SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|_| Preliminary proxy statement
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Pitney Bowes Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Not Applicable
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, par value $0.01 per share.
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
________ shares of Common Stock, par value $0.01 per share.
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N/A
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
- --------------------------------------------------------------------------------
(5) Total fee paid:
N/A
- --------------------------------------------------------------------------------
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
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(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE>
GRAPHIC
(LOGO)
NOTICE OF THE 1998
ANNUAL MEETING
AND
PROXY STATEMENT
Pitney Bowes Inc.
World Headquarters
Stamford, Connecticut 06926-0700
(203) 356-5000
<PAGE>
logo
TO THE STOCKHOLDERS:
Stockholders attending the annual meeting in Stamford on May
11, 1998, are cordially invited to join us for a continental
breakfast, served from 8 a.m. until the meeting begins at
9:30 a.m.
We look forward to welcoming many stockholders to the
meeting and will make it as interesting and informative as
possible.
Sincerely yours,
Michael J. Critelli
Chairman and Chief Executive Officer
Stamford, Connecticut
April 3, 1998
<PAGE>
NOTICE OF MEETING:
The annual meeting of stockholders of Pitney Bowes Inc. will
be held on May 11, 1998, at 9:30 a.m. at the company's World
Headquarters, One Elmcroft Road, Stamford, Connecticut.
Directions, including a map, to Pitney Bowes' World
Headquarters are set forth on the back cover page of the
Proxy Statement.
The items of business at the annual meeting are:
1. Election of four directors.
2. Appointment of independent accountants for 1998.
3. Amendment to the 1991 Stock Plan.
4. Stockholder proposal relating to CERES Principles
if properly presented at the meeting.
5. 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 13, 1998, 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 of record may vote by either: (i)
signing and returning promptly the enclosed proxy in the
accompanying envelope, which requires no postage if mailed
in the United States; (ii) attending the meeting and voting
in person; or (iii) voting by telephone as directed on the
enclosed proxy card.
Amy C. Corn
Corporate Secretary and
Senior Associate General Counsel
<PAGE>
PROXY STATEMENT
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 11, 1998, 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 agenda item. Each share of common stock will
be entitled to one vote and each share of $2.12 preference stock will be
entitled to sixteen votes for each agenda item.
Votes cast by proxy or in person at the annual meeting will be tabulated by the
election inspectors appointed for the meeting. The election inspectors will
determine whether or not a quorum is present. 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 sixteen votes of common stock) in person or by proxy at the
annual meeting is required to elect directors. The proposals relating to the
appointment of independent accountants, the 1991 Stock Plan amendment and the
stockholder proposal each requires the affirmative vote of the holders
representing a majority of the votes cast and entitled to vote on such proposal.
The election inspectors will treat abstentions as shares that are present and
entitled to vote at the meeting 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 or as a vote cast with respect to that matter. Thus,
abstentions and broker nonvotes will have no effect on the number of affirmative
votes needed to elect directors or to adopt any of the other proposals.
At the close of business on March 13, 1998, the record date for the annual
meeting, there were 279,334,236 shares of common stock outstanding and 79,722
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 April 3, 1998.
ELECTION OF DIRECTORS
Under the company's Restated Certificate of Incorporation and its Bylaws, there
are three classes of directors as nearly equal in number as possible. Each class
is elected for a three-year term.
<PAGE>
Mr. Butler and Mr. Campbell were elected last year to three-year terms expiring
in 2000. Mr. Kimball, who was also elected to a three-year term expiring in
2000, will be retiring from the board as of May 11, 1998, having attained
director's retirement age.
As previously announced by the company, effective February 1, 1998, the
Nominating and Organization Affairs Committee (consisting of four non-employee
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 eleven, and
electing James H. Keyes 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. Keyes was elected to the class of directors whose terms expire in 2000.
Mr. Critelli, Mr. Roth, and Mrs. Sewell were elected in 1996 to three-year terms
expiring in 1999. Ms. Alvarado, Mr. Breslawsky, and Mr. Hugel were elected in
1995 to three-year terms expiring in 1998. As previously announced by the
company, effective August 1, 1998, the Nominating and Organization Affairs
Committee recommended, and the board approved, increasing the number of
directors by one, and electing Ernie Green to the board. Mr. Green was elected
to the class of directors whose terms expire in 1998.
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 or vote your shares by telephone as
described on the proxy. 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 size of the board is reduced.
Information about each nominee for director and each incumbent director,
including the nominee's or incumbent's age as of February 28, 1998, 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 2001 ANNUAL MEETING
LINDA G. ALVARADO, 46, president 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, 55, president and chief operating officer, since 1996, of
Pitney Bowes Inc. Formerly vice chairman of Pitney Bowes Inc., 1994-1996, and
president of Pitney Bowes Office Systems, 1990-1994. Director since 1994. (Also
a director of C. R. Bard, Inc. and United Illuminating Company.)
ERNIE GREEN, 59, president and chief executive officer of Ernie Green
Industries, Inc., a manufacturer of automotive components. Director since 1997.
(Also a director of Dayton Power & Light, Inc., Eaton Corporation, Fluor Daniel
GTI and Gradall Industries, Inc.)
CHARLES E. HUGEL, 69, 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.
3
<PAGE>
INCUMBENT DIRECTORS WHOSE
TERMS EXPIRE AT THE 1999 ANNUAL MEETING
MICHAEL J. CRITELLI, 49, chairman and chief executive officer, since 1997, of
Pitney Bowes Inc. Formerly vice chairman and chief executive officer, 1996, and
vice chairman, 1994-1996, of Pitney Bowes Inc.; 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.
MICHAEL I. ROTH, 52, chairman and chief executive officer, since 1994, 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 Promus Hotel Corporation.)
PHYLLIS SHAPIRO SEWELL, 67, retired senior vice president of Federated
Department Stores, Inc. Director since 1987. (Also a director of Lee
Enterprises, Inc. and Sysco Corporation.)
INCUMBENT DIRECTORS WHOSE
TERMS EXPIRE AT THE 2000 ANNUAL MEETING
WILLIAM E. BUTLER, 66, retired chairman and chief executive officer (1991-1995)
of Eaton Corporation, a manufacturer of engineered products serving the
automotive, industrial, commercial, and military markets. Director since 1991.
(Also a director of Applied Industrial Technologies, Inc., BorgWarner
Automotive, Ferro Corporation, The Goodyear Tire and Rubber Co. and Zurn
Industries, Inc.)
COLIN G. CAMPBELL, 62, president of Rockefeller Brothers Fund, a philanthropic
organization. Director since 1977. (Also director of HSB Group, Sysco
Corporation and Rockefeller Financial Services.)
JAMES H. KEYES, 57, chairman, president and chief executive officer, since 1993,
of Johnson Controls, Inc., a supplier of automated building controls, and
automotive seating, interiors and batteries. Formerly president and chief
executive officer, 1988-1993, of Johnson Controls, Inc. Director since 1998.
(Also a director of Firstar Corp., LSI Logic Corporation and Universal Foods
Corporation.)
4
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The board met ten times in 1997 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 1997.
Members of the board serve on one or more of the six committees described below.
Except for Mr. Critelli, 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 1997, 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 the
company's internal accounting controls and the scope and results of the
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 Michael I. Roth.
The CORPORATE RESPONSIBILITY COMMITTEE, which met three times in 1997, oversees
the company's law and ethics compliance programs, and monitors the company's
policies and programs concerning stockholders, customers, employees, government
affairs, and the communities in which the company operates. The policies and
programs that the committee monitors include employee relations, customer
relations, investor relations, diversity initiatives, environmental protection,
postal matters, community affairs, government relations, charitable
contributions and product safety. Members are Linda G. Alvarado (Chairman),
Ernie Green, James H. Keyes, David T. Kimball, and Phyllis Shapiro Sewell.
The EXECUTIVE COMMITTEE, which did not meet in 1997, 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. Mr. Critelli (Chairman) is a
member for the full twelve-month term; each of the non-employee directors serves
a four-month term.
The EXECUTIVE COMPENSATION COMMITTEE, which met six times in 1997, 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 a direct relationship between achievement
of company objectives and compensation incentives. 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 1996
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 grants, or recommends grants of, incentives under the Pitney
Bowes 1991 Stock Plan ("1991 Plan"). Grants to long-term incentive eligible
employees, as described on page 16, are recommended by the Executive
Compensation Committee and 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 five times in 1997, reviews the company's
financial condition and evaluates significant financial policies, oversees the
company's major retirement plans, 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. In 1997, the board approved the recommendation of the
Nominating and Organization Affairs Committee to discontinue the Retirement
5
<PAGE>
Advisory Committee of the board, and to reassign its key responsibilities to the
Finance Committee. Accordingly, the Finance Committee's duties also include
oversight of the financial operations of the company's major retirement,
savings, and post-retirement benefit plans and retirement funds to ensure that
qualified 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 major plans. Members are William E. Butler (Chairman), Colin
G. Campbell, Charles E. Hugel, and Michael I. Roth.
The NOMINATING AND ORGANIZATION AFFAIRS COMMITTEE, which met nine times in 1997,
recommends nominees for election to the board of directors, recommends
membership and duties of the board committees, reviews senior management's
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.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of March 13, 1998, 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 (23 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.
Throughout this proxy statement, unless the context otherwise explicitly
requires, all references to the common stock of the company or the value thereof
shall give effect to the two-for-one stock split effected in the form of a stock
dividend for stockholders of record as of December 29, 1997.
As of December 31, 1997, the only person or group known to the company to be the
beneficial owner of more than five percent of any class of the company's voting
securities is FMR Corp., as more fully described below. The following
information is based solely upon Schedule 13G filed by FMR Corp. with the
Securities and Exchange Commission. More information about FMR's beneficial
ownership of company shares may be obtained from its Schedule 13G.
FMR and its operating subsidiaries beneficially own, on a post-split basis,
43,448,306 shares (representing 15 percent) of the company's outstanding common
stock, of which 39,701,700 shares are beneficially owned by Fidelity Management
& Research Company ("Fidelity"), a wholly-owned subsidiary of FMR Corp., and a
registered investment advisor. FMR may be deemed to have sole dispositive power
over shares held by the investment companies managed by Fidelity, but voting
power over such shares rests with each fund's board of directors. Edward C.
Johnson, 3d and members of his family may be deemed to control FMR. Fidelity
Management Trust Company, a bank, Fidelity International Limited and various
other foreign-based operating subsidiaries beneficially owned 3,698,006, and
48,600 shares, respectively. FMR Corp. has an office at 82 Devonshire Street,
Boston, MA 02109-3614.
6
<PAGE>
SECURITY OWNERSHIP
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
SHARES OPTIONS
DEEMED TO EXERCISABLE
TITLE OF BE BENEFICIALLY WITHIN
CLASS OF STOCK NAME OF BENEFICIAL OWNER OWNED (A) (B) 60 DAYS (C)
-------------- ----------------------------------- --------------- -----------
<S> <C> <C> <C>
Common Linda G. Alvarado 7,550 --
Common William E. Butler 9,375 --
Common Colin G. Campbell 11,000 --
Common Ernie Green 2,120 --
Common Charles E. Hugel 8,200 --
Common James H. Keyes 1,000 --
Common David T. Kimball 49,200 --
Common Michael I. Roth 8,200 --
Common Phyllis Shapiro Sewell 14,200 --
Common Marc C. Breslawsky 201,888 311,398
Common Michael J. Critelli 177,468 106,214
Common Matthew S. Kissner 5,800 12,167
Common John N.D. Moody 40,443 91,716
Common Murray L. Reichenstein 2,400 22,750
------- ----------------------------------- ------- -------
COMMON ALL EXECUTIVE OFFICERS AND DIRECTORS 604,917 780,706
AS A GROUP (23)
</TABLE>
- --------------
(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 2,400 in the case of Mr.
Campbell, 3,000 in the case of Mr. Kimball, 500 in the case of Mr.
Breslawsky and 7,608 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 13, 1998) by exercising outstanding stock
options.
- -------------------------------------------------------------------------------
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Directors and persons who are considered "officers" of the company for purposes
of Section 16 of the Securities Exchange Act of 1934 and greater than ten
percent stockholders ("Reporting Persons") are required 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 generally the practice of the company to file such forms on behalf
of its Reporting Persons who are directors or officers. Based solely upon a
review of such forms filed with the company, the company believes that all such
forms have been timely filed, except that a Form 4 was not timely filed relating
to a purchase of 520 shares (on a pre-split basis) of Pitney Bowes common stock
as well as the reinvestment by a brokerage firm of three quarterly dividends in
an aggregate 30.878 shares made on behalf of William E. Butler, a director.
7
<PAGE>
DIRECTORS' COMPENSATION
DIRECTORS' FEES. In 1997, each non-employee director received a fee of $30,000
per year and $1,100 for each board and committee meeting attended, with
committee chairpersons receiving an additional $400 for each committee meeting
that they chaired. Directors who are also employees of the company receive no
additional compensation for serving as a director of the company. Directors were
also reimbursed for their out-of-pocket expenses incurred in attending board and
committee meetings.
DIRECTORS' STOCK PLAN. Under the Directors' Stock Plan, amended and restated as
of May 1997, each non-employee director receives 1,400 shares of restricted
stock (on a post-split basis). Accordingly, over 50 percent of the directors'
overall compensation currently is comprised of Pitney Bowes 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. Since the approval of the Directors'
Stock Plan by stockholders in 1991, the common stock of the company has twice
undergone a two-for-one split, in 1992 and 1997, respectively. In addition, the
annual grant was increased in 1997 in connection with the discontinuation of the
Directors' Retirement Plan, as described below. The share numbers given in this
section have been adjusted to reflect the 1997 two-for-one stock split.
On May 12, 1997, an aggregate of 9,800 restricted shares was awarded, with each
of the seven non-employee directors then serving receiving 1,400 shares of
restricted common stock. Upon the effective date of their respective elections
to the board of directors, each of Messrs. Green and Keyes received a grant of
restricted stock prorated to reflect the number of months of his service as a
director for the twelve-month period ending May 11, 1998. Mr. Green was granted
1,100 shares of restricted common stock as of August 1, 1997, and Mr. Keyes was
granted 400 shares as of February 2, 1998. Ownership of shares granted under the
Directors' Stock Plan is reflected in the table on page 7 showing security
ownership of executive officers and directors.
DIRECTORS' DEFERRED INCENTIVE SAVINGS PLAN. The company maintains a Directors'
Deferred Incentive Savings Plan under which directors may defer the cash portion
of their compensation and receive a return based upon any combination of several
publicly sponsored mutual funds, a treasury bill-based rate of return, or a
return based upon options to purchase common stock of the company. The number of
options granted (representing the return on the deferred amount) is calculated
by dividing the cash amount deferred by the individual director by the fair
market value of the shares on the date of the option grant, and multiplying that
quotient by two.
DIRECTORS' RETIREMENT PLAN. The company's Directors' Retirement Plan was
discontinued and benefits previously earned by directors were frozen as of May
12, 1997. Under this plan, there is no benefit paid to a director who served for
less than five years as of May 12, 1997. A director who has met the five-year
minimum vesting requirement as of May 12, 1997 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 annual retainer fee in effect as of May 12,
1997 was $30,000. The annual retirement 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 retirement benefit only during a period equal to the number
of years that the director had served on the board as of May 12, 1997.
Individuals who are eligible for pension benefits as prior employees of the
company are not eligible under the Directors' Retirement Plan. In connection
with the discontinuation of the Directors' Retirement Plan, the annual grant of
restricted stock under the Directors' Stock Plan was increased from 800 shares
to 1,400 shares (as adjusted to reflect the 1997 two-for-one stock split).
8
<PAGE>
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,
1997, with that of (i) the Standard & Poor's ("S&P(R)") 500 Composite Index,
(ii) a combination of the companies included in the S&P Office Equipment and
Supplies Index and the S&P Computers (Hardware) Index, and (iii) a combination
of the companies included in a company-constructed industry peer group (the
"Peer Group") at December 31, 1997, over the same five-year period.
The company believes that it is more appropriate to compare its total returns to
the Peer Group than to the combination of the companies included in the S&P
Office Equipment and Supplies and S&P Computers (Hardware) indices because of
the greater overlap of competitive markets and technologies of the Peer Group
with the company's office equipment and business services operations.
The Peer Group is comprised of the following companies: Bell & Howell, Danka
Business Systems (ADR), Harris Corporation, Ikon Office Solutions, Moore
Corporation Ltd. and Xerox Corporation. Total return for the group is based on
market capitalization, weighted for each year. It is the company's intent to use
the Peer Group as its sole industry index comparison in the future.
As with the Peer Group, 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 Computers (Hardware) indices are market-value weighted indices. All
information shown below 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, 1992
would have grown to $256 by December 31, 1997. By comparison, $100 invested in
the S&P 500 Composite Index would have grown to $252 by December 31, 1997.
Additionally, $100 invested in the index that reflects the combined returns of
companies in the S&P Office Equipment and Supplies and the S&P Computers
(Hardware) indices would have been worth $386 on December 31, 1997. An
investment of $100 in the Peer Group on December 31, 1992 would have been worth
$253 on December 31, 1997.
[GRAPH]
STOCK PERFORMANCE OF
$100 (DECEMBER '92) WITH
REINVESTMENT OF
DIVIDENDS
S&P Equity/
Pitney Bowes S&P Comp (Hdwr.) Peer Group
------------ --- ------------ -----------
1992 100 100 100 100
1993 106 110 108 121
1994 84 112 136 124
1995 128 153 193 176
1996 153 189 264 205
1997 256 252 386 253
9
<PAGE>
EXECUTIVE OFFICER COMPENSATION
The Executive Compensation Committee (the "Committee"), which is composed of
three independent (non-employee) directors, oversees the company's executive
compensation programs and establishes its executive compensation policies. (A
description of the Committee's duties appears on page 5.) The Committee reports
to all of the independent directors of the board (the "Independent Directors")
on executive compensation and makes recommendations to the Independent Directors
regarding specific executive officer compensation matters with respect to which
the Independent Directors have final approval. (See "Report on Executive
Compensation by the Independent Directors" beginning on page 14.)
SUMMARY COMPENSATION TABLE. The following table (Table I) shows all compensation
paid or granted, during or with respect to the 1997 fiscal year and the two
previous fiscal years, to the chief executive officer and to the four other
highest paid executive officers for services rendered to the company and its
subsidiaries during 1997. (Persons in this group are referred to herein
individually as a "Named Executive Officer" and collectively as the "Named
Executive Officers," and the titles listed are the titles held as of the end of
the 1997 fiscal year.)
10
<PAGE>
TABLE I
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------- -----------------
GRANTS PAYOUTS
------ --------
LONG-TERM
INCENTIVE
PBC OTHER ANNUAL PLAN ALL OTHER
SALARY INCENTIVE COMPENSATION STOCK PAYOUTS COMPENSATION
($) ($) ($) OPTIONS ($)(1) ($)(2)
NAME AND PRINCIPAL POSITION YEAR (000) (000) (000) (#) (000) (000)
--------------------------------- ---- --------- -------- ------------- ------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael J. Critelli................... 97 693.8 1,100.0 __ 120,000 1,093.8 32.1
Chairman and Chief Executive 96 592.7 730.0 __ 60,000 881.3 3.8
Officer 95 500.0 550.0 __ 31,300 328.1 3.8
Marc C. Breslawsky.................... 97 645.8 850.0 __ 110,000 1,093.8 28.5
President and Chief Operating 96 577.1 710.0 __ 60,000 881.3 3.8
Officer 95 500.0 550.0 __ 31,300 514.2 7.9
John N.D. Moody....................... 97 372.2 400.0 __ 36,000 520.0 32.1
President, U.S. Mailing Systems 96 341.0 285.0 __ 12,000 367.1 3.8
95 325.7 228.0 __ 9,900 202.7 3.8
Murray L. Reichenstein................ 97 400.0 290.0 __ 36,000 -0- -0-
Vice President and Chief 96 100.0 65.0 __ 26,000 -0- -0-
Financial Officer 95 __ __ __ __ __ __
Matthew S. Kissner.................... 97 305.6 320.0 __ 36,000 -0- 19.9
President, Pitney Bowes Financial 96 234.1 168.6 __ 8,000 -0- -0-
Services 95 210.8 143.4 __ 5,500 -0- -0-
</TABLE>
- -----------
(1) The value shown for 1997 is the aggregate of the value of the payout of
Cash Incentive Units ("CIUs") and the December 31, 1997 market value of
restricted stock granted on February 13, 1995, for all Named Executive
Officers. Payout under the CIUs was based on the magnitude of achievement
against the financial performance criteria over the three-year period
ending December 31, 1997. (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. 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.
The aggregate number and fair market value of the shares of restricted
stock held by the Named Executive Officers as of December 31, 1997
(exclusive of shares that were released to the Named Executive Officers
after such date), are as follows: Mr. Critelli, 12,000 shares ($539,625);
Mr. Breslawsky, 12,000 shares ($539,625); Mr. Moody, 4,000 shares
($179,875); Mr. Reichenstein, 2,400 shares ($107,925); and Mr. Kissner,
2,600 shares ($116,919). (Market value is calculated at $44.96875 per
share, the market price of the common stock at the close on December 31,
1997.) Individuals granted restricted stock in 1996 have voting rights and
receive dividends with respect to the stock during the restricted period.
(2) For Messrs. Critelli, Breslawsky, Moody and Kissner, includes amounts
contributed to the Pitney Bowes Deferred Investment Plan (a tax-qualified
plan under Section 401(k) of the Internal Revenue Code) and, for 1997,
also includes an allowance in the amount of $27,548, $23,875, $27,548, and
$15,140, respectively, for financial counselling, including income taxes
payable with respect to such allowance.
- --------------------------------------------------------------------------------
11
<PAGE>
Shown in Table II below is information regarding options granted in 1997 to the
Named Executive Officers.
- --------------------------------------------------------------------------------
TABLE II
STOCK OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
NET POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL RATES
PERCENTAGE OF OF STOCK PRICE
OPTIONS TOTAL OPTIONS APPRECIATION FOR
GRANTED GRANTED TO EXERCISE OR OPTION TERM (2)
-------------------
IN 1997 EMPLOYEES BASE PRICE 5% ($) 10% ($)
NAME (#) IN 1997 ($/SHARE)(1) EXPIRATION DATE (000) (000)
----------------------------- ------- --------- ---------- ------------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Critelli.............. 120,000 7.08% 29.31250 Feb. 9, 2007 2,212.2 5,606.0
Marc C. Breslawsky............... 110,000 6.49% 29.31250 Feb. 9, 2007 2,027.9 5,138.8
John N.D. Moody.................. 36,000 2.12% 29.31250 Feb. 9, 2007 663.7 1,681.8
Murray L. Reichenstein........... 36,000 2.12% 29.31250 Feb. 9, 2007 663.7 1,681.8
Matthew S. Kissner............... 23,000 1.36% 29.31250 Feb. 9, 2007 424.0 1,074.5
13,000 .77% 35.90625 June 8, 2007 293.6 743.9
</TABLE>
- ----------------
(1) The exercise price equals the market price of a share of the
company's common stock on the date of grant adjusted to reflect the
1997 two-for-one stock split. 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. 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.
- --------------------------------------------------------------------------------
12
<PAGE>
Shown in Table III below is information regarding the exercise of options in
1997 by the Named Executive Officers and information regarding their total
outstanding options as of December 31, 1997.
- --------------------------------------------------------------------------------
TABLE III
OPTIONS EXERCISED IN 1997 AND 1997 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
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>
Michael J. Critelli 13,100 230,058 93,504 170,436 2,479,312 2,991,649
5,160* 122,178
Marc C. Breslawsky 40,000 1,011,874 274,164 160,436 8,172,096 2,835,087
John N.D. Moody ___ ___ 77,616 47,300 2,353,862 819,644
Murray L. Reichenstein ___ ___ 10,750 51,250 192,492 836,695
Matthew S. Kissner 6,332* 85,742 1 43,167 20 638,262
</TABLE>
- --------------
* Result of the exercise of ISO.
(1) These columns show the aggregate totals of options granted during the
period 1988 through 1997. The number of shares subject to the options
has been adjusted to reflect the two-for-one stock splits effected in
1992 and 1997. 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 during
and 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 $44.96875 per share, the market price of a
share of common stock as of December 31, 1997, net of exercise
prices, which range from $11.14065 to $29.3125 per share (adjusted to
reflect the 1992 and 1997 stock splits). In all cases, the exercise
price equaled the market price of a share at the date of grant.
- --------------------------------------------------------------------------------
Table IV, which follows, shows detailed information regarding long-term
incentives other than options granted under the Pitney Bowes Key Employees'
Incentive Plan ("KEIP") in 1997. Long-term incentives are contingent upon the
attainment of one or more specified performance objectives. The company is
obligated, under the terms of these incentives, to make the specified payments,
if any, only to the extent that the stated performance objectives are achieved.
In 1997, a committee of the board of directors, consisting solely of all
non-employee directors, granted Cash Incentive Units ("CIUs"), as long-term
incentives. CIUs represent a defeasible right to receive cash, the receipt and
amount of which are contingent upon the extent to which specified performance
objectives are attained during the related three-year period. No grants of
restricted stock were made in 1997.
13
<PAGE>
- --------------------------------------------------------------------------------
TABLE IV
1997 LONG-TERM INCENTIVE GRANTS
<TABLE>
<CAPTION>
PERFORMANCE OR OTHER ESTIMATED FUTURE PAYOUTS
-------------------------------------------
NUMBER OF PERIOD UNTIL THRESHOLD TARGET MAXIMUM
----------- -------------- ----------
CASH INCENTIVE MATURATION OR CIU ($) CIU ($) CIU ($)
NAME UNITS (1) PAYOUT (1) (000) (000) (000)
----------------------- -------- ----------------- ----- ------- -------
<S> <C> <C> <C> <C> <C>
Michael J. Critelli....... 600,000 December 31, 1999 0 600 1,200
Marc C. Breslawsky........ 550,000 December 31, 1999 0 550 1,100
John N.D. Moody........... 235,000 December 31, 1999 0 235 470
Murray L. Reichenstein.... 250,000 December 31, 1999 0 250 500
Matthew S. Kissner........ 225,000 December 31, 1999 0 225 450
</TABLE>
- --------------
(1) CIUs granted under the 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, 1999. CIUs that will mature on December 31, 1999 will pay
$0/CIU if the threshold levels are not exceeded. The CIUs will have a
value of $.0075 to $2.00 per unit if the earnings per share and return on
stockholders' equity performance criteria are met, depending on the actual
magnitude of achievement.
- --------------------------------------------------------------------------------
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.
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 to 14 above). It also establishes the policies for and reviews incentive
awards and stock options granted to executives who comprise approximately 1
percent of the total employees of the company (referred to herein as
"Executives").
The company's executive compensation program has been designed with four main
objectives:
(1) provide total compensation which is competitive when compared to various
markets in which the company competes for executive talent; (2) place a portion
of annual compensation at risk subject to performance against objectives; (3)
divide total compensation between annual and long-term components with a
significant long-term performance related component; and (4) align annual and
long-term compensation with stockholder interests.
For 1997, the Committee considered all features of the executive compensation
program and determined that the individual components in the aggregate continue
to meet the objectives of the program. 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, total long-term compensation, and
executive benefits and perquisites. The company's compensation program
14
<PAGE>
was compared to that of companies deemed to be in its industry group, including
some of the companies in the S&P 500, the S&P Office Equipment and Supplies, and
the S&P Computers (Hardware) indices and the Peer Group referenced in the
performance graph shown on page 9. The company's compensation program was also
compared to that of high performance companies of similar or larger revenue
size, in different lines of business, 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 1997, several new elements were added to the overall compensation
program. Beginning in 1997, the company implemented a Stock Ownership Policy
which requires certain members of senior management to own a significant amount
of company stock. Over a five-year period, covered executives must purchase and
hold a sufficient number of shares of company stock so as to own shares of value
equal to or exceeding a pre-established multiple of their respective base
salaries. The company's executive compensation program has become more complex,
given the elimination of ongoing restricted stock awards, larger stock option
grants, implementation of the Stock Ownership Policy and a deferred compensation
program, as well as significant changes in the pension and 401(k) savings plans.
Therefore, Key Executives who participate in the company's long-term incentive
program and receive Cash Incentive Units ("CIUs") are now eligible for
company-reimbursed financial counseling designed in part to assure that
participants make best use of the various choices available under complex
incentive and benefit arrangements. At the same time, to bring the company's
executive compensation program in line with competitive practice, certain
executive officers now receive a monthly automobile allowance.
ANNUAL COMPENSATION
BASE SALARY. In general, the company establishes base pay for Executives at
levels that it believes to be, in the aggregate, comparable to base pay at
competitor companies. The determination of an individual Named Executive
Officer's base pay is based on his level of experience, individual performance
against annually established financial and non-financial unit and individual
objectives and competitive market rates for similar positions.
As of February 1, 1997, Mr. Critelli's annual base salary was increased from
$625,000 to $700,000, a 12 percent increase. This increase was recommended by
the Committee following review and discussion of competitive compensation data
for CEO positions, Mr. Critelli's expanded level of responsibilities, which, as
of January 1, 1997 included the position of Chairman, his then current base
salary, and recognition of Mr. Critelli's highly successful 1996 accomplishments
against various corporate objectives.
PERFORMANCE BASED COMPENSATION INCENTIVE. All Executives, including the Named
Executive Officers, are eligible for Performance Based Compensation ("PBC")
Incentives for achieving specific, significant, annual company, business unit
and/or individual objectives. PBC Incentives for Executives are expressed as a
percentage of base salary ranging from 0% to two times a pre-established target
award.
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 may be paid for acceptable
performance; and no amount is paid for performance that is unsatisfactory. 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 1997, the Independent Directors determined that Mr. Critelli's performance
was significant against several objectives of short-term and long-term
significance that had been established by the Independent Directors at the
beginning of the year. As a result of its review of all relevant factors of
company achievements and competitive incentive award levels for similar
positions, the Committee determined to pay Mr. Critelli $1,100,000 as a PBC
Incentive for his 1997 performance. This represented a 50.7 percent increase
over his 1996 PBC Incentive. The increase for 1997 reflects the added
responsibilities of Chairman, effective January 1, 1997, as well as the high
level of individual and company performance.
15
<PAGE>
LONG-TERM INCENTIVES
With the elimination by the Independent Directors of restricted stock awards as
an ongoing element of the long-term incentive program and their decision to
replace them with additional stock options, the company now generally utilizes
two types of long-term incentives: CIUs and stock options. The Committee used
these performance-driven components to link executive compensation to internal
company performance and to external market performance of the company's stock
price.
The potential value of CIUs is contingent upon the attainment of one or more
specified long-term financial performance objectives, such as earnings per share
and return on stockholder equity. Amounts are paid, or rights given, only to the
extent, if any, that challenging pre-established performance objectives are
achieved. CIUs are granted only to Key Executives. The potential future value of
stock options, which are granted to Executives 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. The amount paid in satisfaction of CIUs is linked to the
attainment of certain earnings-per-share growth and rates of return on
stockholder equity over a three-year period.
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 proportionate rate
per CIU, and payment decreases to zero if the performance is equal to or less
than an earnings per share growth rate threshold. Payment reaches a maximum
payout of $2.00 per CIU when the performance equals or exceeds a maximum growth
rate objective.
In 1997, Mr. Critelli was granted 600,000 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, 1999.
For the three-year performance period ending on December 31, 1997, the payout of
previously granted CIUs was at the maximum value for all participants because
the maximum financial growth rate objectives established in 1995 were exceeded.
STOCK-BASED INCENTIVES
RESTRICTED STOCK. Restricted stock granted in 1996 for the 1996-1998 performance
period remains subject to both a financial performance and a tenure requirement.
The restrictions on the shares will be 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. These 1996 awards are
the only outstanding restricted stock awards granted under the 1991 Stock Plan.
For the three-year performance period ending on December 31, 1997, the
restrictions on all 12,500 shares granted to Mr. Critelli on February 13, 1995
were released, as the Independent Directors determined that the performance
objective had been exceeded.
STOCK OPTIONS. The level of stock option grants is established by taking into
consideration the competitive level of option grants for comparably situated
executives. 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 typically only
become exercisable in installments during the first three years following their
grant.
In determining the number of options to be granted to Mr. Critelli (120,000 in
1997), the Independent Directors considered the number of stock options then
held by Mr. Critelli and determined that the number of options to be granted for
1997 represented an appropriate component of Mr. Critelli's total compensation
package for 1997.
DEDUCTIBILITY OF COMPENSATION UNDER INTERNAL REVENUE CODE SECTION 162 (M)
Publicly traded corporations generally are not permitted to deduct compensation
in excess of $1 million paid to certain top executives unless the
16
<PAGE>
compensation qualifies for an exception as "performance-based compensation." The
company believes it has complied, and in the future generally intends to comply
with the requirements for full deductibility wherever possible. The company
will, however, weigh the benefits of compliance with Section 162(m) against the
burdens thereof, and reserves the right to pay compensation that may not be
fully deductible if it determines that it is in the company's best interest to
do so. In this regard, it is the company's expectation that compensation under
applicable incentive programs will normally be performance-based compensation
and thus qualify for deductibility under Section 162(m).
Linda G. Alvarado James H. Keyes
William E. Butler David T. Kimball
Colin G. Campbell Michael I. Roth
Ernie Green Phyllis Shapiro Sewell
Charles E. Hugel
SEVERANCE AND CHANGE OF CONTROL ARRANGEMENTS
The Pitney Bowes Severance Plan, Senior Executive Severance Policy, and
incentive plans, as described below, 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 Pitney Bowes Stock Option 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, Executives,
including the Named
17
<PAGE>
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 as
established by Chase Manhattan Bank, N.A. then in effect.
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.
PENSION BENEFITS
Effective September 1,1997, the company revised the Pension Plan such that the
benefit payable under the Pension Plan is no longer a function solely of years
of service and final average earnings. Under the revised formula, employees
receive annual credits of a percentage of their earnings. The annual percentage
ranges from 2% to 10% and increases as the sum of age and years of service
increases. "Earnings" for purposes of the plan, means the average of the five
highest consecutive annual pay amounts during a participant's service with the
company.
In connection with the adoption of revisions to the Pension Plan, various
participants, including certain of the Named Executive Officers, will be
eligible for certain "grandfather" and transition provisions that are intended
to avoid undue impairment of any participant's pension as a result of the new
formula. Certain long-service participants may be entitled to receive their
benefit computed under the old formula, if greater than that computed under the
new formula.
The annual pension benefits to which each of the Named Executive Officers would
be entitled had he retired on December 31, 1997 (disregarding any limitation on
vesting) expressed as a life annuity beginning at age 65 is as follows: Mr.
Critelli: $247,176; Mr. Breslawsky: $274,545; Mr. Moody: $197,760; Mr.
Reichenstein: $3,589; and Mr. Kissner: $18,528.
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 1998.
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.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPOINTMENT OF
PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR 1998.
AMENDMENT TO THE 1991 STOCK PLAN
INTRODUCTION
At the annual meeting, the company's stockholders will be requested to consider
and act upon a proposal to amend Section 4 of the Pitney Bowes 1991 Stock Plan
(the "Plan"). The amendment provides for the authorization of an additional 18
million shares available for issuance under and in accordance with the terms of
the Plan.
On February 9, 1998, the board of directors adopted the proposed amendment to
the Plan, subject to approval by the company's stockholders. The purpose of the
amendment is to authorize sufficient shares for issuance under the Plan to meet
the needs of the company's executive compensation program for a period of
approximately five years. The board of directors believes that the proposed
amendment is desirable since it will serve to pro-
18
<PAGE>
mote the company's interests and those of its stockholders by strengthening
the company's ability to attract and retain employees who can make substantial
contributions to the success of the company. The operation of the Plan will also
facilitate equity ownership of the company by its officers, key management, and
other employees, thereby providing them with a direct personal interest in the
company's continued success and progress, and in the market price of its stock.
If the proposed amendment to the Plan is approved by stockholders, the board of
directors intends, with respect to future grants, to utilize the remaining
shares previously authorized in respect of the Plan for future grants before
utilizing the additional shares recommended for approval at the 1998 annual
meeting.
The board of directors recommends a vote FOR approval of the proposed amendment
to the Plan.
DESCRIPTION
Set forth below is a summary of certain important features of the Plan and the
proposed amendment thereto. This description is qualified in its entirety by
reference to the complete text of the Plan, including the proposed amendment,
which is set forth as Annex 1 to this proxy statement and entitled "The Pitney
Bowes Amended and Restated 1991 Stock Plan."
PLAN PROVISIONS
The Plan provides that it shall be administered by a 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, or such other committee designated by the
board of directors to administer the Plan (the "Committee"). Employees of the
company and its affiliates are eligible for grants under the 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 100% of the fair market value of the underlying stock on the date
of grant. Grants under the Plan have generally taken the form of stock options
and restricted stock.
Awards of restricted stock must bear a restriction of a minimum of three years
if a tenure requirement is the sole restriction for earning the award. If
performance goals are required to be met to earn the award, the restriction
period must be for a minimum of one year. Only 30% of the total shares
authorized under the Plan are issuable in the form of restricted stock awards.
The Committee is not permitted to waive performance conditions applicable in
stock or stock-based awards, either by shortening performance periods, repricing
stock options previously issued (except in the case of authorized adjustments
for extraordinary corporate events and except in the case of death, disability
or retirement of the participant), or taking other such actions.
The total number of shares authorized for issuance pursuant to the Plan was set
at 3,200,000 in 1991, when it was approved by stockholders; as of December 31,
1997, 6,177,308 shares remained available for grants of new awards under the
Plan (after adjustment for the stock splits that occurred in 1992 and 1997,
respectively).
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 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 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 a
majority of votes cast by the holders of common stock and $2.12 preference stock
of the company present or represented by proxy and entitled to vote at the
annual meeting.
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THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE PROPOSED AMENDMENT TO THE
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.
STOCKHOLDER PROPOSAL RELATING
TO CERES PRINCIPLES
The company has been informed that Progressive Securities Investment Management,
200 First Avenue West, Suite 204, Seattle, Washington 98119, on behalf of its
clients, Ogden and Marjorie Kellogg, owners of 500 shares (on a pre-split basis)
of the company's common stock, and The Clean Yield Group, P.O. Box 117, Garvin
Hill Road, Greensboro, Vermont 05841, on behalf of its client, the Sally S.
Venerable Charitable Remainder Trust, Nancy V. Deren and Robert J. Dodds, III,
Trustees, owner of 1,000 shares (on a pre-split basis) of the company's common
stock, intend to present the following supporting statement and proposal at the
1998 Annual Meeting of Stockholders:
"WHEREAS WE BELIEVE:
"Responsible implementation of a sound, credible environmental policy increases
long-term shareholder value by raising efficiency, decreasing clean-up costs,
reducing litigation, and enhancing public image and product attractiveness;
"Adherence to public standards for environmental performance gives a company
greater public credibility than standards created by industry alone. For maximum
credibility and usefulness, such standards should specifically meet the concerns
of investors and other stakeholders;
"Companies are increasingly being expected by investors to do meaningful,
regular, comprehensive and impartial environmental reports. Standardized
environmental reports enable investors to compare performance over time. They
also attract investment from investors seeking companies which are
environmentally responsible and which minimize risk of environmental liability.
"WHEREAS:
"The Coalition for Environmentally Responsible Economies (CERES) - which
includes shareholders of this Company; public interest representatives, and
environmental experts - consulted with corporations to produce the CERES
Principles as comprehensive public standards for both environmental performance
and reporting. Scores of companies, including Bank America, Baxter
International, Bethlehem Steel, General Motors, H. B. Fuller, ITT Industries,
Pennsylvania Power and Light, Polaroid, and Sun [Sunoco], have endorsed these
principles to demonstrate their commitment to public environmental
accountability and standardized reporting. Fortune-500 endorsers say that
benefits of working with CERES are public credibility and `value-added' for the
company's environmental initiatives;
"A company endorsing the CERES Principles commits to work toward:
"1. Protection of the biosphere
2. Sustainable natural resource use
3. Waste reduction and disposal
4. Energy conservation
5. Risk reduction
6. Safe products/services
7. Environmental restoration
8. Informing the public
9. Management commitment
10. Audits and reports
"[Full text of the CERES Principles and accompanying CERES Report Form
obtainable from CERES, 711 Atlantic Avenue, Boston MA 02110,
tel: 617-451-0927].
"CERES is distinguished from other initiatives for corporate environmental
responsibility, by being (1) a successful model of shareholder relations; (2) a
leader in public accountability through standardized environmental reporting;
and (3) a catalyst for significant and measurable environmental improvement
within firms.
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"RESOLVED: Shareholders request the Company to endorse the CERES Principles as a
part of its commitment to be publicly accountable for its environmental impact.
SUPPORTING STATEMENT
"Many investors support this resolution. Those sponsoring similar resolutions at
various companies have portfolios totaling $75 billion. The number of public
pension funds and foundations supporting this resolution increases every year.
We believe the CERES Principles are comparable to the European Community
regulation for voluntary participation in verified and publicly-reported
eco-management and auditing, and they go beyond ISO 14000.
"Your vote FOR this resolution will encourage both scrutiny of our Company's
environmental policies and reports and adherence to goals supported by
management and shareholders alike. We believe the CERES Principles will protect
both your investment and your environment."
DIRECTORS' STATEMENT IN OPPOSITION
Pitney Bowes' environmental management program has evolved over the last decade
from a basic compliance program to one of advanced product stewardship and
corporate responsibility. The company has had a Corporate Policy on
Environmental Protection (the "Policy") in place since 1987. The Policy commits
Pitney Bowes to protect the environment by continually measuring and improving
its environmental performance, policies and programs based on audit results and
taking into account regulatory developments, customer needs, technical
developments, scientific understanding, and community expectations. The Policy
establishes the responsibility of every employee for the protection of the
environment and identifies the specific responsibilities of key management. By
promulgating the Policy, Pitney Bowes has demonstrated its commitment to high
standards of environmental performance and responsibility.
In furtherance of the Policy, the company established a Zero Discharge Program
in 1989 which sets goals surpassing legal requirements and evidences its
commitment to minimizing the discharge of hazardous emissions to air, water and
land. Pitney Bowes made this commitment because of its belief that minimizing
the amount of hazardous emissions from its operations would result in a cleaner
environment for its employees and the community, reduced risk to employee health
through potential exposure to hazardous materials and an improved efficiency in
operations that would in turn lead to reduced costs. At year-end 1997, the
company has reduced its hazardous waste generation by 95% over 1989 levels. It
has completely eliminated its reportable air emissions under federal law (SARA
313) and has reduced wastewater discharges by 91%.
In addition, Pitney Bowes joined the Environmental Protection Agency's (the
"EPA") voluntary 33/50 Program in 1991. Even though the EPA had targeted a 33%
reduction in certain chemical releases by 1992 and a 50% reduction by 1995,
Pitney Bowes chose to commit to, and exceeded, an even more aggressive target of
80% for all five program chemicals which were used in Pitney Bowes' operations.
Pitney Bowes also has an advanced two-phased Product Stewardship Program. The
first phase involves the incorporation of environmental and product end-of-life
concerns into product design in order to minimize the products' environmental
impact up front. The second phase consists of the establishment of programs to
motivate suppliers and vendors to adopt product environmental practices that are
equivalent in effect to those of Pitney Bowes. Pitney Bowes also plans to fully
integrate environmental concerns into its business strategy, including the area
of cost accounting.
While the company is proud of its environmental record, as disclosed in Pitney
Bowes' annual report on Form 10-K, the company is involved as a potentially
responsible party or a third party defendant at certain state and federal
Superfund sites. This involvement is primarily the result of activities which
predated hazardous waste disposal regulations or which were performed by third
parties without the company's knowledge. Pitney Bowes is committed to mitigating
the environmental impact of its operations. It is the company's policy to
respond responsibly to any situation requiring environmental remediation by the
company. Pitney Bowes has an active program for evaluating the environmental
risks associated with property being sold, purchased or leased.
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The board of directors believes that implementation of the CERES proposal would
unduly burden the company and its shareholders with additional administrative
requirements and related costs while adding very little to Pitney Bowes'
environmental effort. In particular, the board of directors believes that Pitney
Bowes' current initiatives regarding the reporting of its environmental
performance are more closely aligned with the interests of its shareholders than
the reporting formats mandated by the CERES proposal. The company's initiatives
include a periodic progress report included in the company's home page on the
Internet, as well as a quarterly newsletter describing the company's
environmental programs and progress.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE AGAINST
THIS PROPOSAL.
STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
Under the rules of the Securities and Exchange Commission, proposals for
stockholder action at the 1999 annual meeting, including nomination of
directors, must be received by the corporate secretary of the company no later
than December 3, 1998, 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
statement. To have a nomination or item of business brought before the 1999
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 8, 1999.
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 ChaseMellon
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 1997 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 1997 annual report or would like a copy of the company's Form
10-K for the 1997 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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ANNEX I
THE PITNEY BOWES AMENDED AND RESTATED 1991 STOCK PLAN
SECTION 1. PURPOSE.
The purposes of this Pitney Bowes 1991 Stock Plan (the "Plan") are (1) to make
available to employees of the Company and its Affiliates, who can make a
substantial contribution to the success of the business, certain compensatory
arrangements related to the common stock of the Company so as to generate an
increased incentive to contribute to the Company's future success and
prosperity, and (2) to enhance the ability of the Company and its Affiliates to
attract and retain exceptionally qualified individuals upon whom, in large
measure, the sustained progress, growth and profitability of the Company depend.
SECTION 2. DEFINITIONS.
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "AFFILIATE" shall mean (i) any entity that, directly or through one or more
intermediaries, is controlled by the Company or (ii) any entity in which
the Company has a significant equity interest, as determined by the
Committee.
(b) "AWARD" shall mean any Option, Restricted Stock, Restricted Stock Unit,
Dividend Equivalent, Other Stock-Based Award, Performance Award or
Substitute Award, granted under the Plan.
(c) "AWARD AGREEMENT" shall mean any written agreement, contract, or other
instrument or document evidencing any Award granted under the Plan.
(d) "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company as it
may be composed from time to time.
(e) "CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time, or any successor code thereto.
(f) "COMMITTEE" shall mean the Board of Directors, excluding any director who
is not a "Non-Employee Director" within the meaning of Rule 16b-3, or any
such other committee designated by the Board of Directors to administer the
Plan, which committee shall be composed of not less than the minimum number
of members of the Board of Directors from time to time required by Rule
16b-3 or any applicable law, each of whom is a "Non-Employee Director"
within the meaning of Rule 16b-3.
(g) "COMPANY" shall mean Pitney Bowes Inc., or any successor thereto.
(h) "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.
(i) "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).
(j) "DIVIDEND EQUIVALENT" shall mean any right granted under Section 6(c) of
the Plan.
(k) "EMPLOYEE" shall mean any employee of the Company or of any Affiliate.
(l) "FAIR MARKET VALUE" shall mean, with respect to any property (including,
without limitation, any Shares or other securities), the fair market value
of such property determined by such methods or procedures as shall be
established from time to time by the Committee.
(m) "INCENTIVE STOCK OPTION" or "ISO" shall mean an option granted under
Section 6(a) of the Plan that is intended to meet the requirements of
Section 422 of the Code, or any successor provision thereto.
(n) "NON-QUALIFIED STOCK OPTION" shall mean an option granted under Section
6(a) of the Plan that is not intended to be an Incentive Stock Option.
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(o) "OPTION" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
(p) "OTHER STOCK-BASED AWARD" shall mean any Award granted under Section 6(d)
of the Plan.
(q) "PARTICIPANT" shall mean an Employee who is granted an Award under the
Plan.
(r) "PERFORMANCE AWARD" shall mean any Award granted hereunder that complies
with Section 6(e)(ii) of the Plan.
(s) "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).
(t) "PERSON" shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, or government or
political subdivision thereof.
(u) "RELEASED SECURITIES" shall mean securities that were Restricted Securities
with respect to which all applicable restrictions have expired, lapsed, or
been waived.
(v) "RESTRICTED SECURITIES" shall mean Awards of Restricted Stock or other
Awards under which issued and outstanding Shares are held subject to
certain restrictions.
(w) "RESTRICTED STOCK" shall mean any Share granted under Section 6(b) of the
Plan.
(x) "RESTRICTED STOCK UNIT" shall mean any right granted under Section 6(b) of
the Plan that is denominated in Shares.
(y) "RULE 16B-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended,
or any successor rule or regulation thereto.
(z) "SECTION 162(M)" means Section 162(m) of the Code or any successor thereto,
and the Treasury Regulations thereunder.
(aa) "SHARE" OR "SHARES" shall mean share(s) of the common stock of the Company,
$2 par value, and such other securities or property as may become the
subject of Awards pursuant to the adjustment provisions of Section 4(c).
(bb) "SUBSTITUTE AWARD" shall mean an Award granted in assumption of, or in
substitution for, an outstanding award previously granted by a company
acquired by the Company or with which the Company combines.
SECTION 3. ADMINISTRATION.
(a) The Plan shall be administered by the Committee. Subject to the terms of
the Plan and applicable law, the Committee shall have full power and
authority to:
(i) designate Participants;
(ii) determine the type or types of Awards to be granted to each Participant
under the Plan;
(iii)determine the number of Shares to be covered by (or with respect to
which payments, rights, or other matters are to be calculated in
connection with) Awards;
(iv) determine the terms and conditions of any Award;
(v) determine whether, to what extent, and under what circumstances Awards
may be settled or exercised in cash, Shares, other securities, other
Awards, or other property, or to what extent, and under what
circumstances Awards may be canceled, forfeited,
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or suspended, and the method or methods by which Awards may be
settled, exercised, canceled, forfeited, or suspended;
(vi) determine whether, to what extent, and under what circumstances
cash, Shares, other securities, other Awards, other property, and
other amounts payable with respect to an Award under the Plan shall
be deferred either automatically or at the election of the holder
thereof or of the Committee;
(vii) interpret and administer the Plan and any instrument or agreement
relating to the Plan, or any Award made under the Plan, including
any Award Agreement;
(viii) establish, amend, suspend, or reconcile such rules and regulations
and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and
(ix) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the
Plan.
(b) Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect
to the Plan, any Award, or any Award Agreement, shall be within 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 Participant, any holder or beneficiary of any Award, and any
employee of the Company or of any Affiliate.
(c) The Committee may delegate to one or more executive officers of the Company
or to a committee of executive officers of the Company the authority to
grant Awards to Employees who are not officers or directors of the Company
and to amend, modify, cancel or suspend Awards to such employees.
SECTION 4. SHARES AVAILABLE FOR AWARD.
(a) MAXIMUM SHARES AVAILABLE. The maximum number of Shares that may be issued
to Participants pursuant to Awards under the Plan shall be 30,800,000 (the
"Plan Maximum"), subject to adjustment as provided in Section 4(c) below.
Only 9,240,000 Shares may be issued pursuant to Awards of Restricted Stock
and Restricted Stock Units under Section 6(b) of the Plan. In its
discretion, the Company may issue pursuant to Awards treasury Shares or
authorized but previously unissued Shares pursuant to Awards hereunder. For
the purpose of accounting for Shares available for Awards under the Plan,
the following shall apply:
(i) Only Shares relating to Awards actually issued or granted hereunder
shall be counted against the Plan Maximum. Shares corresponding to
Awards that by their terms expired, or that are forfeited, canceled or
surrendered to the Company without full consideration paid therefor
shall not be counted against the Plan Maximum.
(ii) Shares that are forfeited by a Participant after issuance, or that are
reacquired by the Company after issuance without full consideration
paid therefor, shall be deemed to have never been issued under the
Plan and accordingly shall not be counted against the Plan Maximum.
(iii)Awards not denominated in Shares shall be counted against the Plan
Maximum in such amount and at such time as the Committee shall
determine under procedures adopted by the Committee consistent with
the purposes of the Plan.
(iv) Substitute Awards shall not be counted against the Plan Maximum, and
clauses (i) and (ii) of this Section shall not apply to such Awards.
The maximum number of Shares that may be the subject of Awards made to a
single Participant in any one calendar year shall be 400,000.
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(b) SHARES AVAILABLE FOR ISOS. The maximum number of Shares for which ISOs may
be granted under the Plan shall not exceed the Plan Maximum as defined in
Section 4(a) above, subject to adjustment as provided in Section 4(c)
below.
(c) ADJUSTMENTS TO AVOID DILUTION. Notwithstanding paragraphs (a) and (b)
above, 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 outstanding
common stock of the Company, such that an adjustment is determined by the
Committee to be appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the
Plan or any Award, then the Committee may make appropriate adjustments to
(i) the number or kind of Shares available for the future granting of
Awards hereunder, (ii) the number and type of Shares subject to outstanding
Awards, and (iii) the grant, purchase, or exercise price with respect to
any Award; or if it deems such action appropriate, the Committee may make
provision for a cash payment to the holder of an outstanding Award;
provided, however, that with respect to any ISO no such adjustment shall be
authorized to the extent that such would cause the ISO to violate Code
Section 422 or any successor provision thereto. The determination of the
Committee as to the adjustments or payments, if any, to be made shall be
conclusive.
(d) OTHER PLANS. Shares issued under other plans of the Company shall not be
counted against the Plan Maximum under the Plan.
SECTION 5. ELIGIBILITY.
Any Employee, including any officer or employee director of the Company or of
any Affiliate, who is not a member of the Committee shall be eligible to be
designated a Participant.
SECTION 6. AWARDS.
(a) OPTIONS. The Committee is hereby authorized to grant Options to
Participants with the following terms and conditions and with such
additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine:
(i) EXERCISE PRICE. The exercise price per Share under an Option shall be
determined by the Committee, provided, however, that except in the
case of Substitute Awards, no Option granted hereunder may have an
exercise price of less than 100% of Fair Market Value of a Share on
the date of grant.
(ii) TIMES AND METHOD OF EXERCISE. The Committee shall determine the time
or times at which an Option may be exercised in whole or in part; in
no event, however, shall the period for exercising an Option extend
more than 10 years from the date of grant. The Committee shall also
determine the method or methods by which options may be exercised, and
the form or forms (including without limitation, cash, Shares, other
Awards, or other property, or any combination thereof, having a Fair
Market Value on the exercise date equal to the relevant exercise
price), in which payment of the exercise price with respect thereto
may be made or deemed to have been made.
(iii)INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Option
granted under the Plan shall comply in all respects with the
provisions of Section 422 of the Code, or any successor provision
thereto, and any regulations promulgated thereunder.
(iv) TERMINATION OF EMPLOYMENT. In the event that a Participant's
employment terminates for any reason, then Options shall be
exercisable as specified below:
(A) With respect to Options that by their terms are not exercisable in
whole or in part on the date the Participant's
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employment erminates, no such Option or part thereof may be
exercised and such Option or part thereof shall be forfeited by
the Participant; provided, however, that in the event that the
Participant's employment terminates because of the death, or total
disability or retirement of the Participant, the Committee may
provide that Options held by the Participant, or a part thereof,
that were not exercisable on the date of termination of employment
may be exercised by the Participant (or his estate, as the case
may be) during such period as the Committee may determine, not to
exceed four (4) years after the date of termination, after which
any Option or part thereof remaining unexercised shall be
forfeited.
(B) With respect to Options that by their terms are exercisable in
whole or in part on the date the Participant's employment
terminates, then such Options, or such part thereof that is
exercisable, may be exercised by the Participant (or his estate as
the case may be) during such period following the date of
termination, as the Committee may determine, not to exceed four
(4) years after the date of termination, after which any Option or
part thereof remaining unexercised shall be forfeited.
(b) RESTRICTED STOCK AND RESTRICTED STOCK UNITS. The Committee is hereby
authorized to grant Awards of Restricted Stock and or Restricted Stock
Units to Participants with the following terms and conditions.
(i) RESTRICTIONS. Shares of Restricted Stock and Restricted Stock Units
shall be subject to such restrictions as the Committee may impose
(including, without limitation, continued employment over a specified
period or the attainment of specified Performance Objectives (as
defined in Section 6(e)(ii)(B) or Performance goals, in accordance
with Section 13), which restrictions may lapse separately or
concurrently at such time or times, in such installments or otherwise,
as the Committee may deem appropriate. Notwithstanding the foregoing,
(A) any Awards of Restricted Stock or Restricted Stock Units as to
which the sole restriction relates to the passage of time and
continued employment must have a restriction period of not less than
three years and (B) any Award not described in Clause (A) must have a
restriction period of not less than one year subject, in the case of
both (A) and (B) to the proviso to Section 6(b)(iii) below.
(ii) REGISTRATION. Any Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee may deem appropriate,
including without limitation, book-entry registration or issuance of a
stock certificate or certificates. In the event any stock certificate
is issued in respect of Shares of Restricted Stock granted under the
Plan, such certificate shall be registered in the name of the
Participant and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Restricted
Stock.
(iii)TERMINATION OF EMPLOYMENT. Upon termination of employment of a
Participant for any reason during the applicable restriction period,
all Restricted Stock and all Restricted Stock Units, or portion
thereof, still subject to restriction shall be forfeited and
reacquired by the Company; provided, however, that in the event
termination of employment is due to the death, total disability or
retirement of the Participant, the Committee may waive in whole or in
part any or all remaining restrictions with respect to Restricted
Stock or Restricted Stock Units.
(c) DIVIDEND EQUIVALENTS. The Committee may grant to Participants Dividend
Equivalents under which the holders thereof shall be entitled to receive
payments equivalent to dividends with respect to a number of Shares
determined by the Committee, and the Committee may provide that such
amounts, if any, shall be deemed to have been reinvested in additional
Shares or
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otherwise reinvested. Subject to the terms of the Plan, such Awards may
have such terms and conditions as the Committee shall determine.
(i) TERMINATION OF EMPLOYMENT. Upon termination of the Participant's
employment for any reason during the term of a Dividend Equivalent,
the right of a Participant to payment under a Dividend Equivalent
shall terminate as of the date of termination; provided, however, that
in the event the Participant's employment terminates because of the
death, total disability or retirement of a Participant the Committee
may determine that such right terminates at a later date.
(d) OTHER STOCK-BASED AWARDS. The Committee is hereby authorized to grant to
Participants such other Awards that are denominated or payable in, valued
in whole or in part by reference to, or otherwise based on or related to
Shares (including without limitation securities convertible into Shares),
as are deemed by the Committee to be consistent with the purposes of the
Plan; provided, however, that such grants must comply with Rule 16b-3 and
applicable law.
(i) If applicable, Shares or other securities delivered pursuant to a
purchase right granted under this Section 6(d) shall be purchased for
such consideration, which may be paid by such method or methods and in
such form or forms, including without limitation cash, Shares, other
securities, other Awards or other property, or any combination
thereof, as the Committee shall determine; provided, however, that
except in the case of Substitute Awards, no derivative security (as
defined in Rule 16b-3) awarded hereunder may have an exercise price of
less than 100% of Fair Market Value of a Share on the date of grant.
(ii) In granting any Stock-Based Award pursuant to this Section 6(d) the
Committee shall also determine what effect the termination of
employment of the Participant holding such Award shall have on the
rights of the Participant pursuant to the Award.
(e) GENERAL. The following general provisions shall apply to all Awards granted
hereunder, subject to the terms of other sections of this Plan or any Award
Agreement.
(i) AWARD AGREEMENTS. Each Award granted under this Plan shall be
evidenced by an Award Agreement which shall specify the relevant
material terms and conditions of the Award and which shall be signed
by the Participant receiving such Award.
(ii) PERFORMANCE AWARDS. Subject to the other terms of this Plan, the
payment, release or exercisability of any Award, in whole or in part,
may be conditioned upon the achievement of such "Performance
Objectives" (as defined below) during such performance periods as are
specified by the Committee. (Hereinafter in this Section 6(e)(ii) the
terms payment, pay, and paid also refer to the release or
exercisability of a Performance Award, as the case may require.)
(A) TERMS. The Committee shall establish the terms and conditions of
any Performance Award including the Performance Objectives (as
defined below) to be achieved during any performance period, the
length of any performance period, any event the occurrence of
which will entitle the holder to payment, and the amount of any
Performance Award granted.
(B) PERFORMANCE OBJECTIVES. The Committee shall establish "Performance
Objectives" the achievement of which shall entitle the Participant
to payment under a Performance Award. Performance Objectives may
be any measure of the business performance of the Company, or any
of its divisions or Affiliates, including but not limited to the
growth in book or market value of capital stock, the increase in
the earnings in total or per share, or any other financial or
non-financial indicator specified by the Committee.
6
<PAGE>
(C) FULFILLMENT OF CONDITIONS AND PAYMENT. The Committee shall
determine in a timely manner whether all or part of the conditions
to payment of a Performance Award have been fulfilled and, if so,
the amount, if any, of the payment to which the Participant is
entitled.
(iii)RULE 16B-3 SIX MONTH LIMITATIONS. To the extent required in order to
render the grant of an Award, the exercise of an Award or any
derivative security, or the sale of securities corresponding to an
Award, an exempt transaction under Section 16b of the Securities
Exchange Act of 1934 only, any equity security granted under the Plan
to a Participant must be held by such Participant for at least six
months from the date of grant, or in the case of a derivative security
granted pursuant to the Plan to a Participant, at least six months
must elapse from the date of acquisition of the derivative security to
the date of disposition of the derivative security (other than upon
exercise or conversion) or its underlying equity security. Terms used
in the preceding sentence shall, for the purposes of such sentence
only, have the meanings if any, assigned or attributed to them under
Rule 16b-3.
(iv) LIMITS ON TRANSFER OF AWARDS. No Award (other than Released
Securities), and no right under any such Award shall be assignable,
alienable, saleable, or transferable by a Participant other than by
will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I
of the Employee Retirement Income Security Act of 1974, as amended, or
the rules thereunder (or, in the case of Awards that are forfeited or
canceled, to the Company); provided, however, that, if so determined
by the Committee, a Participant may in the manner established by the
Committee, designate a beneficiary or beneficiaries to exercise the
rights of the Participant, and to receive any property distributable,
with respect to any Award upon the death of the Participant. Each
Award, and each right under any Award, shall be exercisable, during
the Participant's lifetime only by the Participant or, if permissible
under applicable law, by the Participant's guardian or legal
representative or by a transferee receiving such Award pursuant to a
qualified domestic relations order referred to above. No Award (other
than Released Securities), and no right under any such Award, 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.
(v) No Cash Consideration for Awards. Awards may be granted for no cash
consideration, or for such minimal cash consideration as the
Committee may specify, or as may be required by applicable law.
(vi) Awards May Be Granted Separately or Together. Awards may, in the
discretion of the Committee, be granted either alone or in addition
to, in tandem with, or in substitution for any other Award or any
award granted under any other plan of the Company or any Affiliate.
Awards granted in addition to or in tandem with other Awards or in
addition to or in tandem with awards granted under any other plan of
the Company or any Affiliate may be granted either at the same time as
or at a different time from the grant of such other Awards or awards.
Performance Awards and Awards which are not Performance Awards may be
granted to the same Participant.
(vii)Forms Of Payment Under Awards. Subject to the terms of the Plan and of
any applicable Award Agreement, payments or transfers to be made by
the Company or an Affiliate upon the grant, exercise, or payment of an
Award may be made in such form or forms as the Committee shall
determine, including, without limitation, cash, Shares, other
securities, other Awards, or other property, or any combination
thereof, and may be made in a single payment or transfer, in
installments, or on a
7
<PAGE>
deferred basis, in each case in accordance with rules and procedures
established by the Committee. Such rules and procedures may include,
without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant
or crediting of Dividend Equivalents in respect of installment or
deferred payments.
(viii)Term of Awards. Except as provided in Sections 6(a)(ii) or 6(a)(iv),
the term of each Award shall be for such period as may be determined
by the Committee.
(ix) Share Certificates. All certificates for Shares or other securities
delivered under the Plan pursuant to any Award or the exercise thereof
shall be subject to such stop transfer orders and other restrictions
as the Committee may deem advisable under the Plan or the rules,
regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other
securities are then listed, and any applicable Federal or state
securities laws, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions. Unrestricted certificates representing Shares, evidenced
in such manner as the Committee shall deem appropriate, shall be
delivered to the holder of Restricted Stock, Restricted Stock Units or
any other relevant Award promptly after such related Shares shall
become Released Securities.
SECTION 7. AMENDMENT AND TERMINATION OF AWARDS.
Except to the extent prohibited by applicable law and unless otherwise expressly
provided in an Award Agreement or in the Plan, the following shall apply to all
Awards.
(a) AMENDMENTS TO AWARDS. Subject to Section 6(b)(i), the Committee may waive
any conditions or rights under, amend any terms of, or amend, alter,
suspend, discontinue, cancel or terminate, any Award heretofore granted
without the consent of any relevant Participant or holder or beneficiary of
an Award; provided, however, that no such amendment, alteration,
suspension, discontinuance, cancellation or termination that would be
adverse to the holder of such Award may be made without such holder's
consent. Notwithstanding the foregoing, the Committee shall not amend any
outstanding Option to change the exercise price thereof to any price that
is lower than the original exercise price thereof, except in connection
with an adjustment authorized under Section 4(c).
(b) ADJUSTMENTS OF AWARDS UPON CERTAIN ACQUISITIONS. In the event the Company
or an Affiliate shall issue Substitute Awards, the Committee may make such
adjustments, not inconsistent with the terms of the Plan, in the terms of
Awards as it shall deem appropriate in order to achieve reasonable
comparability or other equitable relationship between the assumed awards
and the Substitute Awards granted under the Plan.
(c) ADJUSTMENTS OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS. The Committee shall be authorized to make adjustments
in the terms and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events (including, without
limitation, the events described in Section 4(c) hereof) affecting the
Company, any Affiliate, or the financial statements of the Company or any
Affiliate, or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits to be made available under the Plan or an Award
Agreement.
(d) CORRECTION OF DEFECTS, OMISSIONS, AND INCONSISTENCIES. The Committee may
correct any defect, supply any omission, or reconcile any inconsistency in
any Award Agreement in the manner and to the extent it shall deem desirable
to carry the Plan into effect.
8
<PAGE>
SECTION 8. ACCELERATION UPON A CHANGE OF CONTROL. In the event of a Change of
Control (as defined in Section 8(b) below) the following shall
apply:
(a) EFFECT ON AWARDS.
(i) OPTIONS. In the event of a Change of Control, (1) all Options
outstanding on the date of such Change of Control shall become
immediately and fully exercisable without regard to any vesting
schedule provided for in the Option.
(ii) RESTRICTED STOCK AND RESTRICTED STOCK UNITS. In the event of a Change
of Control, all restrictions applicable to any Restricted Stock or
Restricted Stock Unit shall terminate and be deemed to be fully
satisfied for the entire stated restricted period of any such Award,
and the total number of underlying Shares shall become Released
Securities. The Participant shall immediately have the right to the
prompt delivery of certificates reflecting such Released Securities.
(iii)DIVIDEND EQUIVALENTS. In the event of a Change of Control, the holder
of any outstanding Dividend Equivalent shall be entitled to surrender
such Award to the Company and to receive payment of an amount equal to
the amount that would have been paid over the remaining term of the
Dividend Equivalent, as determined by the Committee.
(iv) OTHER STOCK-BASED AWARDS. In the event of a Change of Control, all
outstanding Other Stock-Based Awards of whatever type become
immediately vested and payable in an amount that assumes that the
Awards were outstanding for the entire period stated therein, as
determined by the Committee.
(v) PERFORMANCE AWARDS. In the event of a Change of Control, Performance
Awards for all performance periods including those not yet completed,
shall immediately become fully vested and payable in accordance with
the following:
(A) The total amount of Performance Awards conditioned on nonfinancial
Performance Objectives and those conditioned on financial
Performance Objectives and payable in stock, shall be immediately
payable (or exercisable or released, as the case may be) as if the
Performance Objectives had been fully achieved for the entire
performance period.
(B) For Performance Awards conditioned on financial Performance
Objectives and payable in cash, the Committee shall determine the
amount payable under such Award by taking into consideration the
actual level of attainment of the Performance Objectives during
that portion of the performance period that had occurred prior to
the date of the Change of Control, and with respect to the part of
the performance period that had not occurred prior to the date of
the Change of Control, the Committee shall determine an
anticipated level of attainment taking into consideration
available historical data and the last projections made by the
Company's Chief Financial Officer prior to the Change of Control.
The amount payable shall be the present value of the amount so
determined by the Committee discounted using a factor that is the
Prime Rate as established by Chase Manhattan Bank, N.A. as of the
date of the Change of Control.
(vi) The Committee's determination of amounts payable under this Section
8(a) shall be final. Except as otherwise provided in Section 8(a)(1),
any amounts due under this Section 8(a) shall be paid to Participants
within 30 days after such Change of Control.
(vii)The provisions of this Section 8(a) shall not be applicable to any
Award granted to a Participant if any Change of Control results
9
<PAGE>
from such Participant's beneficial ownership (within the meaning of
Rule 13d-3 under the Securities and Exchange Act of 1934, as amended
(the "Exchange Act")) of Shares or other Company common stock or
Company voting securities.
(b) CHANGE OF CONTROL DEFINED. A "Change of Control" shall be deemed to have
occurred upon the occurrence of either of the following:
(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
Exchange Act) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% 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 by any employee benefit plan (or
related trust) of the Company or its subsidiaries; or by any
corporation with respect to which, following such acquisition, more
than 50% 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,
however, that any individual becoming a director subsequent to
September 12, 1988 whose election or nomination for election by the
Company's stockholders was approved by a vote of at least a majority
of 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 of Regulation 14A
promulgated under the Exchange Act); or
(iii)There is an approval by the stockholders of the Company of (a) a
reorganization, merger or consolidation, in each case, with respect to
which the individuals and entities who were the respective beneficial
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% 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 (b) 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.
SECTION 9. AMENDMENT AND TERMINATION OF THE PLAN.
Except to the extent prohibited by applicable law and unless otherwise expressly
provided in an Award Agreement or in the Plan, the Board of Directors may amend,
alter, suspend, discontinue, or terminate the
10
<PAGE>
Plan, including without limitation any such action to correct any
defect, supply any omission or reconcile any inconsistency in the
Plan, without the consent of any stockholder, Participant, other
holder or beneficiary of an Award, or Person; provided that any such
amendment, alteration, suspension, discontinuation, or termination
that would impair the rights of any Participant, or any other holder
or beneficiary of any Award heretofore granted shall not be effective
without the approval of the affected Participant(s); and provided
further, that, notwithstanding any other provision of the Plan or any
Award Agreement, without the approval of the stockholders of the
Company no such amendment, alteration, suspension, discontinuation or
termination shall be made that would increase the total number of
Shares available for Awards under the Plan, except as provided in
Section 4 hereof.
SECTION 10. GENERAL PROVISIONS.
(a) NO RIGHTS TO AWARDS. No Employee, Participant or other Person shall have
any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Employees, Participants, or
holders or beneficiaries of Awards under the Plan. The terms and conditions
of Awards need not be the same with respect to each recipient.
(b) WITHHOLDING. The Company or any Affiliate shall be authorized to withhold
from any Award granted or any payment due or transfer made under any Award
or under the Plan the amount (in cash, Shares, other securities, other
Awards, or other property) of withholding taxes due in respect of an Award,
its exercise, or any payment or transfer under such Award or under the Plan
and to take such other action as may be necessary in the opinion of the
Company or Affiliate to satisfy all obligations for the payment of such
taxes.
(c) NO LIMIT ON OTHER COMPENSATION AGREEMENTS. Nothing contained in the Plan
shall prevent the Company or any Affiliate from adopting or continuing in
effect other or additional compensation arrangements and such arrangements
may be either generally applicable or applicable only in specific cases.
(d) NO RIGHT TO EMPLOYMENT. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company
or any Affiliate. Further, the Company or an Affiliate may at any time
dismiss a Participant from employment, free from any liability or any claim
under the Plan, unless otherwise expressly provided in the Plan or in any
Award Agreement.
(e) GOVERNING LAW. The validity, construction, and effect of the Plan and any
rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Connecticut and applicable Federal
law.
(f) SEVERABILITY. If any provision of the Plan or any Award is or becomes or is
deemed to be invalid, illegal, or unenforceable in any jurisdiction, or as
to any Person or Award, or would disqualify the Plan or any Award under any
law deemed applicable by the Committee, such provision shall be construed
or deemed amended to conform to applicable laws, or if it cannot be so
construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision
shall be stricken as to such jurisdiction, Person, or Award and the
remainder of the Plan and any such Award shall remain in full force and
effect.
(g) NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any
other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(h) NO FRACTIONAL SHARES. No fractional Share shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or
transferred in lieu of any fractional Shares, or whether such fractional
Shares, or whether such fractional Shares or
11
<PAGE>
any rights thereto shall be canceled, terminated, or otherwise eliminated.
(i) HEADINGS. Headings are given to the sections and subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
SECTION 11. EFFECTIVE DATE OF THE PLAN.
The Plan shall be effective as of the date of its approval by the stockholders
of the Company.
SECTION 12. TERM OF THE PLAN.
No Award shall be granted under the Plan after May 31, 2006. However, unless
otherwise expressly provided in the Plan or in an applicable Award Agreement,
any Award theretofore granted may extend beyond such date, and the authority of
the Committee hereunder to amend, alter, adjust, suspend, discontinue, or
terminate any such Award, or to waive any conditions or rights under any such
Award, and the authority of the Board of Directors of the Company to amend the
Plan, shall extend beyond such date.
SECTION 13. PARTICIPANTS SUBJECT TO SECTION 162(M).
(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
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).
12
<PAGE>
[MAP]
DIRECTIONS:
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 third 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.
PLEASE NOTE THAT, DUE TO ONGOING CONSTRUCTION IN THE VICINITY OF WASHINGTON
BOULEVARD, IT MAY BE NECESSARY TO FOLLOW DETOURS AS DIRECTED ON THE DATE OF THE
ANNUAL MEETING.
<PAGE>
PROXY -- COMMON STOCK AND $2.12 CONVERTIBLE
PREFERENCE STOCK PITNEY BOWES INC.
ANNUAL MEETING OF STOCKHOLDERS MAY 11, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Michael J. Critelli, Murray L. Reichenstein, 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 11, 1998, 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 1998.
3. Amendment to the 1991 Stock Plan.
4. Stockholder Proposal relating to CERES Principles if properly presented
at the meeting.
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 AND 3 AND AGAINST ITEM 4.
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.
(CONTINUED, AND TO BE SIGNED, ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
[LOGO] PITNEY BOWES
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF TWO WAYS:
1. Call toll free 1-800-840-1208 on a Touch Tone telephone and follow the
instructions found on the reverse side.
OR
--
2. Mark, sign and date your proxy card and return it promptly in the
enclosed envelope.
PLEASE VOTE
<PAGE>
DIRECTORS RECOMMEND A VOTE FOR ITEMS 1, 2 AND 3 AND AGAINST ITEM 4.
Please mark
your vote /X/
like this
- --------------------------------------------------------------------------------
DIRECTORS RECOMMEND A VOTE FOR ITEM 1.
- --------------------------------------------------------------------------------
Item 1 -- Election of Directors.
01. Linda G. Alvarado
02. Marc C. Breslawsky
03. Ernie Green
04. Charles E. Hugel
For all nominees
(except as marked to the contrary)
/ /
Withhold (as to all nominees)
/ /
(Write a nominee's name on the space provided below to withhold authority to
vote for that individual nominee.)
- ------------------------------
- --------------------------------------------------------------------------------
DIRECTORS RECOMMEND A VOTE FOR ITEM 2.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
Item 2 -- Appointment of Price
Waterhouse LLP as independent
accountants for 1998. / / / / / /
- --------------------------------------------------------------------------------
DIRECTORS RECOMMEND A VOTE FOR ITEM 3.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
Item 3 -- Amendment to
the 1991 Stock Plan. / / / / / /
- --------------------------------------------------------------------------------
DIRECTORS RECOMMEND A VOTE AGAINST ITEM 4.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
Item 4 -- Stockholder Proposal
relating to the CERES
Principles if properly
presented at the meeting. / / / / / /
Signature(s) of stockholder(s)--------------------- Date-------- , 1998
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.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
***IF YOU WISH TO VOTE BY TELEPHONE, PLEASE READ THE INSTRUCTIONS BELOW***
VOTE BY TELEPHONE
Your telephone vote authorizes the named proxies to vote your shares in the same
manner as you marked, signed and returned your proxy card.
YOU WILL BE ASKED TO ENTER A CONTROL NUMBER, WHICH IS LOCATED IN THE BOX IN THE
LOWER RIGHT HAND CORNER OF THIS FORM.
- --------------------------------------------------------------------------------
OPTION A: To vote as the Board of Directors recommends on ALL items, press 1.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OPTION B: If you choose to vote on each item separately, press 0.
You will hear these instructions:
ITEM 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL
nominees, press 9. To withhold FOR AN INDIVIDUAL nominee, press 0 and listen to
the instructions.
ITEM 2: To vote FOR, press 1, AGAINST, press 9; ABSTAIN, press 0.
ITEM 3. To vote FOR, press 1, AGAINST, press 9; ABSTAIN, press 0.
ITEM 4. To vote FOR, press 1, AGAINST, press 9; ABSTAIN, press 0.
Your vote selection will be repeated and you must then confirm it before hanging
up.
- --------------------------------------------------------------------------------
END OF CALL.
- --------------------------------------------------------------------------------
IF YOU VOTE BY TELEPHONE, THERE IS NO NEED TO MAIL BACK YOUR PROXY CARD.
THANK YOU FOR VOTING.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CALL H H TOLL FREE H H ON A TOUCH TONE TELEPHONE
1-800-840-1208
THERE IS NO CHARGE TO YOU FOR THIS CALL.
- --------------------------------------------------------------------------------
<PAGE>
DIRECTORS RECOMMEND A VOTE FOR ITEMS 1, 2 AND 3 AND AGAINST ITEM 4.
Please mark
your vote /X/
like this
- --------------------------------------------------------------------------------
DIRECTORS RECOMMEND A VOTE FOR ITEM 1.
- --------------------------------------------------------------------------------
Item 1 -- Election of Directors.
01. Linda G. Alvarado
02. Marc C. Breslawsky
03. Ernie Green
04. Charles E. Hugel
For all nominees
(except as marked to the contrary)
/ /
Withhold (as to all nominees)
/ /
(Write a nominee's name on the space provided below to withhold authority to
vote for that individual nominee.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIRECTORS RECOMMEND A VOTE FOR ITEM 2.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
Item 2 -- Appointment of Price
Waterhouse LLP as independent
accountants for 1998. / / / / / /
- --------------------------------------------------------------------------------
DIRECTORS RECOMMEND A VOTE FOR ITEM 3.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
Item 3 -- Amendment to
the 1991 Stock Plan. / / / / / /
- --------------------------------------------------------------------------------
DIRECTORS RECOMMEND A VOTE AGAINST ITEM 4.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
Item 4 -- Stockholder Proposal
relating to the CERES
Principles if properly
presented at the meeting. / / / / / /
Signature(s) of stockholder(s)---------------------- Date --------, 1998
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.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
PITNEY BOWES INC.
ANNUAL MEETING OF STOCKHOLDERS MAY 11, 1998
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 11, 1998,
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 1998.
3. Amendment to the 1991 Stock Plan.
4. Stockholder Proposal relating to CERES Principles if properly
presented at the meeting.
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 AND 3 AND AGAINST ITEM 4.
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.
(CONTINUED, AND TO BE SIGNED, ON THE OTHER SIDE)
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FOLD AND DETACH HERE
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