over the applicable
three-year period has been achieved.
If the performance objective is achieved or exceeded, all of the restricted
shares are released. If the compound three-year earnings per share growth is
less than 75 percent of the target rate, the shares are forfeited. If
performance is at 75 percent of the target rate, 50 percent of the shares are
released and the balance is forfeited. For performance between 75 percent and
the target level, the shares are released on a proportionate basis, with the
unearned balance being forfeited.
In 1995, Mr. Harvey was granted 11,050 shares of restricted stock. On the date
of grant, the market price of the stock was $33.5625 per share. The release of
restrictions relating to these shares is to be determined based on performance
over the three-year period ending December 31, 1997. In deciding to grant these
shares to Mr. Harvey, the Independent Directors considered the number of
restricted shares then held by Mr. Harvey and determined that the number of
shares to be granted in 1995 represented an appropriate component of his total
compensation package for 1995. It is the practice of the Independent Directors
17
<PAGE>
to annually review Mr. Harvey's total compensation package for competitiveness
at the time each element is approved. It is the belief of the Independent
Directors that, when previously granted, the outstanding restricted stock was an
appropriate component of the total compensation packages that they then
approved.
For the three-year performance period ending on December 31, 1995, the
restrictions on all 7,400 shares granted to Mr. Harvey on June 14, 1993 were
released, as the Independent Directors determined that the performance objective
had been exceeded.
STOCK OPTIONS. In granting stock options to All Executives, including the Named
Executive Officers, the intent is to provide an incentive to increase the price
of the stock. The Committee considers options to be an appropriate element of
compensation for All Executives. The level of such grants is established by
taking into consideration the competitive level of option grants. Market data
indicate a trend toward increased use and size of stock options in competitive
markets for executive level positions. The exercise price of options granted by
the company has always been equal to 100 percent of the market price of the
company's common stock on the date of grant. Options have a ten-year exercise
period, but only become exercisable in installments during the first three years
following their grant.
During 1995, Mr. Harvey was granted 45,950 options with an exercise price of
$33.5625 per share, which equaled the market price of the stock on the date of
grant. In determining the number of options to be granted to Mr. Harvey, the
Independent Directors considered the number of stock options then held by Mr.
Harvey and determined that the number of options to be granted for 1995
represented an appropriate component of Mr. Harvey's total compensation package
for 1995. The number of options granted Mr. Harvey in 1995 differed from the
number granted in 1994 due to fluctuations in the price of the company's stock
which affected the calculation, however, in both years options represented a
similar portion of his overall compensation. This action was approved by the
Independent Directors at their February meeting. It is the practice of the
Independent Directors to annually review Mr. Harvey's total compensation package
to determine whether it is comparable to the total compensation of similar
executives of other similar companies. It is the belief of the Independent
Directors that, when previously granted, the outstanding options were an
appropriate component of the total compensation packages for the respective
years that they then approved.
DEDUCTIBILITY OF COMPENSATION UNDER INTERNAL REVENUE CODE SECTION 162(M)
Beginning in 1994, publicly traded corporations generally are not permitted to
deduct compensation in excess of $1 million paid to certain top executives
unless the compensation qualifies for an exception as "performance-based
compensation." Based upon an analysis of the compensation of the Executive
Officers named in the preceding compensation tables, which compensation the
Committee does not believe to be excessive, it is the expectation of the
Committee that none of the company's deductions for 1995 compensation will be
disallowed under this "$1 million cap." Further, it is the company's intention
to design executive compensation programs so that none of the deductions for
compensation relating to 1996 and later years will be disallowed under the "$1
million cap." The proposed amendments to the KEIP and 1991 Stock Plan which the
stockholders have been asked to approve at the annual meeting are intended to
preserve the company's ability to design awards that qualify for exclusion from
the "$1 million cap" and thus would be deductible by the company.
CONCLUSION
As described above and as reflected in the 1995 compensation of the Executive
Officers, it is the Committee's and the company's philosophy to link a portion
of the compensation of All Executives to individual and business performance and
to provide All Executives with compensation that creates a direct interest in
the long-term growth of the company's stock price. Further, with respect to Key
Executives, the company's practice has been to link a significant portion of
total compensation to company performance and to have a greater portion linked
to long-term (as opposed to short-term) incentive awards.
18
<PAGE>
Linda G. Alvarado Charles E. Hugel Michael I. Roth
William E. Butler David T. Kimball Phyllis Shapiro Sewell
Colin G. Campbell Leroy D. Nunery Arthur R. Taylor
SEVERANCE AND CHANGE OF CONTROL ARRANGEMENTS
The Pitney Bowes Severance Plan, Senior Executive Severance Policy, and
Incentive Plans provide for a period of continued income and continued benefit
under grants made pursuant to the Incentive Plans (see "Executive Officer
Compensation" beginning on page 10) to employees who are terminated by certain
actions of the company. These terms are also intended to encourage all
employees, including the Named Executive Officers, to continue to carry out
their duties in the event of the possibility of a Change of Control. "Change of
Control" is defined in the Severance Plan, Senior Executive Severance Policy,
and in the Incentive Plans as the acquisition of 20 percent of the company's
common stock or 20 percent or more of the combined voting power of all voting
securities by an individual, entity or group, or a change of more than a
majority of the board other than by approval of the then-current board, or
approval by the stockholders of a reorganization, merger, or dissolution of the
company.
The Pitney Bowes Severance Plan dated December 12, 1988, as amended, provides
for the payment of severance to employees, including the Named Executive
Officers, whose employment with the company or any of its United States
subsidiaries is terminated under certain circumstances (exclusive of a Change of
Control). Severance will consist of a minimum of one week of pay for each full
year of service (a fraction thereof for a partial year of service), with a
minimum of two weeks' pay, and a maximum of two years' pay. The Severance Plan
also provides that employees (exclusive of executives covered under the Senior
Executive Severance Policy) whose employment is terminated or whose position,
authority, pay or benefits are diminished within two years after a Change of
Control will be entitled to severance pay on the basis of their position levels
and seniority.
The Senior Executive Severance Policy, which was adopted by the board of
directors in December, 1995 provides for the payment of severance to certain
senior executive employees, including the Named Executive Officers, whose
employment with the company is terminated within two years after a Change of
Control. The Senior Executive Severance Policy provides that a covered employee
whose employment is terminated, whose position, authority, pay or benefits are
diminished or who is relocated within two years after a Change of Control, or
who voluntarily terminates employment during the 30-day period immediately
following the first anniversary of the date of the Change of Control, will be
entitled to, among other things, severance pay in an amount equal to two times
the sum of the employee's annual base salary and highest annual PBC Incentive
received in any of the three years preceding termination, and the continuation
of certain welfare benefits for up to two years following termination of
employment.
The 1979 Plan and the 1991 Plan each provide that, in the event of a Change of
Control, outstanding options granted under the plans to any employee will become
immediately and fully exercisable. The 1991 Plan also provides that, in the
event of a Change of Control, other outstanding stock-based incentives granted
pursuant to the plan will become fully vested, with all performance objectives
deemed fully satisfied except for transfer restrictions required for exempt
treatment under Section 16 of the Securities Exchange Act of 1934, as amended,
or any other applicable law.
Also, the KEIP provides that in the event of a Change of Control, all
Executives, including the Named Executive Officers, will have a vested right to
PBC Incentives with respect to the year in which such Change of Control occurs
and to CIUs which are then outstanding (for Key Executives) (in amounts to be
determined by the Independent Directors as specified in the plan on the basis of
relevant past performance of the individual executive, of his or her division
and of Pitney Bowes, as applicable). Such PBC Incentives and CIU payments would
be made shortly after the Change of Control, discounted to present value at the
prime rate then in effect.
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<PAGE>
If any of these benefits, either alone or together with any other payments or
benefits provided to covered senior executive employees, including a Named
Executive Officer, would constitute an "excess parachute payment" subject to the
20 percent excise tax under certain provisions of the Internal Revenue Code, the
Senior Executive Severance Policy provides that an additional payment would be
made to each affected covered employee so that such excise tax is reimbursed on
a net after-tax basis. It is possible that no payments will ever be made
pursuant to the foregoing; therefore, it is not possible to estimate the amount
of any payments that may become due to any individual under the Senior Executive
Severance Plan or either of the Incentive Plans in the event of a Change of
Control.
PENSION BENEFITS
The following table shows estimated annual retirement benefits (rounded to the
nearest dollar) which would be payable to individuals at the compensation levels
of the Named Executive Officers, at specified years of service classifications
under the Pitney Bowes Retirement Plan, as supplemented by the Pitney Bowes
Benefit Equalization Plan (collectively, the "Retirement Plan"). The amounts of
annual benefits shown on the following table are predicated on the assumptions
that the employee retires at age 65, that the employee is to be paid on a single
life annuity basis, and that the amount of Social Security covered wages for
each year of service was more than the Social Security maximum for 1993. The
amount of compensation shown under the columns "Annual Compensation" on the
Summary Compensation Table (Table I) on page 11 is substantially the same as
compensation that is the basis for benefits under the Retirement Plan, which is
referred to as "Final Average Earnings" on the following table. The estimated
annual benefits are not subject to any further deduction for Social Security
benefits.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
PENSION BENEFITS
YEARS OF SERVICE
------------------------------------------------------------------------------------------------
FINAL AVG.
EARNINGS 10 15 20 25 30 35 40
- --------- -------- -------- -------- -------- -------- -------- ---------
<C> <C> <C> <C> <C> <C> <C> <C>
$ 800,000...........$126,098 $189,147 $256,196 $323,245 $390,294 $457,343 $524,392
$1,000,000...........$158,098 $237,147 $321,196 $405,245 $489,294 $573,343 $657,392
$1,200,000...........$190,098 $285,147 $386,196 $487,245 $588,294 $689,343 $790,392
$1,400,000...........$222,098 $333,147 $451,196 $569,245 $687,294 $805,343 $923,392
Messrs. Harvey (age 64), Breslawsky (age 53), Critelli (age 47), Adimando (age
51), and Ms. St. Mark (age 53), have 39, 15, 17, 17 and 16 years of credited
service (rounded to the nearest whole year), respectively, under the Retirement
Plan as of February 29, 1996.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
20
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APPROVAL OF APPOINTMENT OF PITNEY BOWES' INDEPENDENT ACCOUNTANTS
The Audit Committee of the board has recommended, and the board has approved for
vote by stockholders, the continuation of Price Waterhouse LLP as the
independent accountants for Pitney Bowes for 1996.
Price Waterhouse LLP has served in this capacity continuously since 1934. Price
Waterhouse LLP has no direct or indirect financial interest in Pitney Bowes or
any of its subsidiaries. Representatives of Price Waterhouse LLP will be present
at the annual meeting of stockholders and will have the opportunity to make a
statement and to respond to appropriate questions.
Under Delaware corporation law, a majority of the votes cast by the holders of
stock entitled to vote represented in person or by proxy at the meeting (each
share of $2.12 preference stock counting as eight votes of common stock) is
required to approve the appointment of independent accountants. If a majority of
the votes cast at the meeting is not voted in favor of such firm, the board of
directors will determine what action should be taken.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPOINTMENT OF
PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR 1996.
PROPOSAL TO APPROVE ADOPTION OF THE 1996 PITNEY BOWES EMPLOYEE STOCK PURCHASE
PLAN
INTRODUCTION
At the annual meeting, the company's stockholders will be requested to consider
and act upon a proposal to approve an employee stock purchase plan to be known
as the 1996 Pitney Bowes Employee Stock Purchase Plan (the "1996 ESPP").
On February 12, 1996, the board of directors adopted the 1996 ESPP, subject to
approval by the company's stockholders. The 1996 ESPP will become effective
immediately upon approval by the company's stockholders. The purpose of the 1996
ESPP is to encourage employees to become part owners of the company by the
acquisition of shares of common stock of the company, thereby stimulating their
personal and active interest in its growth and prosperity. If approved by the
stockholders, the 1996 ESPP will replace the 1984 Pitney Bowes Employee Stock
Purchase Plan, as amended, which was originally approved by the company's
stockholders in 1984.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1996 ESPP.
DESCRIPTION
Set forth below is a summary of certain important features of the 1996 ESPP,
which summary is qualified in its entirety by reference to the complete text of
the plan attached as Exhibit 1 to this proxy statement.
ADMINISTRATION. The 1996 ESPP will be administered by a committee (the
"Committee") of members of the board of directors who are "disinterested
persons" within the meaning of Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended. Among
other things, the Committee will have full authority to establish rules for the
administration of the 1996 ESPP and to make administrative decisions regarding
the 1996 ESPP. The Committee may delegate certain administrative decisions and
functions regarding the 1996 ESPP, except that the designation of eligible
employees and decisions concerning the timing, pricing and amount of
participation will be made by the Committee, subject to the other terms of the
1996 ESPP. Except as otherwise expressly provided in the 1996 ESPP, all
designations, determinations, interpretations, and other decisions under or with
respect to the 1996 ESPP, any participation thereunder, or any participation
agreement or certificate relating thereto, will be with and in the sole
discretion of the Committee, may be made at any time, and will be final,
conclusive, and binding.
21
<PAGE>
ELIGIBILITY. Any person who is a regular employee of the company, or a
subsidiary designated by the board of directors, who has worked at least 20
hours per week continuously since December 31st of the year preceding the first
pay period commencing after an offering date, and whose customary employment is
for more than five months in any one calendar year will be eligible to be
offered the opportunity to purchase stock under the 1996 ESPP. The board of
directors currently estimates that approximately 28,000 employees of the company
and its designated subsidiaries will be eligible employees under the 1996 ESPP.
Notwithstanding the foregoing, no eligible employee will be granted an option
under the 1996 ESPP if (i) immediately after the grant such eligible employee
would own shares and/or hold outstanding options to purchase stock possessing
five percent or more of the total combined voting power or value of all classes
of stock of the company or of any subsidiary of the company or (ii) the option
would enable the eligible employee to purchase under employee stock purchase
plans of the company and its subsidiaries, in any one year, more than $25,000 of
the Company's stock (based on the fair market value of the shares determined at
the time such option is granted and subject to certain accumulation rules
contained in the Code).
PLAN FEATURES. Under the 1996 ESPP, the company may make offerings ("Offerings")
of up to 5,000,000 shares of its common stock to eligible employees who elect to
participate in the 1996 ESPP ("Participating Employees"). The company may make
one or more Offerings in any calendar year pursuant to which Participating
Employees will be granted upon each offering date determined by the Committee
the number of shares to be offered in the respective Offering. Each
Participating Employee will be offered rights to purchase stock in amounts up to
a maximum percentage of such Participating Employee's annual compensation, which
maximum percentage will be determined with respect to each Offering by the
Committee based on a Participating Employee's basic or regular rate of
compensation, and will be applied uniformly to all Participating Employees. The
term of each Offering will be one year from July 1 (or such other date as
determined by the Committee) of the year in which the Offering is made to the
Date of Exercise specified by the Committee. For each Offering the option price
per share of stock (the "Exercise Price") will be determined by the Committee,
and will, unless the Committee determines otherwise, be expressed as a
percentage (the "Discount") of the closing price of the common stock of the
company (the "Closing Price") on the offering date. The total number of shares
of common stock to be offered in each Offering will be determined by the
Committee.
Unless the Committee specifies otherwise, the purchase price of each share of
stock for which a Participating Employee has a right to purchase under the 1996
ESPP will be deducted from a Participating Employee's salary over a one year
period. All payroll deductions may be used by the company for general corporate
purposes. Unless a Participating Employee cancels his or her right to purchase,
the right will be exercised and become an obligation to take the shares of
common stock as of the date of the final payroll deduction. Unless the Committee
specifies otherwise, if the Discount multiplied by the Closing Price of the
company's stock on the Date of Exercise yields a purchase price per share (the
"New Price") less than the Exercise Price, the Participating Employee will be
refunded an amount equal to the difference between the New Price and the
Exercise Price multiplied by the number of shares purchased. A Participating
Employee will have none of the rights or privileges of a stockholder of the
company until the full purchase price of such Participating Employee's shares
has been paid and such Participating Employee has been issued such shares of
stock.
If a Participating Employee dies or retires prior to such Participating
Employee's final payroll deduction for an Offering, such Participating Employee,
or such Participating Employee's legal representative, may within a period of
three months thereafter (but in no event more than fifteen months from the date
of grant of the right to purchase), either: (a) cancel all of such Participating
Employee's right to purchase and request payment in cash of the entire amount
which has been deducted pursuant to the 1996 ESPP plus interest, or (b) receive
the number of full shares of common stock which the payroll deductions will
purchase, at the Exercise Price, and receive the balance, if any, in cash. If a
22
<PAGE>
Participating Employee's employment is otherwise terminated prior to the final
payroll deduction for an Offering, such Participating Employee's only right will
be to receive in cash the amount which has been deducted pursuant to the 1996
ESPP, together with interest.
The Committee may impose restrictions on the transferability of shares of common
stock acquired pursuant to the 1996 ESPP, and such restrictions, if any, would
apply uniformly to all Participating Employees with respect to each Offering.
Generally, no right under the 1996 ESPP (other than stock issued pursuant to the
terms of the 1996 ESPP not otherwise subject to restrictions on transfer), will
be assignable, alienable, saleable, or transferable by a Participating Employee
other than by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined in the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder.
With respect to persons subject to Section 16 of the Securities Act of 1934 the
following will apply in the absence of a change in controlling law: (a) such a
Participating Employee who makes a withdrawal from the 1996 ESPP may not make a
purchase under the 1996 ESPP for six months, (b) such a Participating Employee
who ceases participation in the 1996 ESPP may not participate again in the 1996
ESPP until six months have elapsed, and (c) such a Participating Employee must
retain for at least six months from the date of acquisition the securities
acquired pursuant to the 1996 ESPP.
AMENDMENT AND DISCONTINUANCE. The Board of Directors may, from time to time,
alter, amend, suspend or discontinue the 1996 ESPP for the purpose of meeting
any changes in legal requirements or for any other purpose permitted by law;
provided, however, that, except for any adjustment for stock split-ups, stock
dividends and other changes in the capital stock authorized under the 1996 ESPP,
the maximum number of shares that may be offered under the 1996 ESPP may not be
increased, without appropriate stockholder approval.
In the event of a stock dividend, split-up or combination of shares, merger,
consolidation, reorganization, recapitalization, or other change in the
corporate structure or capitalization affecting the company's common stock,
appropriate adjustment will be made in the maximum number of shares available
under the 1996 ESPP and outstanding rights to purchase will be proportionately
increased or decreased, the terms relating to the purchase price with respect to
such rights will be appropriately adjusted and such other actions will be taken
by the Committee as in its opinion are appropriate under the circumstances.
FEDERAL INCOME TAX CONSEQUENCES
Upon approval by stockholders, the 1996 ESPP will qualify as an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code of 1986, as
amended (the "IRC"). The following discussion is intended only as a brief
summary of the federal income tax rules that generally will apply. The laws
governing the tax aspects of grants are highly technical and such laws are
subject to change.
An employee who elects to participate in the 1996 ESPP will not realize income
at the time of the grant of a right to purchase shares of common stock or at the
time of the issuance of the shares. If an employee does not dispose of a share
issued to him or her under the 1996 ESPP for at least two years after the right
to purchase such share is granted to him or her and one year after the share is
issued, then, upon his or her subsequent sale of the share the employee will
realize ordinary income equal to the lesser of (i) the excess of the fair market
value of the share on the date of sale over the amount paid for the share, or
(ii) the excess of the fair market value of the share at the time the right to
purchase the share was granted over the amount paid for the share.
Such ordinary income should be included in the employee's gross income for the
taxable year in which the sale of the share occurs and should be added to his or
her tax basis in the share. Any gain on the sale in excess of the amount of
ordinary income realized by the employee will be treated as long-term capital
23
<PAGE>
gain. If the employee sells the share for an amount less than he or she paid for
it, no ordinary income will be realized by the employee and the loss will be
treated as a long-term capital loss.
The company will not be entitled to a tax deduction with respect to any amount
of income realized by an employee as a result of a sale of the share after the
expiration of the two-year and one-year periods referred to above.
If an employee sells a share issued to him or her under the 1996 ESPP prior to
the expiration of the two-year or one-year periods referred to above, the
employee will realize ordinary income equal to the excess of the fair market
value of the share on the date the share is issued to him or her over the amount
paid for the share. Such amount should be included in the employee's gross
income whether or not he or she realizes a gain on the sale of the share and
should be added to the employee's tax basis for the share. Any gain on the sale
in excess of the amount of ordinary income realized by the employee will be
treated as short-term capital gain. If the selling price of the share is less
than (i) the amount the employee paid for the share, plus (ii) the amount the
employee includes in his or her gross income as ordinary income, the difference
will be treated as a short-term capital loss.
The company will be entitled to a deduction with respect to any amount of
ordinary income realized by an employee as a result of a sale of the share prior
to the expiration of the two-year and one-year periods referred to above.
Interest payments are also deductible by the company.
Special tax rules apply if an employee (i) disposes of a share issued to him or
her under the 1996 ESPP by gift or (ii) owns such a share at the employee's
death.
NEW PLAN BENEFITS
It cannot be determined at this time what benefits or amounts, if any, will be
received by or allocated to any person or group of persons under the 1996 ESPP
if the 1996 ESPP is approved or what benefits or amounts would have been
received by or allocated to any person or group of persons for the last fiscal
year if the 1996 ESPP had been in effect.
VOTE REQUIRED
Approval of the 1996 ESPP requires the affirmative vote of the holders of a
majority of the common stock and $2.12 preference stock of the company present
or represented by proxy and entitled to vote at the annual meeting.
THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE 1996 ESPP IS IN THE BEST
INTERESTS OF ALL STOCKHOLDERS AND, ACCORDINGLY, RECOMMENDS A VOTE FOR THE
PROPOSED 1996 ESPP. YOUR EXECUTED PROXY WILL BE SO VOTED UNLESS YOU SPECIFY
OTHERWISE.
PROPOSAL TO APPROVE AMENDMENT TO THE PITNEY BOWES 1991 STOCK PLAN
INTRODUCTION
At the annual meeting, the company's stockholders will be requested to consider
and act upon a proposal to amend the Pitney Bowes 1991 Stock Plan (the "1991
Plan").
On February 12, 1996, the board of directors adopted the First Amendment to the
1991 Plan, subject to approval by the company's stockholders. The amendment will
become effective as of January 1, 1996, subject to approval by the company's
stockholders. The purpose of the amendment, as more fully set forth below, is to
permit compensation payable under the 1991 Plan to the chief executive officer
and the other four highest-paid officers of the company to qualify as
performance-based compensation that is fully deductible for tax purposes. If
stockholders fail to approve the amendment, grants will not be made to such
officers under the amendment, and the company has not yet determined whether and
on what basis grants would be made to such officers under the 1991 Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE FIRST AMENDMENT TO
THE 1991 PLAN.
24
<PAGE>
DESCRIPTION
Set forth below is a summary of certain important features of the 1991 Plan and
the amendment thereto. This description is qualified in its entirety by
reference to the complete text of the 1991 Plan, which has been filed as an
Exhibit to the company's Form 10-K, and the complete text of the amendment to
the 1991 Plan, which appears as Exhibit 2 to this proxy statement.
THE 1991 PLAN. The 1991 Plan is administered by a committee (the "Committee") of
members of the board of directors who are "disinterested persons" within the
meaning of Rule 16b-3 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended (the "Committee").
Officers and employees of the company and its affiliates are eligible for grants
under the 1991 Plan. Such grants may consist of stock options, restricted stock,
restricted stock units, dividend equivalents or other stock-based grants, on
terms and conditions determined by the Committee, including such terms and
conditions as the number of shares subject to the grant, and the exercise price
(if applicable), vesting schedule, and forfeiture provisions of the grant. The
exercise price of any option may not be less than 85 percent of the fair market
value of the underlying stock on the date of grant (or such lesser exercise
price as may be permitted by Internal Revenue Code ("IRC") Section 423 for a
stock purchase plan). Grants under the 1991 Plan have generally taken the form
of stock options and restricted stock. The total number of shares authorized for
issuance pursuant to the 1991 Plan was set at 3,200,000 in 1991 when it was
approved by stockholders; as of December 31, 1995, 4,365,012 shares remained
available under the 1991 Plan (after adjustment for the stock split that
occurred in 1992).
AMENDMENT TO 1991 PLAN. The amendment to the 1991 Plan is being proposed in
response to recent tax law changes that impose limits on the ability of a public
corporation to claim tax deductions for compensation paid to certain highly
compensated executives. IRC Section 162(m) generally denies a corporate tax
deduction for annual compensation exceeding $1 million paid to the chief
executive officer or any of the four other most highly compensated officers of a
public corporation ("Covered Employees"). Certain types of compensation that
qualify as "performance-based" within the meaning of IRC Section 162(m) are
generally excluded from this deduction limit. Such compensation includes options
granted with an exercise price not less than the fair market value on the date
of grant of the underlying stock, if the plan under which they are granted
states a maximum number of shares that may be granted to any individual in a
specified period. Other compensation (including restricted stock, restricted
stock units and other stock-based incentives) may be excluded if it is payable
based upon objective performance criteria that are approved by the stockholders.
To permit the Committee to make grants under the 1991 Plan that qualify for the
exclusion for performance-based compensation, the amendment to the 1991 Plan is
being submitted to stockholders for approval at the 1996 annual meeting. By
approving the amendment, the stockholders will be approving, among other things,
the performance criteria on which grants to Covered Employees may be based and
the maximum number of shares that may be the subject of grants to any one
individual in a given year.
It should be noted that the Committee will have the authority to make grants
under the 1991 Plan that will not qualify as performance-based compensation for
purposes of IRC Section 162(m). In the event of a Change in Control (as defined
in the 1991 Plan and as discussed under Severance and Change of Control
Arrangements on page 19), grants that would otherwise so qualify may result in
the payment of compensation that is not qualified under IRC Section 162(m).
The amendment limits to 200,000 the number of shares that may be represented by
grants made to any one individual in a single calendar year. This limit has been
set higher than the level at which grants have been made under the 1991 Plan in
the past. The Committee does not currently expect to significantly increase the
level of grants made annually under the 1991 Plan. However, the limit is
designed to permit larger grants in the future, in the event the Committee
should determine that such grants are needed to attract or retain top executive
talent.
25
<PAGE>
The amendment contains special provisions that will apply to grants to
participants in the Plan who are, or are expected to be at the time taxable
income will be realized with respect to the grant, Covered Employees, if the
Committee so provides at the time of grant. Such grants will be made subject to
the achievement of one or more preestablished Performance Goals (as defined
below), in accordance with procedures to be established by the Committee from
time to time. The Committee will not have the discretion to waive or amend such
Performance Goals or to increase the amount payable pursuant to such grants
after the Performance Goals have been established, but it will have the
discretion to reduce the amount that would otherwise be payable.
"Performance Goals" under the amendment will be one or more objective
performance goals, established by the Committee at the time a grant is made, and
based upon the attainment of targets for one or any combination of the following
criteria: operating income, revenues, return on stockholder equity, stock price,
return on operating assets, earnings per share, or achievement of cost control,
of the company or such subsidiary, division or department of the company for or
within which the participant is primarily employed. Performance Goals also may
consist of attainment of specified levels of company performance based upon one
or more of the criteria described above relative to prior periods or the
performance of other corporations. Performance Goals will be set by the
Committee within the time period prescribed by IRC Section 162(m). In addition,
under the amendment, the Committee may from time to time establish procedures
pursuant to which Covered Employees will be permitted or required to defer
receipt of amounts payable under grants made under the 1991 Plan. For purposes
of grants to Covered Employees that are subject to the amendment, the Committee
is required to consist of at least two members of the board of directors, each
of whom is an "outside director" within the meaning of IRC Section 162(m).
NEW PLAN BENEFITS
It cannot be determined at this time what grants, if any, will be made to any
person or group of persons under the 1991 Plan if the amendment is approved by
stockholders. If the amendment had been in effect for the last fiscal year, the
amount of grants under the 1991 Plan would not have differed from the grants
actually made.
VOTE REQUIRED
Approval of the amendment to the 1991 Plan requires the affirmative vote of the
holders of a majority of the common stock and $2.12 preference stock of the
company present or represented by proxy and entitled to vote at the annual
meeting.
THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE FIRST AMENDMENT TO THE 1991
PLAN IS IN THE BEST INTERESTS OF ALL STOCKHOLDERS AND, ACCORDINGLY, RECOMMENDS A
VOTE FOR THE PROPOSED AMENDMENT. YOUR EXECUTED PROXY WILL BE SO VOTED UNLESS YOU
SPECIFY OTHERWISE.
PROPOSAL TO APPROVE AMENDMENT TO THE PITNEY BOWES INC. KEY EMPLOYEES' INCENTIVE
PLAN
INTRODUCTION
At the annual meeting, the company's stockholders will be requested to consider
and act upon a proposal to amend the Pitney Bowes Inc. Key Employees' Incentive
Plan, as amended and restated June 10, 1991 (the "KEIP").
On February 12, 1996, the Board of Directors adopted the First Amendment to the
KEIP, subject to approval by the company's stockholders. The amendment will
become effective as of January 1, 1996, subject to approval by the company's
stockholders. The purpose of the amendment, as more fully set forth below, is to
permit compensation payable under the KEIP to the chief executive officer and
the other four highest-paid officers of the company to qualify as
performance-based compensation that is fully deductible for tax purposes. If
stockholders fail to approve the amendment, grants will not be made to such
officers under the amendment, and the company has not yet determined whether and
on what basis grants would be made to such officers under the KEIP.
26
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE FIRST AMENDMENT TO
THE KEIP.
DESCRIPTION
Set forth below is a summary of certain important features of the KEIP and the
amendment thereto. This description is qualified in its entirety by reference to
the complete text of the KEIP which has been filed as an Exhibit to the
Company's Form 10-K, and the complete text of the amendment to the KEIP which
appears as Exhibit 3 to this proxy statement.
THE KEIP. The KEIP is administered by a committee (the "Committee") of members
of the board of directors who are "disinterested persons" within the meaning of
Rule 16b-3 promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended. Key employees of the company are
eligible for grants under the KEIP in an aggregate amount equal to the
"Incentive Fund" amount for each calendar year. The "Incentive Fund" amount is
determined by the board of directors for each calendar year prior to the end of
the following year, not to exceed (i) 4-1/2 percent of the consolidated net
income of the company and its consolidated subsidiaries before provision for
income taxes, as certified by the company's independent public accountants, plus
(ii) an additional amount equal to any excess of the aggregate amount of the
Incentive Funds for the five preceding years over the aggregate amount of awards
made for such years.
The Committee determines the recipients of grants under the KEIP and the terms
and amounts thereof, subject to the limits of the Incentive Fund. Grants have
generally taken the form of Performance Based Compensation Incentives ("PBC
Incentives") and Cash Incentive Units ("CIUs"). PBC Incentives are annual cash
payments of specified percentages of base salary, which are paid based upon the
achievement of preestablished corporate, unit and/or individual performance
objectives. CIUs represent a defeasible right to receive cash, the receipt and
amount of which are contingent upon the extent to which specified performance
criteria are achieved during the related three-year period.
AMENDMENT TO KEIP. The amendment to the KEIP is being proposed in response to
recent tax law changes that impose limits on the ability of a public corporation
to claim tax deductions for compensation paid to certain highly compensated
executives. Internal Revenue Code ("IRC") Section 162(m) generally denies a
corporate tax deduction for annual compensation exceeding $1 million paid to the
chief executive officer or any of the four other most highly compensated
officers of a public corporation ("Covered Employees"). Certain types of
compensation, including compensation payable based upon the achievement of
objective performance criteria that are approved by the stockholders, are
generally excluded from this deduction limit. To permit the Committee to make
grants under the KEIP that qualify for the exclusion for performance-based
compensation, the amendment to the KEIP is being submitted to stockholders for
approval at the 1996 annual meeting. By approving the amendment, the
stockholders will be approving, among other things, the performance criteria on
which grants to Covered Employees will be based and the limit on the maximum
amount payable to any individual Covered Employee for any fiscal year pursuant
to grants made under the KEIP for purposes of IRC Section 162(m).
It should be noted that the Committee will have the authority to make grants
under the KEIP that will not qualify as performance-based compensation for
purposes of IRC Section 162(m). In the event of a Change in Control (as defined
in the KEIP and as discussed under Severance and Change of Control Arrangements
on page 19), grants that would otherwise so qualify may result in the payment of
compensation that is not qualified under IRC Section 162(m).
The amendment will apply to grants to participants in the KEIP Plan who are
designated by the Committee prior to the making of a grant thereunder who are,
or are expected to be at the time taxable income will be realized with respect
to the grant, Covered Employees, if the Committee so determines at the time of
grant. Such grants may be in the form of PBC Incentives, CIUs or any other form
of grant permitted under the KEIP, and will be made subject to the achievement
of one or more preestablished Performance Goals (as defined below), in
27
<PAGE>
accordance with procedures to be established by the Committee from time to time.
The Committee will not have the discretion to waive or amend such Performance
Goals or to increase the amount payable pursuant to such grants after the
Performance Goals have been established, but it will have the discretion to
reduce the amount that would otherwise be payable.
"Performance Goals" under the amendment will be one or more objective
performance goals, established by the Committee at the time a grant is made, and
based upon the attainment of targets for one or any combination of the following
criteria: operating income, revenues, return on stockholder equity, stock price,
return on operating assets, earnings per share or achievement of cost control,
of the company or such subsidiary, division or department of the company for or
within which the participant is primarily employed. Performance Goals also may
consist of attainment of specified levels of company performance based upon one
or more of the criteria described above relative to prior periods or the
performance of other corporations. Performance Goals will be set by the
Committee within the time period prescribed by IRC Section 162(m). The maximum
amount payable to a Covered Employee for any fiscal year of the company pursuant
to grants made under the KEIP is $5,000,000. This limit has been set higher than
the level at which grants have been made under the KEIP in the past, and the
Committee does not currently expect to significantly increase the level of
grants made under the KEIP in the future. However, the limit is designed to
permit larger grants in the future in the event the Committee should determine
that such grants are needed to attract or retain top executive talent.
In addition, under the amendment, the Committee may from time to time establish
procedures pursuant to which Covered Employees will be permitted or required to
defer receipt of amounts payable under grants made under the KEIP. For purposes
of awards to Covered Employees that are subject to the amendment, the Committee
is required to consist of at least two members of the board of directors, each
of whom is an "outside director" within the meaning of Section 162(m). The
amendment also makes certain technical changes to the definition of "Change of
Control" under the KEIP, to conform it to the definition in the Pitney Bowes
1991 Stock Plan.
NEW PLAN BENEFITS
It cannot be determined at this time what benefits or amounts, if any, will be
received by or allocated to any person or group of persons under the KEIP if the
amendment is approved by stockholders. If the amendment had been in effect for
the last fiscal year, awards under the KEIP would not have differed from the
grants actually payable.
VOTE REQUIRED
Approval of the Amendment to the KEIP requires the affirmative vote of the
holders of a majority of the common stock and $2.12 preference stock of the
company present or represented by proxy and entitled to vote at the annual
meeting.
THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE FIRST AMENDMENT TO THE KEIP
IS IN THE BEST INTERESTS OF ALL STOCKHOLDERS AND, ACCORDINGLY, RECOMMENDS A VOTE
FOR THE PROPOSED AMENDMENT. YOUR EXECUTED PROXY WILL BE SO VOTED UNLESS YOU
SPECIFY OTHERWISE.
STOCKHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING
Under the rules of the Securities and Exchange Commission, proposals for
stockholder action at the 1997 annual meeting, including nomination of
directors, must be received by the corporate secretary of the company no later
than November 30, 1996, if such proposals are to be included in the company's
proxy statement and proxy.
In addition, the company's Bylaws provide certain procedures that a stockholder
must follow to nominate persons for election as directors or to introduce an
item of business at an annual meeting, even if such item is not to be included
in the company's proxy statement and proxy. Such procedural requirements are
fully set forth in the company's Bylaws, a copy of which may be obtained without
charge by any stockholder by contacting the corporate secretary of the company
at the address and telephone number set forth on the cover of this proxy
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statement. To have a nomination or item of business brought before the 1997
annual meeting, a stockholder must deliver the requisite notice of such
nomination or item to the corporate secretary of the company at its executive
offices no later than February 3, 1997.
SOLICITATION OF PROXIES
In addition to the use of the mails, proxies may be solicited by the directors,
officers, and employees of Pitney Bowes without additional compensation by
personal interview, by telephone, or by telegram. Arrangements may also be made
with brokerage firms and other custodians, nominees, and fiduciaries for the
forwarding of solicitation material to the beneficial owners of Pitney Bowes
common and $2.12 preference stock held of record, and Pitney Bowes will
reimburse such brokers, custodians, nominees, and fiduciaries for reasonable
out-of-pocket expenses incurred. Pitney Bowes has retained Chemical Mellon
Shareholder Services, L.L.C. to aid in the solicitation of proxies. The
anticipated fee of such firm is $8,500 plus out-of-pocket costs and expenses.
The cost of solicitation will be borne entirely by Pitney Bowes.
OTHER MATTERS
The management knows of no other matters which may be presented for
consideration at the meeting. However, if any other matters properly come before
the meeting, it is the intention of the individuals named in the enclosed proxy
to vote in accordance with their judgment.
The 1995 annual report was distributed by mail several days prior to the
distribution of this notice and proxy statement. If you did not receive a copy
of the company's 1995 annual report or would like a copy of the company's Form
10-K for the 1995 fiscal year, you may request copies by contacting the
corporate secretary of the company at the address and telephone number set forth
on the cover of this proxy statement.
By order of the board of directors.
Amy C. Corn
Corporate Secretary and
Senior Associate General Counsel
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EXHIBIT 1
1996 PITNEY BOWES EMPLOYEE STOCK PURCHASE PLAN
1. INTRODUCTION
The 1996 Pitney Bowes Employee Stock Purchase Plan (the "Plan) is designed to
encourage employees to become part owners of Pitney Bowes Inc. (the "Company")
by the acquisition of shares of common stock of the Company, thereby stimulating
their personal and active interest in its growth and prosperity.
It is the intention of the Company to have the Plan qualify as an "employee
stock purchase plan" under Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any successor provision thereto, and the Plan shall be
construed in accordance with such purpose.
2. ELIGIBLE EMPLOYEES
An "Eligible Employee" is any person who is (i) an employee of (A) Pitney Bowes
Inc. or (B) a subsidiary designated as a "participating subsidiary" by the Board
of Directors of the Company, (ii) who has been employed for at least twenty (20)
hours a week continuously since December 31st of the year preceding the Initial
Payroll Deduction Date (as defined below), and (iii) whose customary employment
is for more than five (5) months in any one calendar year. An Eligible Employee
shall be eligible to be offered options under this Plan.
Any provision of this Plan to the contrary notwithstanding, no Eligible Employee
shall be granted an option under this Plan:
a) If, immediately after the grant such Eligible Employee would own
shares and/or hold outstanding options to purchase stock possessing
five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any subsidiary of the
Company; or
b) Which permits the Eligible Employee's rights to purchase shares under
all employee stock purchase plans of the Company and its subsidiaries
to accrue at a rate which exceeds $25,000, in the aggregate (or such
greater amount as may be then permitted by Section 423, or any
successor provision, of the Code), of the fair market value of the
shares (determined at the time such option is granted) for each
calendar year in which such option is outstanding at any time.
An Eligible Employee who elects to participate as provided in Paragraph 4 shall
be a "Participating Employee."
With respect to persons subject to Section 16 of the Securities Exchange Act of
1934, the following shall apply in the absence of a change in controlling law:
(a) such a Participating Employee who makes a withdrawal from the Plan may not
make a purchase under the Plan for six (6) months, (b) such a Participating
Employee who ceases participation in the Plan may not participate again in the
Plan until six (6) months have elapsed, and (c) such a Participating Employee
must retain for at least six (6) months from the date of acquisition securities
acquired pursuant to the Plan.
3. OFFERING
The Company may make offerings ("Offerings") of shares of its common stock to
Participating Employees. The Company may, if the Committee (as defined below) so
directs, make one or more Offerings in any calendar year. For each Offering,
Participating Employees will be granted upon each Offering Date, which shall
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occur on a date determined by the Committee, the number of shares to be offered
in the Offering. Each Participating Employee will be offered rights to purchase
stock in amounts up to a maximum percentage of such Participating Employee's
annual compensation, which maximum percentage shall be determined with respect
to each Offering by the Committee in its discretion and shall apply uniformly to
all Participating Employees with respect to each such Offering. "Compensation"
shall be as defined by the Committee, based on a Participating Employee's basic
or regular rate of compensation and shall apply uniformly to all Participating
Employees with respect to the applicable Offering.
The term of each Offering shall be one (1) year from July 1 (or such other date
as the Committee, in its discretion, shall designate) of the Offering year to
the Date of Exercise, which shall be specified by the Committee. For each
Offering the option price per share of stock (the "Exercise Price") will be
determined by the Committee, in its discretion, and shall, unless the Committee
determines otherwise, be expressed as a percentage (the "Discount") of the
closing price of the common stock of the Company on the Composite Tape for
issues traded on the New York Stock Exchange (the "Closing Price") on the
Offering Date. In no event shall the Committee determine an Exercise Price that
is less than the lowest price that employee stock purchase plans are permitted
to establish under Section 423 (or any successor provision) of the Code.
The total number of shares of common stock to be offered in each Offering will
be determined by the Committee. The maximum number of shares of common stock
that may be issued pursuant to this Plan is 5,000,000.
In no event shall an option granted under this Plan be exercisable for a period
of time longer than that permitted under Section 423 (or any successor
provision) of the Code.
4. METHOD OF PARTICIPATION
Unless the Committee shall specify otherwise, an Eligible Employee may become a
Participating Employee in the Plan by filing on or before the Offering Date a
completed Stock Purchase form provided by the Company and applying for an
allotment of the number of shares purchasable, not to exceed the amounts
described below. Any such Stock Purchase form pursuant to this paragraph 4 shall
remain in effect for subsequent Plan years unless such Participating Employee
delivers a new Stock Purchase form applying for a different allotment, which
shall be applied to future Plan years until a further Stock Purchase form is
received by the Company pursuant to this paragraph 4. Unless the Committee shall
specify otherwise, an Eligible Employee will also be required to agree to
payroll deductions to cover the purchase price of such shares in accordance with
paragraph 6.
Unless the Committee shall specify otherwise, after the Offering Date, each
Participating Employee will be granted an allotment for the number of shares of
common stock which are purchasable, computed as the aggregate amount designated
by such Participating Employee on such Participating Employee's Stock Purchase
form to be deducted during the year divided by the Exercise Price or for such
reduced amount as permitted under paragraph 5 below. If such amount does not
result in a whole number of shares, the number of shares will be increased to
the next highest whole number.
Notice of the Offering will be given to each Participating Employee with full
details as to the aggregate number of shares offered, the Exercise Price, the
number of shares allotted to the Participating Employee, the amount of payroll
deductions to be made by such and any pro rata reduction in accordance with
paragraph 5.
5. OVERSUBSCRIPTIONS
In the event the number of shares for which subscriptions are received exceeds
the number of shares offered as determined under paragraph 3, the number of
shares allotted to each Participating Employee will be proportionately reduced.
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6. PAYROLL DEDUCTIONS
Unless the Committee shall specify otherwise, the purchase price of each share
of stock for which a Participating Employee has a right to purchase will be
deducted over a one (1) year period (or such shorter period as may be determined
by the Committee) in substantially equal installments (weekly, biweekly,
semi-monthly or monthly, depending on the normal pay period of such
Participating Employee). Unless the Committee shall specify otherwise,
deductions shall begin in the first pay period commencing after the Offering
Date (the "Initial Payroll Deduction Date") and shall cease one (1) year
thereafter. All payroll deductions may be used by the Company for general
corporate purposes. A separate bookkeeping account for each Participating
Employee shall be maintained by the Company and the amount of each Participating
Employee's payroll deductions shall be credited to such account.
7. RIGHTS AS A STOCKHOLDER
A Participating Employee will have none of the rights or privileges of a
stockholder of the Company until the full purchase price of such Participating
Employee's shares has been paid and such shares of stock have been issued to the
Participating Employee.
8. ISSUANCE OF STOCK
Unless a Participating Employee cancels such Participating Employee's right to
purchase as provided below, it will be exercised and become an obligation to
take the shares of common stock as of the date of the final payroll deduction.
Within a reasonable time after the date of the final payroll deduction, the
number of shares purchased by a Participating Employee will be issued to such
Participating Employee. Unless the Committee shall specify otherwise, if the
Discount multiplied by the Closing Price of the Company's stock on the Date of
Exercise yields a purchase price per share (the "New Price") less than the
Exercise Price, the Participating Employee shall also receive an amount equal to
the difference between the New Price and the Exercise Price multiplied by the
number of shares so offered.
The stock will be issued in the name of the employee or, upon such employee's
request, jointly in such employee's name and that of a family member as
specified on such employee's Stock Purchase Registration form.
The Committee, in its discretion, may impose restrictions on the transferability
of shares of common stock acquired pursuant to this Plan, and may cause to be
placed on all stock certificates or other evidences of ownership, legends or
other indicators setting forth any such restrictions on transferability
instructing the transfer agent to notify the Company of any transfer of such
shares. Such restrictions, if any, shall apply uniformly to all Participating
Employees with respect to any Offering.
9. RIGHT TO CANCEL
At any time prior to the final payroll deduction to be made pursuant to any
Offering, a Participating Employee may cancel all or any part of such
Participating Employee's right to purchase by filing a notice of cancellation
with the Company. Promptly after the Company's receipt of such notice, the
Participating Employee will receive the proportional amount withheld from such
Participating Employee's compensation in respect of that portion of such
Participating Employee's allotment which is canceled, with interest thereon at a
rate to be determined as provided under paragraph 10, computed on the average
balance to the credit of the Participating Employee during the period when
payroll deductions were made. Rights to purchase which have been canceled
pursuant to this section may not be reinstated at a later date.
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10. TERMINATION OF EMPLOYMENT
If a Participating Employee dies or retires prior to such Participating
Employee's final payroll deduction for an Offering, such Participating Employee
or such Participating Employee's legal representative may, within a period of
three (3) months thereafter (but in no event more than fifteen (15) months from
the date of grant of the right to purchase), either:
a) cancel all of such Participating Employee's right to purchase and
request payment in cash of the entire amount which has been deducted
under the Plan plus interest as computed below, or
b) receive the number of full shares of common stock which the payroll
deductions will purchase, at the Exercise Price, and receive the
balance, if any, in cash.
Notice of choice between a) and b) above shall be given to the Company in
writing and if such notice is not received within the prescribed period, the
Company shall act in accordance with a) above.
If a Participating Employee's employment is otherwise terminated, such
Participating Employee's only right will be to receive in cash the amount which
has been deducted under the Plan, together with interest, at the average
passbook rate, or such other rate as the Committee shall determine, during the
offering period up to the time of termination.
A Participating Employee who remains an employee, but whose name is temporarily
taken off the payroll because of leave of absence, temporary disability,
temporary layoff, military service, or for service with another organization
which is to the mutual benefit of the Company and the employee, may cancel such
Participating Employee's right to purchase and receive the amounts accumulated
to such Participating Employee's credit, or make special arrangements to
continue payments, or to suspend them. In the event of suspension of payments,
full payment must be made not later than the Date of Exercise.
11. RIGHTS NOT TRANSFERABLE
No right under this Plan (other than stock issued pursuant to the terms of the
Plan not otherwise subject to restrictions on transfer ("Released Stock")),
shall be assignable, alienable, saleable, or transferable by a Participating
Employee other than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined in the Code or Title
I of the Employee Retirement Income Security Act of 1974, as amended, or the
rules thereunder. Notwithstanding the foregoing, however, if so determined by
the Committee, a Participating Employee may in the manner established by the
Committee, designate a beneficiary or beneficiaries to exercise the rights of
the Participating Employee under the Plan and to receive any property
distributable, with respect to any right upon the death of the Participating
Employee. Each right under this Plan shall be exercisable during the
Participating Employee's lifetime only by the Participating Employee, or, if
permissible under applicable law, by the Participating Employee's guardian or
legal representative or by a transferee receiving such right pursuant to a
qualified domestic relations order referred to above. No right hereunder (other
than Released Stock) may be pledged, alienated, attached, or otherwise
encumbered and any purported pledge, alienation, attachment, or encumbrance
thereof shall be void and unenforceable against the Company or any affiliate.
12. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") which shall
consist of Directors then constituting the Board of Directors of the Company,
excluding any Director who is not a "disinterested person" within the meaning of
Rule 16b-3 ("Rule 16b-3") promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended, or any applicable law, or
any such other committee designated by the Board of Directors of the Company to
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administer the Plan, which committee shall be composed of not less than the
minimum number of Directors from time to time required by Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, or any applicable law, each of whom
is a "disinterested person" within the meaning of Rule 16b-3. The Committee
shall have full authority to establish rules for the administration of the Plan,
to make administrative decisions regarding the Plan and to make the
determinations to be made by the Committee under the Plan. The Committee may
delegate certain administrative decisions and functions regarding the Plan,
except that the designation of Eligible Employees and decisions concerning the
timing, pricing and amount of participation shall be made by the Committee,
subject to the other terms of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect to
the Plan, any participation hereunder, or any participation agreement or
certificate, shall be with and in the sole discretion of the Committee, may be
made at any time, and shall be final, conclusive, and binding upon all persons,
including the Company, any affiliate, any Participating Employee, any holder or
beneficiary of any right of participation, and any employee of the Company or of
any affiliate.
In the event of a stock dividend, split-up or combination of shares, merger,
consolidation, reorganization, recapitalization, or other change in the
corporate structure or capitalization affecting the Company's common stock,
appropriate adjustment shall be made in the maximum number of shares available
under the Plan and outstanding rights to purchase will be proportionately
increased or decreased, the terms relating to the purchase price with respect to
such rights will be appropriately adjusted, and such other actions will be taken
by the Committee as in its opinion are appropriate under the circumstances.
The Board of Directors of the Company may, from time to time, alter, amend,
suspend or discontinue this Plan for the purpose of meeting any changes in legal
requirements or for any other purpose permitted by law; provided, however, that
except for any adjustment for stock split-ups, stock dividends and other changes
in the capital stock heretofore authorized, the maximum number of shares that
may be offered under this Plan may not be increased without appropriate
stockholder approval.
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EXHIBIT 2
FIRST AMENDMENT TO
PITNEY BOWES 1991 STOCK PLAN
The Pitney Bowes 1991 Stock Plan (the "Plan") is hereby amended, effective as of
the date set forth below, as follows:
1. This Amendment shall be effective if and only if it is approved by the
stockholders of Pitney Bowes Inc. (the "Company") at their annual meeting in
1996, and if so approved, this Amendment shall be effective as of January 1,
1996.
2. Section 2 of the Plan is hereby amended to add the following new definitions:
"COVERED AWARD" means an Award, other than an Option or other Award
with an exercise price per Share not less than the Fair Market Value of a
Share on the date of grant of such Award, to a Covered Employee, if it is
designated as such by the Committee at the time it is granted. Covered
Awards are subject to the provisions of Section 13 of this Plan.
"COVERED EMPLOYEES" means Participants who are designated by the
Committee prior to the grant of an Award who are, or are expected to be at
the time taxable income will be realized with respect to the Award,
"covered employees" within the meaning of Section 162(m).
"PERFORMANCE GOALS" means one or more objective performance goals,
established by the Committee at the time an Award is granted, and based
upon the attainment of targets for one or any combination of the following
criteria: operating income, revenues, return on operating assets, earnings
per share, return on stockholder equity, stock price, or achievement of
cost control, of the Company or such subsidiary, division or department of
the Company for or within which the participant is primarily employed.
Performance Goals also may be based upon attaining specified levels of
Company performance based upon one or more of the criteria described above
relative to prior periods or the performance of other corporations.
Performance Goals shall be set by the Committee within the time period
prescribed by Section 162(m).
"SECTION 162(M)" means Section 162(m) of the Code or any successor
thereto, and the Treasury Regulations thereunder.
3. There is added to Section 4(a) of the Plan a new sentence at the end thereof,
reading in its entirety as follows:
The maximum number of Shares that may be the subject of Awards made to a single
Participant in any one calendar year shall be 200,000.
4. There is added to the Plan a new Section 13, reading in its entirety as
follows:
13. (a) The provisions of this Section 13 shall be applicable to all
Covered Awards. Covered Awards shall be made subject to the achievement of
one or more preestablished Performance Goals, in accordance with procedures
to be established by the Committee from time to time. Notwithstanding any
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provision of the Plan to the contrary, the Committee shall not have
discretion to waive or amend such Performance Goals or to increase the
number of Shares subject to Covered Awards or the amount payable pursuant
to Covered Awards after the Performance Goals have been established;
PROVIDED, HOWEVER, that the Committee may, in its sole discretion, reduce
the number of Shares subject to Covered Awards or the amount which would
otherwise be payable pursuant to Covered Awards; and PROVIDED, FURTHER,
that the provisions of Section 8 shall override any contrary provision of
this Section 13.
(b) No Shares shall be delivered and no payment shall be made
pursuant to a Covered Award unless and until the Committee shall have
certified in writing that the applicable Performance Goals have been
attained.
(c) The Committee may from time to time establish procedures
pursuant to which Covered Employees will be permitted or required to defer
receipt of amounts payable under Awards made under the Plan.
(d) Notwithstanding any other provision of the Plan, for all
purposes involving Covered Awards, the Committee shall consist of at least
two members of the Board of Directors, each of whom is an "outside
director" within the meaning of Section 162(m).
5. Except as provided above, the Plan shall continue in effect without
amendment.
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EXHIBIT 3
FIRST AMENDMENT TO
PITNEY BOWES INC.
KEY EMPLOYEES' INCENTIVE PLAN
(AS AMENDED AND RESTATED: JUNE 10, 1991)
The Pitney Bowes Inc. Key Employees' Incentive Plan, as amended and restated
June 10, 1991 (the "Plan"), is hereby amended, effective as of the date set
forth below, as follows:
1. This Amendment shall be effective if and only if it is approved by the
stockholders of Pitney Bowes Inc. (the "Company") at their annual meeting in
1996, and if so approved, this Amendment shall be effective as of January 1,
1996.
2. Section 6(E) of the Plan is amended to read in its entirety as follows:
(E) For purposes of this Plan, a "Change of Control" shall be deemed
to have occurred if:
(i) There is an acquisition, in any one transaction or a series of
transactions, other than from the Company, by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20 percent or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election
of directors, but excluding, for this purpose, any such acquisition by the
Company or any of its subsidiaries, or any employee benefit plan (or
related trust) of the Company or its subsidiaries, or any corporation with
respect to which, following such acquisition, more than 50 percent of the
then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by the individuals and entities
who were the beneficial owners, respectively, of the common stock and
voting securities of the Company immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately prior to
such acquisition, of the then outstanding shares of common stock of the
Company or the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors, as the case may be; or
(ii) Individuals who, as of September 12, 1988, constitute the Board
of Directors (as of such date, the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board, provided that any
individual becoming a director subsequent to September 12, 1988, whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the
Directors of the Company (as such terms are used in Rule 14a-11 or
Regulation 14A promulgated under the Exchange Act); or
(iii) There is (x) an approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to
which the individuals and entities who were the respective beneficial
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owners of the common stock and voting securities of the Company immediately
prior to such reorganization, merger or consolidation do not, following
such reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 50 percent of, respectively, the then outstanding
shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such
reorganization, merger or consolidation, or (y) an approval by the
shareholders of the Company of a complete liquidation or dissolution of the
Company or of the sale or other disposition of all or substantially all of
the assets of the Company.
3. There is added to the Plan a new Section 10, reading in its entirety as
follows:
10. (A) The provisions of this Section 10 shall be applicable to
awards under the Plan to "Covered Employees" if the Committee so
provides at the time of grant (such awards being referred to as
"Covered Awards"). For purposes of this Section 10, "Covered
Employees" means participants in the Plan who are designated by the
Committee prior to the grant of an award hereunder who are, or are
expected to be at the time taxable income will be realized with
respect to the award, "covered employees" within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended, or
any successor thereto, and the Treasury Regulations thereunder
("Section 162(m)").
(B) Covered Awards shall be made subject to the achievement of
one or more preestablished Performance Goals (as defined below), in
accordance with procedures to be established by the Committee from
time to time. Notwithstanding any provision of the Plan to the
contrary, the Committee shall not have discretion to waive or amend
such Performance Goals or to increase the amount payable pursuant to
Covered Awards after the Performance Goals have been established;
PROVIDED, HOWEVER, that the Committee may, in its sole discretion,
reduce the amount which would otherwise be payable with respect to any
Covered Award; and PROVIDED, FURTHER, that the provisions of Section 8
shall override any contrary provision of this Section 10.
(C) "Performance Goals" means one or more objective performance
goals, established by the Committee at the time an award is granted,
and based upon the attainment of targets for one or any combination of
the following criteria: operating income, revenues, return on
operating assets, earnings per share, return on stockholder equity,
stock price, or achievement of cost control, of the Company or such
subsidiary, division or department of the Company for or within which
the participant is primarily employed. Performance Goals also may be
based upon attaining specified levels of Company performance based
upon one or more of the criteria described above relative to prior
periods or the performance of other corporations. Performance Goals
shall be set by the Committee within the time period prescribed by
Section 162(m).
(D) No payment shall be made pursuant to a Covered Award unless
and until the Committee shall have certified in writing that the
applicable Performance Goals have been attained. The maximum amount
payable pursuant to Covered Awards to a particular Covered Employee
for any fiscal year of the Company shall be $5,000,000.
(E) The Committee may from time to time establish procedures
pursuant to which Covered Employees will be permitted or required to
defer receipt of awards under the Plan.
(F) Notwithstanding any other provision of the Plan, for all
purposes involving Covered Awards, the Committee shall consist of at
least two members of the Board of Directors, each of whom is an
"outside director" within the meaning of Section 162(m).
4. Except as provided above, the Plan shall continue in effect without
amendment.
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[MAP OF PITNEY BOWES STAMFORD FACILITIES]
<PAGE>
DIRECTIONS TO THE PARKING AREAS AT THE COMPANY'S WORLD HEADQUARTERS, ONE
ELMCROFT ROAD, STAMFORD, CT.:
NORTHBOUND ON I-95
Please take Exit 7 (Greenwich Avenue) and proceed through the first intersection
to next traffic light, where you should turn right onto Washington Boulevard
Continue 1/2 mile to stop sign. Turn left onto South Pacific Street and take
immediate right onto Dyke Lane. At the end of Dyke Lane, turn left onto Elmcroft
Road. Please park where indicated.
SOUTHBOUND ON I-95
Please take Exit 7 (Atlantic Street). At the second traffic light, turn left
onto Atlantic Street and continue through second traffic light to stop sign and
turn left onto Washington Boulevard. At next stop sign turn left onto South
Pacific Street and take immediate right onto Dyke Lane. At the end of Dyke Lane,
turn left onto Elmcroft Road. Please park where indicated.
FROM THE MERRITT PARKWAY
Please take Exit 34 (Long Ridge Road). Turn south onto Long Ridge Road. Follow
Long Ridge Road for approximately 2 miles to Cold Spring Road and turn right
onto Cold Spring Road. Bear left onto Washington Boulevard and follow to the end
(approximately 2 miles). At stop sign make a left turn onto South Pacific Street
and take an immediate right onto Dyke Lane. At the end of Dyke Lane, turn left
onto Elmcroft Road. Please park where indicated.
PROXY -- COMMON STOCK AND $2.12 CONVERTIBLE
PREFERENCE STOCK PITNEY BOWES INC.
ANNUAL MEETING OF STOCKHOLDERS MAY 13, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
George B. Harvey, Carmine F. Adimando, Amy C. Corn, or any of them, with power
of substitution, are hereby appointed proxies of the undersigned to vote all
common stock and $2.12 convertible preference stock of Pitney Bowes Inc. owned
by the undersigned at the annual meeting of stockholders to be held in Stamford,
Connecticut, on May 13, 1996, including any continuation of the meeting caused
by any adjournment, or any postponement of the meeting, upon such business as
may properly come before the meeting, including the following items, as set
forth in the notice of meeting and proxy statement:
1. Election of four directors.
2. Appointment of independent accountants for 1996.
3. Adoption of a new Employee Stock Purchase Plan.
4. Adoption of an amendment to the 1991 Stock Plan.
5. Adoption of an amendment to the Key Employees' Incentive Plan.
ALL SHARES OF $2.12 CONVERTIBLE PREFERENCE STOCK AND COMMON STOCK REGISTERED IN
YOUR NAME AND/OR HELD FOR YOUR BENEFIT IN THE DIVIDEND REINVESTMENT PLAN ARE
SHOWN ON THIS CARD. THE SHARES REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE
WITH THE DIRECTIONS GIVEN BY THE STOCKHOLDER. IF A PROPERLY SIGNED PROXY IS
RETURNED WITHOUT CHOICES MARKED, AND IF NOT OTHERWISE DIRECTED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED FOR ITEMS 1, 2, 3, 4 AND 5.
(CONTINUED, AND TO BE SIGNED, ON THE OTHER SIDE)
FOLD AND DETACH HERE
[LOGO] PITNEY BOWES
<PAGE>
Please mark
your vote
like this /x/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3, 4 AND 5.
- --------------------------------------------------------------------------------
Item 1 -- Election of Directors.
For all nominees (except as marked to the contrary)
Withhold (as to all nominees)
Michael J. Critelli, George B. Harvey, Michael I. Roth, Phyllis Shapiro Sewell
(Write a nominee's name on the space provided below to withhold authority to
vote for that individual nominee.) ----------------------------
- --------------------------------------------------------------------------------
Item 2 -- Appointment of Price Waterhouse, LLP as independent accountants for
1996. FOR / / AGAINST / / ABSTAIN / /
Item 3 -- Adoption of the 1996 Pitney Bowes Employee Stock Purchase Plan.
FOR / / AGAINST / / ABSTAIN / /
Item 4 -- Approval of an amendment to the Pitney Bowes 1991 Stock Plan.
FOR / / AGAINST / / ABSTAIN / /
Item 5 -- Approval of an amendment to the Pitney Bowes Inc. Key Employees'
Incentive Plan. FOR / / AGAINST / / ABSTAIN / /
- --------------------------------------------------------------------------------
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting, including any continuation of the
meeting caused by any adjournment, or any postponement of the meeting.
Please mark, date and sign, and return promptly this proxy in the enclosed
envelope, which requires no postage if mailed in the U.S.A. When signing as
attorney, executor, administrator, trustee or guardian, or in any other
representative capacity, please give your full title as such. Each joint owner
must sign the proxy.
Signature(s) of stockholder(s)__________________________ Date__________, 1996
FOLD AND DETACH HERE
<PAGE>
PITNEY BOWES INC.
ANNUAL MEETING OF STOCKHOLDERS MAY 13, 1996
VOTING DIRECTION TO TRUSTEE OF THE PITNEY BOWES INC.
DEFERRED INVESTMENT PLAN
As a participant in the Pitney Bowes Inc. Deferred Investment Plan, I hereby
direct Merrill Lynch Trust Company, Trustee, to vote all common stock of Pitney
Bowes allocated to my account, as indicated on the reverse side, at the annual
meeting of stockholders to be held in Stamford, Connecticut, on May 13, 1996,
including any continuation of the meeting caused by any adjournment, or any
postponement of the meeting, upon such business as may properly come before the
meeting, including the following items, as set forth in the notice of meeting
and proxy statement:
1. Election of four directors.
2. Appointment of independent accountants for 1996.
3. Adoption of a new Employee Stock Purchase Plan.
4. Adoption of an amendment to the 1991 Stock Plan.
5. Adoption of an amendment to the Key Employees' Incentive Plan.
ALL SHARES OF COMMON STOCK HELD FOR YOUR BENEFIT IN THE PLAN ARE SHOWN ON THIS
CARD. THE SHARES REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE WITH YOUR
DIRECTIONS. IF A PROPERLY SIGNED DIRECTION CARD IS RETURNED WITHOUT CHOICES
MARKED, AND IF NOT OTHERWISE DIRECTED, THE SHARES REPRESENTED BY THIS VOTING
DIRECTION CARD WILL BE VOTED FOR ITEMS 1, 2, 3, 4 AND 5.
(CONTINUED, AND TO BE SIGNED, ON THE OTHER SIDE)
[LOGO] PITNEY BOWES
<PAGE>
Please mark
your vote
like this /x/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3, 4 AND 5.
- --------------------------------------------------------------------------------
Item 1 -- Election of Directors.
For all nominees (except as marked to the contrary)
Withhold (as to all nominees)
Michael J. Critelli, George B. Harvey, Michael I. Roth, Phyllis Shapiro Sewell
(Write a nominee's name on the space provided below to withhold authority to
vote for that individual nominee.) ----------------------------
- --------------------------------------------------------------------------------
Item 2 -- Appointment of Price Waterhouse, LLP as independent accountants for
1996. FOR / / AGAINST / / ABSTAIN / /
Item 3 -- Adoption of the 1996 Pitney Bowes Employee Stock Purchase Plan.
FOR / / AGAINST / / ABSTAIN / /
Item 4 -- Approval of an amendment to the Pitney Bowes 1991 Stock Plan.
FOR / / AGAINST / / ABSTAIN / /
Item 5 -- Approval of an amendment to the Pitney Bowes Inc. Key Employees'
Incentive Plan. FOR / / AGAINST / / ABSTAIN / /
- --------------------------------------------------------------------------------
In its discretion, the Trustee is authorized to vote upon such other business as
may properly come before the meeting, including any continuation of the meeting
caused by any adjournment, or any postponement of the meeting.
Please mark, date and sign, and return promptly this voting direction card in
the enclosed envelope, which requires no postage if mailed in the U.S.A. When
signing as attorney, executor, administrator, trustee or guardian, or in any
other representative capacity, please give your full title as such. Each joint
owner must sign the proxy.
Signature(s) of stockholder(s)__________________________ Date__________, 1996
FOLD AND DETACH HERE
