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
[ ] Confidential, for Use of the Commission Only
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
POLAROID CORPORATION
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of filing fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
___________________________________________________________________________
(2) Aggregate number of securities to which tranactions applies:
___________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
___________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
____________________________________________________________________________
[ ] Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee
was paid previously. Identify the previous filing
by registration statement number, or the form or
schedule and the date of its filing.
(1) Amount previously paid:
____________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
_____________________________________________________________________________
(3) Filing party:
_____________________________________________________________________________
(4) Date Filed:
_____________________________________________________________________________
<PAGE>
Polaroid
Corporation
Notice to
Polaroid Stock
Equity Plan
(ESOP) and
Polaroid Profit
Sharing Retirement
Plan Participants
and 1996 Proxy
Statement
<PAGE>
Polaroid
Corporation
Notice of
1996 Annual
Meeting of
Stockholders
and Proxy
Statement
<PAGE>
Polaroid Corporation
549 Technology Square
Cambridge, Massachusetts 02139
March 21, 1996
To Polaroid Employee Benefit Plan Participants:
This booklet contains important information to assist you in voting as a
participant in one or both of the Polaroid benefit plans under which shares of
Polaroid stock are held in trust: the Polaroid Stock Equity Plan (the "ESOP")
and the Polaroid Profit Sharing Retirement Plan. You should refer also to the
Company's Annual Report for 1995 and the Voting Instructions card enclosed with
this booklet.
The Company's Annual Meeting will be held on Tuesday, May 14, 1996, for the
following purposes:
1. To elect thirteen directors to serve until the next Annual Meeting of
Stockholders.
2. To ratify the appointment of KPMG Peat Marwick LLP as independent
auditors of the Company for 1996 -- recommended by the Board of
Directors.
3. To consider and act upon an amendment to the Board of Directors Stock
Option Plan -- recommended by the Board of Directors.
4. To conduct such other business as may properly come before the meeting.
You have a right to instruct the Plan Trustee on how to vote your stock.
These instructions are confidential. No one from Polaroid will know your
decision. Subject to the Plan Trustee's responsibilities under the plans, your
shares and fractions of shares will be voted in accordance with your
instructions on the enclosed Voting Instructions card. If you do not send in
your instructions, your shares will be voted in the same proportion as the
shares of other participants from whom instructions are received. Unallocated
ESOP shares will be voted in the same proportion as the voting of shares
allocated to ESOP participants' accounts.
Sincerely yours,
/s/ Richard F. deLima
Richard F. deLima
Vice President, Secretary and General Counsel
SO THAT YOUR STOCK MAY BE VOTED, PLEASE MARK, SIGN AND DATE THE ENCLOSED
VOTING INSTRUCTIONS CARD AND RETURN IT IN THE ENVELOPE PROVIDED NOT LATER
THAN MAY 7, 1996.
1
<PAGE>
Polaroid Corporation
549 Technology Square
Cambridge, Massachusetts 02139
March 21, 1996
To Our Stockholders:
You are cordially invited to attend the Company's 1996 Annual Meeting on
Tuesday, May 14, 1996, in Boston, Massachusetts.
The meeting will begin at 3:00 p.m. at the Cahners Theater, located at the
Museum of Science.
The principal items of business will be the election of directors, ratification
of the appointment of independent auditors and the approval of an amendment to
the Board of Directors Stock Option Plan. I will also report on the progress of
the Company during the past year and answer stockholder questions.
The vote of every stockholder is important. Please note that returning your
completed proxy will not prevent you from voting in person at the meeting if you
wish to do so. Your cooperation in signing, dating and returning your proxy
promptly will be greatly appreciated.
Sincerely yours,
/s/ Gary T. DiCamillo
Gary T. DiCamillo
Chairman and Chief Executive Officer
1
<PAGE>
NOTICE OF ANNUAL MEETING
To the Stockholders:
The Annual Meeting of Stockholders of Polaroid Corporation will be held at
the Cahners Theater, located at the Museum of Science, Boston, Massachusetts
on Tuesday, May 14, 1996, at 3:00 P.M. for the following purposes:
1. To elect thirteen directors to serve until the next Annual Meeting of
Stockholders.
2. To ratify the appointment of KPMG Peat Marwick LLP as independent
auditors of the Company for 1996 -- recommended by the Board of
Directors.
3. To consider and act upon an amendment to the Board of Directors Stock
Option Plan -- recommended by the Board of Directors.
4. To conduct such other business as may properly come before the
meeting.
Stockholders of record at the close of business on March 15, 1996 are
entitled to vote at the meeting.
By order of the Board of Directors.
/S/ Richard F. deLima
Richard F. deLima
Vice President, Secretary and General Counsel
March 21, 1996
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK,
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN
THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES.
2
<PAGE>
POLAROID CORPORATION
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Polaroid Corporation (the "Company") to be voted at
the Annual Meeting of Stockholders of the Company on Tuesday, May 14, 1996, and
any adjournment.
All holders of record of common stock of the Company as of the close of business
on March 15, 1996, the record date, are entitled to vote at the meeting. As of
that date, 45,638,840 shares of common stock of the Company were outstanding.
Each share is entitled to one vote. A favorable vote of a majority of the shares
of common stock represented in person or by proxy at the meeting and entitled to
vote is required for the approval of each of the proposals described in this
Proxy Statement.
If a proxy is signed and not revoked, the shares it represents will be voted in
accordance with the instructions of the stockholder. Proxies indicating
stockholder abstentions will, in accordance with Delaware law, be counted as
represented at the meeting for purposes of determining whether there is a quorum
present, but will not be voted for or against the proposal. However, the effect
of marking a proxy for abstention on any proposal other than for the election of
directors, has the same effect as a vote against the proposal. Shares
represented by "broker non- votes" (i.e., shares held by brokers or nominees
that are represented at a meeting but with respect to which the broker or
nominee is not empowered to vote on a particular proposal) will be counted for
purposes of determining whether there is a quorum, but will not be voted on such
matter and will not be counted for purposes of determining the number of votes
cast on such matter.
A stockholder may sign and return a proxy without instructions as to one or more
proposals. If the shares represented by the proxy are not held by a broker, the
shares will be voted on those proposals in accordance with the recommendations
of the Board. If the shares are held by a broker and the broker in turn submits
a proxy covering the shares, the shares will, with respect to issues on which
the broker is empowered to act, be counted as present at the meeting and voted
in accordance with any instructions the broker may give. In the absence of such
instructions the shares will be voted with respect to those issues in accordance
with the recommendations of the Board.
At any time before a proxy is voted it may be revoked by the stockholder who
submitted it.
For participants in the Company's Automatic Dividend Reinvestment Plan, proxies
representing shares of common stock held of record will also represent shares
held under that plan.
The approximate date on which this Proxy Statement and proxy are first being
sent to stockholders is March 28, 1996.
ELECTION OF DIRECTORS
At the Annual Meeting, thirteen directors will be elected to hold office until
the next Annual Meeting and until their respective successors are elected and
qualify. All nominees have consented to be named in this Proxy Statement and to
serve if elected.
All nominees except Gary T. DiCamillo and Bernee D. L. Strom were elected
directors at the last Annual Meeting.
The Company has agreed to use its best efforts to secure the election to the
Board of Directors by the Company's stockholders of a nominee designated by
Corporate Advisors, L.P. and satisfactory to the Board. The agreement terminates
when specified affiliates beneficially own less than 1,500,000 shares of common
stock and their voting power is less than 3% of the Company's then outstanding
voting power. The agreement will terminate, in any event, on January 30, 1999.
Lester Pollack is the designated nominee.
3
<PAGE>
The following information is submitted respecting the nominees for election:
- --------
Gary T. DiCamillo, 45, has been a director since December 1, 1995. He
is Chairman and Chief Executive Officer of the Company. He is also a
director of Pella Corporation and Sheridan Group.
- --------
[Photo of Gary T. DiCamillo]
- --------
Ralph E. Gomory, 66, has been a director since 1993. He is President
of the Alfred P. Sloan Foundation. He is also a director of Ashland
Oil, Inc., Bank of New York, Lexmark International, Inc., and
Washington Post Company.
- --------
[Photo of Ralph E. Gomory]
- --------
Frank S. Jones, 67, has been a director since 1973. Since February
1992, he has been Professor Emeritus and prior to that time was Ford
Professor of Urban Affairs of Massachusetts Institute of Technology.
He is also a director of CIGNA Corporation and Scientific Games
Holdings Corporation.
- --------
[Photo of Frank S. Jones]
- --------
John W. Loose, 54, has been a director since 1994. He is the Executive
Vice President of Corning, Inc., and President and Chief Executive
Officer of Corning Consumer Products Company (a manufacturer of
consumer products).
- --------
[Photo of John W. Loose]
- --------
Albin F. Moschner, 43, has been a director since 1994. He is the
President, Chief Executive Officer and a director of Zenith
Electronics Corporation (an electronics manufacturer). He is also a
director of Pella Corporation.
- --------
[Photo of Albin F. Moschner]
4
<PAGE>
- --------
Henry Necarsulmer, 82, has been a director since 1967. Since January
1990, he has been a consultant to Lehman Brothers Inc. (an investment
banking firm) and from January 1988 to January 1990 was an Advisory
Director of that firm.
- --------
[Photo of Henry Necarsulmer]
- --------
Kenneth H. Olsen, 70, has been a director since 1975. Since August
1995, he has been Chairman of Advanced Modular Solutions, Inc., (a
supplier of client server computing and consulting services). Prior to
October 1992, he was the President, Chief Executive Officer and a
director of Digital Equipment Corporation (a manufacturer of computer
and peripheral equipment). He is also a director of Ford Motor
Company.
- --------
[Photo of Kenneth H. Olsen]
- --------
Lester Pollack, 62, has been a director since 1989. Since June 1988,
he has been the Senior Managing Director of Corporate Advisors, L.P.
(investment partnership). Since June 1986, he has been a managing
director of Lazard Freres & Co. LLC (investment banking firm) and the
Chief Executive Officer of Centre Partners, L.P. (investment
partnership). He is also a director of Continental Cablevision, Inc.,
LaSalle Re Holdings Limited, Parlex Corporation, Sphere Drake Holdings
Limited, SunAmerica, Inc., and Tidewater, Inc.
- --------
[Photo of Lester Pollack]
- --------
Charles P. Slichter, 72, has been a director since 1975. He is Center
for Advanced Study Professor of Physics and Chemistry, Loomis
Laboratory of Physics, University of Illinois.
- --------
[Photo of Charles P. Slichter]
- --------
Ralph Z. Sorenson, 62, has been a director since 1984. Since July
1993, he has been Professor Emeritus, University of Colorado. From
July 1992 to July 1993, he was Dean of the College of Business at the
University of Colorado. From September 1989 until July 1992, he was an
Adjunct Professor at Harvard Business School. Prior to that time, he
was the Chairman of the Board, President and Chief Executive Officer
of Barry Wright Corporation. He is also a director of Eaton Vance
Corporation, Exabyte Corporation, Houghton Mifflin Company,
Sweetwater, Inc., Whole Foods Market, Inc., and Xenometrix, Inc.
- --------
[Photo of Ralph Z. Sorenson]
5
<PAGE>
- --------
Delbert C. Staley, 71, has been a director since 1989. He has been
retired since October 1991. From October 1989 until October 1991, he
was the Chairman and a director of NYNEX International Management
Committee. He was Chairman, Chief Executive Officer and a director of
NYNEX Corporation from 1983 until his retirement in September 1989. He
is also Chairman of the Board of Directors of Alcatel Network Systems,
Inc., Principal of East Haven Investments Ltd., and a member of the
Board of Directors of the John Hancock Mutual Life Insurance Company
and the Digital Equipment Corporation. He is a member of the Board of
Managers of Rose-Hulman Institute of Technology and a member of the
Board of Trustees of the New York Racing Association, Inc.
- --------
[Photo of Delbert C. Staley]
- --------
Bernee D. L. Strom, 48, has been nominated for election to the Board
of Directors of the Company. Since April 1995, she has been President
of USA Digital Radio, LP (a partnership between Gannett Co., Inc. and
Westinghouse Electric Corporation) and prior to that time was
President and Chief Executive Officer of The Strom Group and President
and Chief Executive Officer of MBS Technologies, Inc. She is also a
director of DDL Electronics Inc., Software Publishing Corporation and
a member of the Board of Advisors of the J. L. Kellogg Graduate School
of Management of Northwestern University.
- --------
[Photo of Bernee D. L. Strom]
- --------
Alfred M. Zeien, 66, has been a director since 1985. Since February
1991, he has been Chairman of the Board and Chief Executive Officer of
The Gillette Company (a manufacturer of consumer products). From
January 1, 1991 to February 1991, he was President and a director and
prior to that time Vice Chairman of the Board of The Gillette Company.
He is also a director of Repligen Corporation, Massachusetts Mutual
Life Insurance Company, Bank of Boston Corporation and Raytheon
Company.
- --------
[Photo of Alfred M. Zeien]
BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth certain information with respect to shares of
common stock owned by beneficial owners of more than 5% of the outstanding
common stock as of December 31, 1995 and (i) the two individuals who held the
position of Chief Executive Officer during 1995 and the four other most highly
compensated executive officers of the Company; (ii) each director of the
Company; and (iii) all directors and executive officers as a group as of January
22, 1996. Individuals have sole voting and investment power with regard to the
stock unless otherwise indicated in the footnotes.
6
<PAGE>
Common Stock
Beneficially Peercent of
Name Owned(1)(2) Class
- -------------------------------------------------------------------------------
EXECUTIVE OFFICERS AND DIRECTORS
- --------------------------------
Gary T. DiCamillo 40,000(3) *
Satish C. Agrawal 22,177 *
Enrico I. Ancona 1,250 *
Joseph R. Oldfield 44,632 *
William J. O'Neill, Jr. 46,057 *
I. MacAllister Booth 124,632(4) *
Yen-Tsai Feng 5,620(4) *
Ralph E. Gomory 3,500 *
Frank S. Jones 5,100 *
John W. Loose 2,250 *
James D. Mahoney 1,900(4) *
Albin F. Moschner 1,250 *
Henry Necarsulmer 9,000 *
Kenneth H. Olsen 7,000(5) *
Lester Pollack 5,000(6) *
Charles P. Slichter 5,200(7) *
Ralph Z. Sorenson 5,200 *
Delbert C. Staley 5,200 *
Bernee D. L. Strom 100(8) *
Alfred M. Zeien 5,400 *
All directors and executive officers as a group 427,204 *
(24 persons)
FIVE PERCENT OWNERS
- -------------------
NationsBank, N.A. (South) 8,784,662(9) 19.3%
600 Peachtree Street, NE
7th Floor Plaza
Atlanta, Georgia 30308
FMR Corp. 3,772,533(10) 8.3%
82 Devonshire Street
Boston, Massachusetts 02109
Putnam Investment, Inc. 4,730,090(11) 10.4%
One Post Office Square
Boston, Massachusetts 02109
LFCP Corp. and Corporate Advisors, L.P. 4,307,688(12) 8.6%
One Rockefeller Plaza
New York, New York 10020
- -------------------------------------------------------------------------------
*Less than 1%
7
<PAGE>
(1) The number of shares set forth opposite the name of each nominee or
executive officer includes shares obtainable upon the exercise of stock
options under the Polaroid Stock Incentive Plan or the Board of Directors
Stock Option Plan within 60 days of January 22, 1996 (the "Option Shares"):
0 for Mr. DiCamillo, 18,625 for Mr. Agrawal, 1,250 for Mr. Ancona, 0 for
Mr. Mahoney, 39,650 for Mr. Oldfield, 40,880 for Mr. O'Neill; and 5,000
shares for each other nominee, except Ms. Strom, of which 2,000 shares are
subject to shareholder approval at the annual meeting (with the exception
of Mr. Gomory who holds 2,500 which are exercisable, and Mr. Loose and Mr.
Moschner each of whom holds 1,250 options which are exercisable) and
335,253 for all directors and executive officers as a group. Ms. Strom will
receive 3,000 options under the Board of Directors Stock Option Plan at the
fair market price on May 14, 1996 if she is elected a director of the
Company.
(2) Includes allocated shares under the Polaroid Stock Equity Plan (the "ESOP")
and shares under the Polaroid Profit Sharing Retirement Plan: 0 for Mr.
DiCamillo, 3,552 for Mr. Agrawal, 0 for Mr. Ancona, 1,900 for Mr. Mahoney,
4,576 for Mr. Oldfield, 5,177 for Mr. O'Neill, and 35,075 for all directors
and executive officers as a group.
(3) Reflects 40,000 shares of restricted common stock as to which Mr. DiCamillo
has sole voting power, of which 25,000 shares were granted in December of
1995 (see Footnote (3) to Summary Compensation Table) and of which 15,000
shares were granted on February 23, 1996.
(4) Members of the Board of Directors not standing for re-election.
(5) Includes 2,000 shares held in a revocable trust created by Mr. Olsen. Mr.
Olsen does not have investment power with respect to such shares.
(6) Does not include an aggregate of 4,307,688 shares of common stock (8.6%)
(described in Note 12) as to which Mr. Pollack disclaims beneficial
ownership.
(7) Includes 200 shares over which Dr. Slichter has shared investment power.
(8) Ms. Strom is nominated for election to the Board. She acquired these shares
on January 31, 1996.
(9) Includes 8,784,662 shares (19.3%) held by NationsBank, N.A. (South) ("NB-
Georgia"), as Trustee for the ESOP, of which 6,792,051 shares have been
allocated to the accounts of the ESOP participants and 1,992,611 shares are
unallocated. NationsBank Corporation ("NationsBank"), the parent holding
company of NB-Georgia, beneficially owns (directly and through
subsidiaries) 8,825,258 shares (19.4%), which includes 8,784,662 ESOP
shares. Of the 40,596 additional shares, NationsBank has sole voting power
over 20,873 shares, shared voting power over 6,600 shares, sole dispositive
power over 23,774 shares and shared dispositive power over 700 shares.
(10) FMR Corp. has sole voting power over 71,854 shares, shared voting power
over 1,300 shares, sole dispositive power over 3,771,233 shares and shared
dispositive power over 1,300 shares.
(11) Putnam Investments Inc. is a wholly-owned subsidiary of Marsh & McLennan
Companies, Inc. and wholly owns two registered investment advisers: Putnam
Investment Management, Inc. and The Putnam Advisory Company, Inc. Putnam
Investments, Inc. has shared voting power over 383,600 shares and shared
dispositive power over 4,730,090 shares.
(12) The Company has received the following information: LFCP Corp. ("LFCP"), a
subsidiary of Lazard Freres & Co. L.L.C., is the general partner of
Corporate Advisors, L.P. (LFCP and Corporate Advisors, L.P. being referred
to collectively as "Corporate Partners"). Corporate Advisors, L.P. is the
general partner of two limited partnerships, Corporate Partners, L.P.
("CP") and Corporate Offshore Partners, L.P. ("Offshore"; CP and Offshore
being referred to collectively as the "Partnerships"). Corporate Advisors
L.P. also serves as investment manager for, and exercises sole investment
discretion with respect to, account assets held in a certain custody
account for the State Board of Administration of Florida ("SBA"; the
Partnerships and SBA being referred to collectively as the "Corporate
Partners Affiliates"). Assuming conversion of all Debentures as to which
the Corporate Partners Affiliates hold conversion rights, Corporate
Partners (through their control of the Corporate Partners Affiliates) may
be deemed to have owned beneficially, 4,307,688 shares of common stock
(8.6%) of which 3,635,350 of such shares (7.3%) may be deemed to be held by
CP. Lester Pollack, a director of the Company, is Chairman, Treasurer and a
director of LFCP, Senior Managing Director of Corporate Advisors L.P. and a
managing director of Lazard Freres & Co. L.L.C. Through those positions,
Mr. Pollack may be deemed to control Corporate Partners and to be able to
direct the voting and investment of common stock beneficially owned by
Corporate Partners Affiliates. Mr. Pollack disclaims beneficial ownership
of such 4,307,688 shares of common stock.
8
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Executive Committee is composed of Gary T. DiCamillo (Chairman), Ralph
Gomory, Henry Necarsulmer, Kenneth H. Olsen and Charles P. Slichter. The
Executive Committee may, between meetings of the Board of Directors, exercise
all the powers of the Board except as to matters for which Board action is
specifically required by law.
The Audit Committee is composed of Henry Necarsulmer (Chairman), Ralph E.
Gomory, Frank S. Jones, Albin F. Moschner, Ralph Z. Sorenson and Delbert C.
Staley. The Audit Committee monitors, on behalf of the Board of Directors, the
adequacy and effectiveness of the internal and external audit functions, the
system of internal accounting controls, financial accounting and reporting and
the adequacy and effectiveness of systems for ensuring compliance with
federal, state and local laws and regulations.
The Human Resources Committee is composed of Delbert C. Staley (Chairman), Frank
S. Jones, John W. Loose, Lester Pollack, Ralph Z. Sorenson and Alfred M. Zeien.
The functions of the Committee include recommending to the Board of Directors
the remuneration of the Company's officers and other senior personnel and
proposals to adopt various employee benefit plans in which directors, officers
and senior personnel are eligible to participate.
The Committee on Directors is composed of Alfred M. Zeien (Chairman), Kenneth
H. Olsen, Lester Pollack and Charles P. Slichter. The Committee recommends
nominees to the Board of Directors.
The Committee of Outside Directors is composed of the non-employee directors,
Ralph E. Gomory, Frank S. Jones, John W. Loose, Albin F. Moschner, Henry
Necarsulmer, Kenneth H. Olsen, Lester Pollack, Charles P. Slichter, Ralph Z.
Sorenson, Delbert C. Staley and Alfred M. Zeien. The Committee meets regularly
to consider matters of corporate governance, including such matters suggested by
any of its own members.
The Search Committee. In 1995, the Committee, composed of Delbert C. Staley
(Chairman), I. M. Booth, Frank S. Jones, Lester Pollack and Alfred M. Zeien,
was responsible for finding and reviewing candidates for the position of Chief
Executive Officer of the Company and making recommendations to the Board in
that regard. Upon selection of Gary T. DiCamillo, the Committee was disbanded.
During 1995, the numbers of meetings of the Board of Directors and of the Audit
Committee, Human Resources Committee, Committee on Directors, Committee of
Outside Directors and the Search Committee were, respectively, 11, 4, 4, 2, 3
and 5. The average attendance of directors at meetings of the Board of Directors
was 95%. All current directors attended 75% or more of the aggregate of the
meetings of the Board and meetings of Committees of the Board on which they
served except Mr. Moschner, whose attendance was 72%.
FURTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS
Directors' fees are paid only to directors who are not employees of the Company.
Each such director is paid a retainer of $20,000 per year and $1,500 for each
Board or Committee meeting attended. Committee chairmen receive an additional
$2,000 per year. Members of the Board also receive fees as directors for
consulting with members of the Company's management, including attending
meetings of advisory boards for specific Company businesses, based on a daily
fee of between $750 to $1,500 depending on the time spent.
Pursuant to the terms of the Polaroid Board of Directors Stock Option Plan, a
one-time grant of an option for 3,000 shares of common stock was made to each
non-employee director on April 24, 1990, or, if later, the date the director
joined the board. Options are valued at the fair market value on the date of
grant.
Subject to stockholder approval, the Board of Directors approved an amendment to
the plan to award a one-time grant of an option to purchase 2000 shares of
common stock to each non-employee member of the Board of Directors who was a
member of the Board on July 25, 1995. The exercise price of the option is
$42.625 per share, the fair market value on July 25, 1995, the date the
amendment was approved by the Board.
Pursuant to the Polaroid Board of Directors Retirement Plan each retired
non-employee director who has served on the Board for at least five years
receives an annual payment equal to the last annual retainer paid prior to
retirement. Payments continue for a number of years equal to the number of years
in which the director served as a non-employee director prior to attaining age
73. The age limitation does not apply to any director who attained age 73 prior
to January 1, 1990. A participant may not receive annual payments under the plan
for more than 25 years.
9
<PAGE>
BOARD PROPOSAL -- TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS
Subject to stockholder ratification, the Board of Directors has appointed KPMG
Peat Marwick LLP as the independent auditors of the financial statements of the
Company for 1996.
KPMG Peat Marwick LLP has performed audit and non-audit services for the Company
for many years. Representatives of KPMG Peat Marwick LLP will be present at the
Annual Meeting, will have an opportunity to make a statement if they so desire,
and will be available to respond to questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS BOARD PROPOSAL.
BOARD PROPOSAL -- TO AMEND THE BOARD OF DIRECTORS STOCK OPTION PLAN
On May 9, 1990, the shareholders approved the Board of Directors Stock Option
Plan. Provisions of the plan are discussed above under "Further Information
Concerning the Board of Directors". The plan provides that options vest with
respect to 25% of the shares covered thereby for each year of service as a
director on the date of grant and thereafter on each anniversary of the date of
grant. An option remains exercisable for ten years from the date of grant unless
the Board member resigns. If a Board member resigns he or she has three years
from the date of the resignation or ten years from the date of option grant,
whichever is earlier, to exercise each option. No more than 100,000 shares may
be authorized or issued under the plan.
Subject to stockholder approval, the Board of Directors approved an amendment to
the Directors Stock Option Plan to award a one-time grant of an option to
purchase 2,000 shares of common stock to each non-employee member who was a
director on July 25, 1995. The exercise price of the option is $42.625 per
share, the fair market value on July 25, 1995, the date the amendment was
approved by the Board. There were twelve non-employee members of the Board on
July 25, 1995. Subject to stockholder approval, grants of options to purchase an
aggregate of 24,000 shares of common stock at an aggregate value of $1,023,000
were issued. There is no federal tax consequence for the recipient or the
Company until the option is exercised.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS BOARD PROPOSAL.
EXECUTIVE COMPENSATION
HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Human Resources Committee (the "Committee") of the Board of Directors acts
as the compensation committee of the Company. The Committee makes
recommendations to the Board of Directors on the Company's executive
compensation policies and practices, as well as the compensation to be paid to
the Chief Executive Officer and the other executive officers of the Company.
Based on the Committee's recommendations, the Board of Directors makes the final
decisions on executive compensation. None of the members of the Committee is or
has been an officer or employee of the Company or receives remuneration from the
Company in any capacity other than as a director.
SELECTION OF A NEW CHIEF EXECUTIVE OFFICER
In the fall of 1994 at the suggestion of I. M. Booth, the Company's Chief
Executive Officer, the Board of Directors initiated a process to search for and
select a candidate to succeed Mr. Booth on his retirement. The Board discussed
the needs and potential of the Company and the personal qualities and abilities
in a Chief Executive Officer that would enhance the Company's prospects. To that
end the Board formed a search committee comprised of Mr. Booth and non-employee
directors. With the assistance of a leading search firm, a number of highly
qualified candidates were considered. At the conclusion of the process, which
consumed more than a year, the Board unanimously selected Gary T. DiCamillo to
become the Company's Chief Executive Officer effective December 1, 1995. The
terms of Mr. DiCamillo's employment agreement are set forth in the section
entitled "Employment Agreement". In reaching the terms of the Employment
Agreement, the Board of Directors established an initial base pay which is below
market. However, the total compensation value, excluding amounts paid to
compensate Mr. DiCamillo for the value of benefits forfeited as a result of his
resignation from his prior employer, is competitive.
10
<PAGE>
COMPENSATION PHILOSOPHY
The Company's overall executive compensation program is designed to enhance
shareholder value, to support the implementation of the Company's business
strategy and to improve both corporate and personal performance. There are
several principles that provide a framework to the compensation decisions. Total
compensation is designed to motivate individuals to their highest levels of
performance, reward outstanding achievement and align the interests of
management with those of the shareholders by linking management's compensation
to the company's performance. The executive total compensation program is
structured to increase the proportion of performance incentives at progressively
higher management levels.
In determining its executive compensation program, the Company considers the
compensation practices of a group of ten comparison companies regarding three
components: base salary, annual bonuses and long-term incentive compensation
opportunities. The Company's comparison group is engaged in diverse
photographic, technological and consumer goods businesses. Half of those
companies are included in the industry index used by the Company in the
Performance Graph below. To provide a better basis for comparison, the Committee
uses an average of the comparison group's compensation information. This average
is calculated after having an independent consultant adjust the compensation
information of each company in the group to reflect differences in sales volume.
COMPONENTS OF COMPENSATION
Base Salary. In 1995, the base salary range for each executive officer was
established after considering each executive officer's position, the Company's
assessment of the importance of the position to long-term performance objectives
of the Company and the base salaries of similar executives in the Com- pany's
comparison group. An actual salary is then determined based on the individual's
performance. The named executive officers' salaries remain somewhat below the
average base salaries of executive officers in similar positions in the
Company's comparison group.
The primary factor in determining the retired Chief Executive Officer's salary
was the salary range of the chief executive officers of the Company's comparison
group. That factor was the primary reason the Committee recommended his salary
be increased by approximately 9% from 1994 to 1995.
Annual Bonus Awards. The Company's officers and key employees are eligible for
annual cash bonuses pursuant to the Polaroid Executive Incentive Compensation
Plan. A participant who achieves his individual performance goals is eligible
for part of an annual cash bonus. For Company officers who are not assigned to a
business unit, the total bonus stems from achieving a corporate internal
operating profit target. For Company officers who are working in business units,
a portion of the annual bonus is based upon achieving an internal operating
profit target for the participant's business unit and the remainder is based
upon achieving an internal operating profit target for the Company. The internal
operating profit targets are set by the Board of Directors, upon recommendation
of the Committee, along with a threshold profit target below which there is no
general contribution but only certain distributions for significant individual
achievement.
If the internal operating profit target was reached, the bonuses to Mr. Booth
and the named executive officers would have been comparable to the average
annual bonuses paid by the Company's comparison group to officers in similar
positions. In 1995, the Company's threshold target was not achieved; therefore,
the CEO and Company officers who are not assigned to business units did not
receive a bonus under this plan. A bonus was paid to Company officers in
business units where the business unit thresholds were achieved.
In addition to the annual bonus plan in 1995, several Company officers and key
employees received one time special bonuses for their significant contribution
to the restructuring program.
11
<PAGE>
Long-Term Incentives. Pursuant to the 1993 Polaroid Stock Incentive Plan,
officers and key employees may receive incentive awards as determined by the
Committee. In 1995, executive officers received non-qualified stock options at
the fair market price on the date of grant with related dividend equivalents
pursuant to the Plan, except for Mr. DiCamillo's non-qualified stock option
which does not include dividend equivalents. Stock option awards provide
incentives for executives to practice long-term strategic management and rewards
for improvement in shareholder value. The primary factors the Committee takes
into account in making awards under the 1993 Polaroid Stock Incentive Plan are:
(i) the officer's level of responsibility in the Company, (ii) the practices of
the Company's comparison group, (iii) the likely value of the officer's
contributions to the long-term growth of the Company and (iv) restrictions on
the number of shares to limit dilution. The Committee typically does not
consider options already outstanding or previously awarded in making such
decisions. The 1995 grants for Mr. Booth and the other named executive officers
under this Plan are set forth below in the table captioned "Option Grants in
1995". The additional grant for Mr. Booth reflects his efforts during the
transition of the office of Chairman and Chief Executive Officer and in
recognition of his longevity with and past contributions to the Company. Upon
exercise of those options, Mr. Booth and each other plan participant will
realize a gain if the market price of the common stock exceeds the exercise
price of the options. Appreciation in the value of the Company's common stock
would also benefit all the Company's shareholders.
A second type of long-term incentive is provided through participation in the
Officers' Compensation Exchange Plan ("OCEP"). The Plan provides for two types
of awards. Under the first type, officers receive a biannual allocation of units
tied in value to the market price of the common stock in exchange for a
mandatory 5% reduction in their base compensation. Each participant's allocation
equals 50% of the stock that would have been allocated to the participant under
the ESOP without regard to limitations imposed by the Internal Revenue Code of
1986 as amended from time to time (the "Code"). The date of distribution is
generally the date of retirement, termination of employment or August 31, 1998,
whichever is earlier, unless the participant defers payment until retirement,
but in any event not earlier than six months from the date of award. Under the
second type of award under the OCEP, officers and key employees participate
without reduction in base compensation and for the exclusive purpose of
receiving an allocation equal to the amount of stock that they would have been
allocated under the ESOP if the Code imposed no limits on allocations.
Distribution of this type of award occurs on the participant's termination date.
All units are paid in cash based upon the fair market value of the common stock
on the distribution date.
For the named executive officers, the value of the Company's long-term incentive
plans is somewhat below the value of the average long-term incentives awarded by
the Company's comparison group to executives in similar positions.
The Committee has considered the impact of Section 162(m) of the Code, which
provides a limit on the deductibility of compensation for certain executive
officers in excess of $1,000,000 per year. Future options granted under the 1993
Polaroid Stock Incentive Plan have been structured to be exempt from the
deduction limit. Under Mr. DiCamillo's Employment Agreement, in 1996 he will
receive a base salary of no less than $550,000 and a bonus of no less than
$400,000, i.e., a total of at least $950,000. In addition, 5,000 shares of
restricted stock will vest. Assuming a value of more than $10 per share at
vesting, the $1,000,000 will have been exceeded. It is unlikely that for any of
the other specified officers this limit will be exceeded.
Submitted by the Human Resources Committee:
Delbert C. Staley, Chairman
Frank S. Jones
John W. Loose
Lester Pollack
Ralph Z. Sorenson
Alfred M. Zeien
12
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid to the two individuals
who held the position of Chief Executive Officer during 1995 and the four
most highly compensated executive officers. The amounts paid to Mr.
DiCamillo, who became Chief Executive Officer on December 1, 1995, commenced
with his employment on October 20, 1995. The amounts paid to Mr. Booth, who
ceased to be the Chief Executive Officer effective December 1, 1995, reflect
the amounts paid to him during the year, including for the month of
December.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
--------------------------------------- ---------------------------
Other Restricted All
Annual Stock Stock Other
Name and Salary Bonus Compensation Awards Options Compensation
Position Year ($) ($)(1) ($)(2) ($)(3) (#) ($)(4)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
G.T. DiCamillo 1995 129,168 0 505,714 1,162,500 250,000 0
Chairman and Chief
Executive Officer
- -------------------------------------------------------------------------------------------------------------------------------
Satish C. Agrawal 1995 212,475 0 22,631 0 11,000 41,642
Group Vice
President and 1994 174,177 0 16,416 0 7,500 19,107
Chief Technology
Officer 1993 164,605 0 11,970 0 7,000 10,550
- -------------------------------------------------------------------------------------------------------------------------------
E.I. Ancona 1995 282,504 32,165 22,125 0 17,500 0
Executive Vice
President, 1994 157,293 0 86,250 0 25,000 0
Commercial Group
- -------------------------------------------------------------------------------------------------------------------------------
J.R. Oldfield 1995 325,002 0 50,081 0 25,000 63,767
Executive Vice
President 1994 296,250 0 35,570 0 16,000 37,343
Photographic
Imaging 1993 268,935 0 25,542 0 15,000 35,611
- -------------------------------------------------------------------------------------------------------------------------------
W.J. O'Neill, Jr. 1995 287,514 20,000 48,347 0 20,000 56,377
Executive Vice
President and 1994 275,004 0 36,136 0 15,000 40,032
Chief Financial
Officer 1993 261,558 0 26,430 0 15,000 34,720
- -------------------------------------------------------------------------------------------------------------------------------
I.M. Booth 1995 630,006 0 148,778 0 113,000 123,460
Retired Chairman,
President 1994 577,506 0 99,225 0 40,000 73,939
and Chief
Executive Officer 1993 525,507 0 72,828 0 40,000 69,526
- -------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Amounts shown in this column represents for Mr. Ancona the payment under the Polaroid Executive Incentive Compensation Plan,
and for Mr. O'Neill a one time special bonus for his significant contibution to the restructuring program.
(2) Amounts shown in this column include dividend equivalents paid under the OCEP in 1995 and 1994 and the Polaroid Stock
Incentive Plans for all three years to each named executive with the following exceptions: i) the amount for Mr. DiCamillo
represents his special payment as provided in the Employment Agreement section in this proxy statement plus relocation
expenses of $5,714, ii) the amount for Mr. Ancona in 1994 represents dividend equivalents for units granted under the 1993
Polaroid Stock Incentive Plan and a hiring bonus of $75,000.
(3) Mr. DiCamillo's employment agreement includes an award of 25,000 shares of restricted common stock granted in December 1995.
Regular dividends will be paid on the 25,000 shares. The restriction provides that 5,000 shares vest on each anniversary of
the signing of Mr. DiCamillo's employment agreement if he is an employee on such date.
(4) The amounts shown in this column include the value of shares of common stock allocated in the ESOP and the Profit Sharing
Retirement Plan ("PSRP" ) and the value of units allocated to participants under the OCEP in the years shown. The value of
the shares or units was calculated by using a year-end closing price of $47.375 per share of common stock for 1995, $32.50
for 1994, and $33.50 for 1993. For 1995, the amounts represent $22,029 OCEP, $47 PSRP and $19,566 ESOP for Mr. Agrawal;
$44,106 OCEP, $95 PSRP and $19,566 ESOP for Mr. Oldfield; $36,716 OCEP, $95 PSRP and $19,566 ESOP for Mr. O'Neill; and
$103,799 OCEP, $95 PSRP and $19,566 ESOP for Mr. Booth.
</TABLE>
13
<PAGE>
OPTION GRANTS IN 1995
The following table sets forth information concerning stock options granted
in 1995 under the 1993 Polaroid Stock Incentive Plan to the Chief Executive
Officer and the four other most highly compensated executive officers and
the retired Chief Executive Officer of the Company.
<TABLE>
<CAPTION>
Individual Grants
- -------------------------------------------------------------------------------------------------------------------------------
Percent of
Total Options
Options Granted to Exercise or Market Price Grant Date
Granted Employees in Base Price on Grant Date Expiration Present
Name (#) Fiscal Year ($/Sh) ($/Sh)(1) Date Value $(2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
G.T. DiCamillo 250,000 24.87 42.000 42.000 10-20-05 4,675,000
- -------------------------------------------------------------------------------------------------------------------------------
S.C. Agrawal 11,000 1.09 33.875 33.875 4-25-05 217,800
- -------------------------------------------------------------------------------------------------------------------------------
E.I. Ancona 17,500 1.74 33.875 33.875 4-25-05 346,500
- -------------------------------------------------------------------------------------------------------------------------------
J.R. Oldfield 25,000 2.49 33.875 33.875 4-25-05 495,000
- -------------------------------------------------------------------------------------------------------------------------------
W.J. O'Neill, Jr. 20,000 1.99 33.875 33.875 4-25-05 396,000
- -------------------------------------------------------------------------------------------------------------------------------
I.M. Booth 63,000 6.27 33.875 33.875 4-25-05 1,247,400
50,000 4.97 43.125 43.125 6-27-05 1,206,500
- -------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) All grants (i) were made at the fair market value of the stock on the date of the grant; (ii) vest 25% per year beginning
on the first anniversary of the grant date; (iii) will terminate ten years from the grant date, or earlier if there is a
separation of service (including termination, retirement, death); (iv) cease vesting when an officer's employment
terminates; and (v) accelerate to full vesting upon a change in control, retirement at age 65 or older with ten years of
service, or retirement before age 65 with age and service equal to at least 90. Dividend equivalents identical in both
timing and value to the dividends paid to stockholders on common stock are paid to Messrs. Agrawal, Ancona, Oldfield,
O'Neill and Booth on outstanding options under the plan. Common stock dividends have been $0.15 per share per quarter since
1987.
(2) Option valuations are based on the Black-Scholes option pricing model using various assumptions regarding stock price
volatility, future dividend yield and interest rates. In calculating the grant date present values set forth in the table
above (i) a factor of 25.761% for the April 1995 grant, a factor of 26.777% for the June 1995 grant and a factor of 30.048%
for the October 1995 grant have been assigned to the volatility of the common stock, based on daily stock market quotations
for the 12 months preceding the date of grant; (ii) the yield on the common stock has been set at 1.77% for the April 1995
grant, 1.39% for the June 1995 grant and 1.43% for the October 1995 grant based upon its annual dividend rate of $0.60 per
share at date of grant; (iii) for the April and June 1995 grants, the dividend equivalent feature has been valued by taking
the present value of the dividends which would be paid over time assuming a constant dividend yield; (iv) the risk-free
rate of return has been fixed at 7.06% for the April 1995 grant, 6.17% for the June 1995 grant and 6.04% for the October
1995 grant, the rate for a ten-year U.S. Treasury Note with a maturity date corresponding to that of the option term; and
(v) the actual option term to the expiration date has been used. The actual value that an executive may realize, if any,
will depend on the amount by which the stock price at the time of exercise exceeds the exercise price. There is no
assurance that the value realized by an executive will equal or approximate the value estimated by the Black-Scholes model.
</TABLE>
14
<PAGE>
AGGREGATED OPTION EXERCISES IN 1995 AND 1995 YEAR-END OPTION VALUES
The following chart shows the number of shares obtained by stock option exercise
in 1995 and the number of shares covered by both exercisable (vested) and
unexercisable (unvested) stock options as of December 31, 1995. Also reported
are the values for in-the-money options which represent the positive spread
between the exercise price of any such stock options and the year-end price of
the common stock of $47.375.
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised Options In-the-money Options
Shares as of 12/31/95 as of 12/31/95 ($)(1)
Acquired on Value ------------------------------ ------------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
G.T. DiCamillo 0 0 0 250,000 0 1,343,750
- -------------------------------------------------------------------------------------------------------------------------------
S.C. Agrawal 0 0 18,625 21,575 322,503 324,222
- -------------------------------------------------------------------------------------------------------------------------------
E.I. Ancona 5,000 67,500 1,250 36,250 20,313 540,938
- -------------------------------------------------------------------------------------------------------------------------------
J.R. Oldfield 0 0 39,650 47,670 689,579 714,574
- -------------------------------------------------------------------------------------------------------------------------------
W.J. O'Neill, Jr. 0 0 40,880 41,920 704,088 634,980
- -------------------------------------------------------------------------------------------------------------------------------
I.M. Booth 0 0 112,495 171,885 1,953,799 2,045,831
- -------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Aggregate fair market value underlying unexercised options at year end, less the exercise price.
</TABLE>
PENSION PLAN TABLE
The Polaroid Pension Plan is a defined benefit plan qualified under the
rules of the Code which provides a pension benefit to all eligible
employees, including officers. To the extent that any participant's benefit
exceeds limitations imposed by the Code, the excess benefits are paid out of
unfunded supplementary plans. The following Table provides the aggregate
annual pension benefit that would be payable under all these plans to a
participant at age 65 in the form of a straight life annuity based on the
Final Average Compensation and benefit accrual as of December 31, 1995,
before the deduction for Social Security. Final Average Compensation is a
participant's average annual compensation for the five consecutive highest
compensation years in the participant's last 10 years of employment.
For this purpose, 1995 Compensation for the named executive officers
includes the salary amount which is shown in the "Salary" column of the
Summary Compensation Table uplifted by 1.12674.
Final Years of Service
Average ------------------------------------------------------------
Pay($) 15 20 25 30 35
- --------------------------------------------------------------------------
150,000 40,725 54,300 67,875 81,450 81,450
- --------------------------------------------------------------------------
175,000 47,513 63,350 79,188 95,025 95,025
- --------------------------------------------------------------------------
200,000 54,300 72,400 90,500 108,600 108,600
- --------------------------------------------------------------------------
225,000 61,088 81,450 101,813 122,175 122,175
- --------------------------------------------------------------------------
250,000 67,875 90,500 113,125 135,750 135,750
- --------------------------------------------------------------------------
300,000 81,450 108,600 135,750 162,900 162,900
- --------------------------------------------------------------------------
350,000 95,025 126,700 158,375 190,050 190,050
- --------------------------------------------------------------------------
400,000 108,600 144,800 181,000 217,200 217,200
- --------------------------------------------------------------------------
450,000 122,175 162,900 203,625 244,350 244,350
- --------------------------------------------------------------------------
500,000 135,750 181,000 226,250 271,500 271,500
- --------------------------------------------------------------------------
550,000 149,325 199,100 248,875 298,650 298,650
- --------------------------------------------------------------------------
600,000 162,900 217,200 271,500 325,800 325,800
- --------------------------------------------------------------------------
650,000 176,475 235,300 294,125 352,950 352,950
- --------------------------------------------------------------------------
15
<PAGE>
The following table sets forth the current compensation as defined in the
Pension Plan and credited years of service of the Chief Executive Officer
and the other named executive officers.
<TABLE>
<CAPTION>
Name Pension Plan Compensation($) Credited Years of Service
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
G.T. DiCamillo(1) 0 0
- -----------------------------------------------------------------------------------------------------------------------------
S.C. Agrawal 185,516 24.0
- -----------------------------------------------------------------------------------------------------------------------------
E.I. Ancona(2) 234,872 16.6
- -----------------------------------------------------------------------------------------------------------------------------
J.R. Oldfield 305,741 24.0
- -----------------------------------------------------------------------------------------------------------------------------
W.J. O'Neill, Jr. 295,149 24.0
- -----------------------------------------------------------------------------------------------------------------------------
I.M. Booth 613,740 24.0
- -----------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Mr. DiCamillo has a supplemental executive retirement plan which grants him one additional year of service for each of
his first ten years of actual service with the Company. This pension promise vests upon Mr. DiCamillo's completion of
2-1/2 years of service.
(2) Mr. Ancona has a supplemental executive retirement plan which grants him full pension benefits as if he were vested in
the Polaroid Pension Plan for fifteen years, offset by the pension benefits he will receive from another employer. For
1995, this results in a straight life annuity benefit at age 65 of approximately $18,886.
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934 --
FORM 4 REPORTING OBLIGATION
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors, executive officers and persons who
beneficially own more than ten percent (10%) of any class of the Company's
equity securities ("Reporting Persons") to file certain reports concerning
their beneficial ownership of the Company's equity securities. The Company
believes that during 1995 all Reporting Persons complied with their Section
16(a) filing obligations.
THE POLAROID EXTENDED SEVERANCE PLAN
The Extended Severance Plan is established for all employees of the Company
who may be adversely affected following a change in control of the Company.
The Extended Severance Plan becomes operative when there is a change in
control of the Company or after the acquisition by a person or a group of
30% or more of the Company's stock. The Extended Severance Plan also becomes
operative (i) upon the occurrence of certain events after the acquisition by
a person or a group of 20% or more of the Company's stock; (ii) the date
stockholders approve either the liquidation of the Company, disposition of
substantially all its assets; or (iii) the date stockholders approve any
merger or consolidation other than one in which at least 50% the voting
securities of the Company immediately prior thereto to remain viable.
A participant in the Extended Severance Plan is entitled to receive a
severance payment under the Extended Severance Plan. This payment will be
made in lieu of a normal severance payment, if, within two years of the
Extended Severance Plan becoming operative, his or her employment is
terminated for any reason by the Company, except for serious or willful
misconduct, or if he or she voluntarily leaves the Company after the
occurrence of certain defined events which adversely affect the participant.
This severance payment will be the greater of (i) twice the highest amount
provided under any Company lay off or severance plan; (ii) one-twelfth of
one month's Compensation for each month of service; or (iii) six months'
Compensation. However, this severance payment may not exceed thirty months
of Compensation. For purposes of the Extended Severance Plan, Compensation
includes base pay, shift and overtime premiums and cash bonuses (except for
payments under long-term incentive plans). A participant who receives a
severance payment under the Extended Severance Plan has the right to
continue to receive certain Company welfare benefits, such as medical,
dental and life insurance coverage.
16
<PAGE>
EMPLOYMENT AGREEMENT WITH MR. DICAMILLO
On October 20, 1995, the Company entered into an employment agreement for a
term of approximately five years with Gary T. DiCamillo. The agreement was
amended December 21, 1995. Pursuant to the terms of the amended employment
agreement, Mr. DiCamillo became the Company's Chairman and Chief Executive
Officer effective December 1, 1995. The agreement provides for (i) an
annualized base salary of no less than $550,000, which shall be reviewed
periodically by the Board of Directors; (ii) participation in the company's
annual executive bonus plan with minimum guaranteed payment for only 1996 of
$400,000; (iii) a ten year option to purchase 250,000 shares of common stock
which vest ratably over each of the next four years on the anniversary date
of the signing of Mr. DiCamillo's employment agreement if he is an employee
on such anniversary; (iv) 25,000 shares of restricted common stock which
vest ratably over each of the next five years on the anniversary date of the
signing of Mr. DiCamillo's employment agreement if he is an employee on such
anniversary; (v) 15,000 shares of restricted stock which vest on October 20,
2000 if Mr. DiCamillo is an employee on that date and has achieved the
performance factors which were established by the Board of Directors on
February 23, 1996, the date these shares were granted and (vi) a special
payment of $500,000 to compensate Mr. DiCamillo for amounts forfeited due to
his resignation from his previous employment.
RETIREMENT AND SEVERANCE AGREEMENT WITH MR. BOOTH
On November 10, 1995, Polaroid Corporation entered into a severance and
retirement agreement with I. M. Booth, retired Chairman, President and Chief
Executive Officer of the Company. Under the agreement, Mr. Booth will
receive: (i) a severance payment of $1,012,110 and (ii) an unreduced
pension. He also receives an annual bonus, if awarded, with respect to 1996,
prorated based on the time worked in 1996, and full vesting of all options
granted as of the date of retirement.
RETIREMENT AND SEVERANCE AGREEMENT WITH MR. OLDFIELD
On January 25, 1996, Polaroid Corporation entered into a severance and
retirement agreement with Joseph R. Oldfield, Executive Vice President,
Photographic Imaging. Under the agreement, Mr. Oldfield retired on March 31,
1996 as a participant in the Company wide severance and early retirement
programs. From the severance program Mr. Oldfield will receive a severance
payment of $518,881, which will be paid in monthly installments beginning the
month following his termination; full vesting of all outstanding options and a
three year period within which to exercise the options; and dental insurance
continuation at employee rates for three years. From the early retirement
program, Mr. Oldfield received a seven year uplift to his age/service using the
formula which produced the highest benefit. In addition to the benefits under
the Company wide program, Mr. Oldfield also received an unreduced pension
benefit calculated as of March 31, 1996 as though he had thirty years of service
and attained age 65. The value of this enhancement is approximately $2,400 per
month. The agreement also includes a non compete provision under which Mr.
Oldfield received $81,127 and agreed to refrain from accepting employment or
consulting with a competitor for 24 months following his termination.
17
<PAGE>
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total shareholder
return (including dividends) over the last five fiscal years with the S&P
500 Index and a peer group index comprised of the Fortune 500 Scientific,
Photographic, and Control Equipment Index (for 1995: 3M, Bausch & Lomb,
Baxter International, Beckman Instruments, Becton Dickinson, C. R. Bard,
Eastman Kodak, EG&G, Honeywell, Medtronic, Perkin-Elmer, Tektronix, Thermo
Electron, United States Surgical, Varian Associates and Xerox).
COMPARISON OF FIVE-YEAR
CUMULATIVE TOTAL SHAREHOLDER RETURN (1)
- --------------------------------------------------------------------------------
DEC-90 DEC-91 DEC-92 DEC-93 DEC-94 DEC-95
- --------------------------------------------------------------------------------
POLAROID CORP. $100 $117 $139 #152 $151 $223
S&P 500(R) $100 $130 $140 $155 $157 $215
FORTUNE 500 INDUSTRY GROUP $100 $141 $139 $149 $160 $233
- --------------------------------------------------------------------------------
(1) ASSUMES THAT THE VALUE OF THE INVESTMENT IN THE COMPANY'S COMMON STOCK
AND IN EACH INDEX WAS $100 ON DECEMBER 31, 1990 AND THAT ALL DIVIDENDS
WERE REINVESTED.
19
<PAGE>
OTHER MATTERS
The cost of this solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, some officers and regular employees of the
Company may solicit proxies personally or by telephone or by telegraph. The
Company has engaged Georgeson & Co. Inc. to assist in proxy solicitation at
a cost of $15,000 plus out-of-pocket expenses. The Company will reimburse
banks, brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy material to beneficial
owners of the Company's stock. Nominations to the Board of Directors by
Stockholders must be made in accordance with the information and timely
notice requirements of the Company's By-Laws, a copy of which may be
obtained from the Secretary of the Company. Such nominations must be in
writing. For consideration at an annual meeting, such nominations must be
received by the Secretary of the Company not later than 90 days in advance
of such meeting.
Stockholder proposals intended for presentation at the 1997 Annual Meeting of
Stockholders must be received by the Company for inclusion in its proxy
statement and form of proxy not later than December 1, 1996.
By order of the Board of Directors.
/s/ Richard F. deLima
Richard F. deLima
Vice President, Secretary and General Counsel
March 21, 1996
19
<PAGE>
APPENDIX
Document Control No.: BOARD-OPTION #2
THE POLAROID BOARD OF DIRECTORS
______________________________
STOCK OPTION PLAN
_________________
POLAROID CORPORATION
--------------------
Cambridge, Massachusetts
Effective as of July 25, 1995
<PAGE>
THE POLAROID BOARD OF DIRECTORS STOCK OPTION PLAN
_________________________________________________
TABLE OF CONTENTS
-----------------
Article Section Page
- ---------------- ----
I Definitions
___________
1.01 Board or Board of Directors 1
1.02 Code 1
1.03 Committee 1
1.04 Company 1
1.05 Exchange Act 1
1.06 Fair Market Value 2
1.07 Option 2
1.08 Option Price 2
1.09 Participant 2
1.10 Plan 2
1.11 Registration Statement 2
1.12 Securities Act 2
1.13 Stock 2
II Participation
-------------
2.01 Participation 3
III Shares of Stock subject to Plan
------------------------------
3.01 Limitations 3
3.02 Options Granted Under Plan 3
3.03 Adjustments 3
IV Options
-------
4.01 Option Grant 4
4.02 Exercise of Option while on Board 4
4.03 Exercise of Option upon Termination 5
4.04 Nontransferability of the Option 5
4.05 Procedure for Exercising Option 6
4.06 Information or Assurances 7
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V Stock Certificates
------------------
5.01 Stock Certificates 8
VI Dividends
---------
6.01 Dividends 8
6.02 Notices of Dividends
and Other Distributions 8
VII Plan Administration
-------------------
7.01 Plan Administration 9
7.02 Disqualification 9
VIII Miscellaneous Provisions
------------------------
8.01 Applicable Law 9
8.02 Change of Control 10
8.03 Expenses 10
8.04 Gender and Number 10
8.05 Headings not Part of Plan 10
8.06 Indemnification 10
8.07 Non-Assignability 10
8.08 Plan Binding on Successors 11
8.09 Non-Contravention of Securities Laws 11
8.10 Unenforceability of a
Particular Provision 11
IX Permanency of the Plan and Plan Termination
-------------------------------------------
9.01 Effective Date 11
9.02 Termination, Amendment,
and Modification of Plan 11
ii
<PAGE>
THE POLAROID BOARD OF DIRECTORS STOCK OPTION PLAN
The purpose of the Plan is to advance the interests of the Company
and its shareholders by affording non-employee members of the Company's
Board of Directors an opportunity to increase their proprietary interest
in the Company by the grant of Options to them under the terms set forth
herein. The Company believes that this Plan can give an incentive to
these members of the Board to increase revenues and profits.
ARTICLE I
DEFINITIONS
___________
1.01 Board or Board of Directors. Board or Board of Directors shall mean
the board of directors of the Company.
1.02 Code. Code shall mean the Internal Revenue Code of 1986, as
amended, unless otherwise specifically provided herein.
1.03 Committee. Committee shall mean the Compensation Committee of the
Board of Directors, comprised of three or more Board members, to
administer the Plan and exercise all or any part of the authority
herein conferred upon the Board of Directors.
1.04 Company. Company shall mean Polaroid Corporation, a Delaware
corporation, and any successor thereof.
1.05 Exchange Act. Exchange Act shall mean the Securities and Exchange
Act of 1934, as amended.
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<PAGE>
1.06 Fair Market Value. Fair Market Value of the Stock shall mean the
last sale price at which Stock is traded on any given date or, if no
Stock is traded on such date, the most recent date on which Stock
was traded, as reflected in the New York Stock Exchange Composite
Transactions Index.
1.07 Option. Option shall mean an option to purchase Stock granted by
the Company pursuant to the provisions of this Plan and the
Agreement executed pursuant hereto. No Option granted under this
Plan shall be an Incentive Stock Option within the meaning of
Section 422 of the Code.
1.08 Option Price. Option Price shall be the Fair Market Value of the
Stock on the day the Option is granted.
1.09 Participant. Participant shall mean a non-employee member of the
Board of Directors.
1.10 Plan. Plan shall mean the Polaroid Board of Directors Stock
Option Plan.
1.11 Registration Statement. Registration Statement shall mean any
registration statement required by the provisions of the Securities
Act or the Exchange Act.
1.12 Securities Act. Securities Act shall mean the Securities Act of
1933, as amended.
1.13 Stock. Stock shall mean common stock, par value $1 per share,
issued by the Company.
2
<PAGE>
ARTICLE II
PARTICIPATION
_____________
2.01 Participation. Each non-employee member of the Board of Directors
shall be a Participant in this Plan.
ARTICLE III
SHARES OF STOCK SUBJECT TO PLAN
_______________________________
3.01 Limitations. Subject to adjustment pursuant to the provisions of
Section 3.03 hereof, the number of shares of Stock which may be
issued and sold hereunder under this Plan shall not exceed 100,000
shares. Such shares will be authorized and unissued shares of Stock
or treasury stock.
3.02 Options Granted Under Plan. Once an Option for shares of Stock has
been granted, such Option or parts thereof that have been exercised,
lapsed, or otherwise terminated shall not again be available under
this Plan.
3.03 Adjustments. In the event that the outstanding shares of Stock are
changed into or exchanged for a different number or kind of shares
or other securities of the Company or of another corporation by
reason of merger, consolidation, other reorganization,
recapitalization, reclassification, combination of shares, stock
split-up, or stock dividend, the Committee shall make such
corresponding adjustments, if any, as deemed appropriate in its sole
discretion. The Committee may adjust the number and kind of shares
which may be granted under the Plan, the maximum number and kind of
shares which may be granted to any one eligible Participant, and the
number, the Option Price, and the kind of shares or property subject
to each outstanding Option. Notwithstanding the foregoing, no
dilution or enhancement of any Participant's Options, or the shares
covered thereby, shall result from any such adjustments. If any
such adjustment shall be made, the Company shall give the
Participants a brief written summary of such events and the effect
thereof upon the number and kind of shares or property purchasable
under the Plan and the price payable therefor. No fractional shares
of stock shall be issued under the Plan resulting from such
adjustment.
3
<PAGE>
ARTICLE IV
OPTIONS
_______
4.01 Option Grant. Each Participant:
a) who is a participant shall be granted an Option of three
thousand (3,000) shares of Stock on the fifth business day
following the date the first quarter earnings for 1990 are
announced at the Option Price. Notwithstanding the foregoing,
this grant is subject to shareholder approval at the Annual
Meeting of Shareholders, May 8, 1990.
b) who joins the Board of Directors after such date shall be
granted an Option for three thousand (3,000) shares of Stock
on the date he becomes a member of the Board of Directors at
the Option Price on that date. The grant is effective the
date an individual joins the Board.
c) who is a non-employee member of the Board of Directors on
July 25, 1995 shall receive an option of two thousand (2,000)
shares of stock on such date at the Option Price.
Notwithstanding the foregoing, this grant is subject to
shareholder approval at the Annual Meeting of Shareholders,
May 14, 1996.
No Option shall be granted under this Plan after March
31, 2000.
4.02 Exercise of Option while on Board. If the Participant remains a
member of the Board of Directors, the Option may be exercised in whole or
in part with respect to whole shares of Stock based on the following
schedule, regardless of the date of grant:
a) 25% of the Option may be exercised one year after a
Participant joins the Board;
b) 50% of the Option may be exercised two years after a
Participant joins the Board;
c) 75% of the Option may be exercised three years after a
Participant joins the Board; and
d) 100% of the Option may be exercised four years after a
Participant joins the Board.
Upon becoming exercisable, the Option shall remain exercisable until
the date which is ten (10) years from the date the Option was
granted.
4
<PAGE>
4.03 Exercise of Option Upon Termination. If a Participant resigns from
the Board of Directors for any reason, all further vesting of this
Option ceases. Any portion of the Option which, at the time of
separation from service could have been exercised, shall remain
exercisable until the earlier of:
a) the date which is ten (10) years from the date the Option
was granted; or
b) three (3) years from the date the Participant terminates
from service as a member of the Board of Directors for any
reason;
provided, however, that in the event of any separation from service
for any of the reasons described in the foregoing clauses, shares of
Stock issuable upon the exercise of any Option granted under this
Plan shall not be delivered to the Participant on a date earlier
than six (6) months from the mailing of the notice referred to in
Article 4.05.
4.04 Nontransferability of the Option. A Participant shall have no right
to assign, transfer, or otherwise dispose of any Option, nor shall
such rights be assigned or transferred by operation of law or
otherwise for any reason other than by will or the laws of descent
and distribution. During the lifetime of a Participant, the Option
shall be exercisable only by the Participant.
5
<PAGE>
4.05 Procedure for Exercising Option. Subject to Federal and State
securities laws then applicable, for an Option to be exercised the
following procedure must be followed:
a) The Participant must provide a written notice to the Company
of his intent to exercise the Option. The notice must specify
the whole shares of Stock to be purchased and the Option Price
to be paid pursuant to the terms of this Agreement (Note: A
form notice of intent is available from the Compensation
Director of the Company);
b) The notice of intent to exercise the Option must be
accompanied by one or a combination of any of the following:
i) full payment of the Option Price by check or
money order made payable in United States funds to
"Polaroid Corporation";
ii) shares of Stock owned by the Participant, having
an aggregate Fair Market Value on the last trading day
immediately preceding the day the notice of intent was
mailed, equal to the Option Price, together with a duly
executed stock power therefor; or,
iii) a copy of irrevocable instructions to a broker
to deliver to the Company promptly the Option Price either
by cash, a check or money order made payable in United
States funds to "Polaroid Corporation", provided, however,
that the payment option in (iii) above is subject to
compliance with such procedures and such agreements of
indemnity as the Company may prescribe from time to time
as a condition of such payment option.
c) The Participant must provide a written notice to the Company
of his intent to exercise the Option. This notice must be sent to
the following address:
Douglas F. Mitchell
Treasury Services
Polaroid Corporation
575 Technology Square - 5T
Cambridge, Massachusetts 02139
6
<PAGE>
d) The notice of intent and payment or instructions regarding
payments as set forth above, MUST BE SENT BY FACSIMILE,
REGISTERED OR CERTIFIED MAIL. The date the Option is
exercised, in full or in part, shall be the date of the
registration of the written notice of intent sent by facsimile,
registered or certified mail.
4.06 Information or Assurances. Upon or prior to the exercise of all or
any portion of any Option, the Participant shall furnish to the
Company in writing such information or assurances as, in the
Company's opinion, may be necessary to enable it to comply fully
with the Securities Act and the Exchange Act and the rules and
regulations thereunder and any other applicable Federal or State
statutes, rules, and regulations.
Without limiting the foregoing, if a Registration Statement is not
in effect under the Securities Act with respect to the shares of
Stock to be issued upon exercise of the Option, the Company shall
have the right to require, as a condition to the exercise of the
Option, that the Participant represent to the Company in writing
that the shares of Stock to be received upon exercise of the Option
will be acquired by the Participant for investment and not with a
view to distribution within the meaning of the applicable provisions
of either the Securities Act or the Exchange Act. Further, the
Company may require that the Participant agree in writing that such
shares will not be disposed of except pursuant to an effective
Registration Statement,
unless the Company shall have received an opinion of counsel
reasonably acceptable to it to the effect that such disposition is
exempt from the registration requirements of the Securities Act.
The Company shall have the right to endorse on certificates
representing shares of Stock issued upon exercise of the Option such
legends referring to the foregoing representations and restrictions
or any other applicable restrictions on resale or disposition as the
Company, in its discretion, shall deem appropriate.
7
<PAGE>
ARTICLE V
STOCK CERTIFICATES
__________________
5.01 Stock Certificates. The Company shall not be required to issue or
deliver any certificate for shares of Stock purchased upon the
exercise of any Option granted under this Plan or of any portion
thereof prior to fulfillment of all of the following conditions:
a) The admission of such shares to listing on all stock
exchanges on which the Stock is then listed, if any;
b) The completion of any registration or other qualification of
such shares under any federal or state law or under the rulings
or regulations of the Securities and Exchange Commission or any
other governmental regulatory agency, which the Company shall
in its sole discretion determine to be necessary or advisable;
c) The obtaining of any approval or other clearance from any
federal or state governmental agency which the Company shall
in its sole discretion determine to be necessary or
advisable; and
d) The lapse of such reasonable period of time following the
exercise of the Option as the Company from time to time may
establish for reasons of administrative convenience.
ARTICLE VI
DIVIDENDS
_________
6.01 Dividends. Dividend equivalents shall not be provided under this
Plan as a matter of course.
8
<PAGE>
6.02 Notices of Dividends and Other Distributions. In the event the
Company proposes to declare a cash dividend on Stock payable other
than out of earned surplus, or a dividend payable in property other
than cash or Stock, or shall distribute subscription rights to its
shareholders or the Company offers to purchase Stock from
shareholders in a tender offer (within the meaning of the Exchange
Act), then the Company shall notify the Participant or the person
who shall have duly acquired the Option by written notice mailed at
least ten (10) days before the proposed record date for the
determination of holders of Stock entitled to participate in such
offer to purchase or distribution or receive such dividend or such
subscription rights, which notice shall specify such proposed record
date.
ARTICLE VII
PLAN ADMINISTRATION
___________________
7.01 Plan Administration. This Plan shall be administered by the
Committee. The Committee shall have the full authority and absolute
discretion:
a) To construe and interpret the Plan; and
b) To make all determinations and take all other actions
necessary or advisable for the proper administration of the
Plan.
All such actions and determinations shall be conclusively
binding upon all persons for all purposes.
7.02 Disqualification. If any deliberation of the Committee shall
exclusively affect a member(s) of the Committee, the member(s) so
affected shall not participate in such deliberation.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
_________________________
8.01 Applicable Law. To the extent that state law shall not have been
preempted by any laws of the United States, the Plan shall be
construed, regulated, interpreted and administered according to the
laws of the State of Delaware.
9
<PAGE>
8.02 Change of Control. Upon the occurrence of a Trigger Date as defined
in the Polaroid Extended Severance Plan adopted by the Company on
December 17, 1987 and as amended from time to time, each Option
shall automatically become fully exercisable unless the Committee
shall otherwise expressly provide at the time of the grant.
8.03 Expenses. The cost of benefit payments from this Plan and the
expenses of administering this Plan shall be borne by the Company,
including such costs as those associated with the registration of
the Stock.
8.04 Gender and Number. Unless the context clearly requires otherwise,
the masculine pronoun whenever used shall include the feminine and
neuter pronoun, the singular shall include the plural, and vice
versa.
8.05 Headings Not Part of Plan. Headings of Articles and Sections are
inserted for convenience and reference; they constitute no part of
this Plan.
8.06 Indemnification. No member of the Board of Directors or the
Committee shall be liable for any action or determination taken or
made in good faith with respect to this Plan nor shall any member of
the Board of Directors or the Committee be liable for any Options
granted under it. Each member of the Board of Directors and the
Committee shall be indemnified by the Company against any losses
incurred in such administration of the Plan, unless his action
constitutes serious and willful misconduct.
8.07 Non-Assignability. A Participant's interest under this Plan shall
not be subject at any time or in any manner to alienation, sale,
transfer, assignment, pledge, attachment, garnishment or encumbrance
of any kind and any attempt to deliver, sell, transfer, assign,
pledge, attach, garnish or otherwise encumber such interest shall be
void and any interest so encumbered will terminate.
10
<PAGE>
8.08 Plan Binding on Successors. This Plan shall be binding upon the
successors and assigns of the Company.
8.09 Non-Contravention of Securities Laws. Notwithstanding anything to
the contrary expressed in this Plan, any provisions hereof that vary
from or conflict with any applicable Federal or State securities
laws (including any regulations promulgated thereunder) shall be
deemed to be modified to conform to and comply with such laws.
8.10 Unenforceability of a Particular Provision. The unenforceability of
any particular provision of this document shall not affect the other
provisions, and the document shall be construed in all respects as
if such unenforceable provision were omitted.
ARTICLE IX
PERMANENCY OF THE PLAN AND PLAN TERMINATION
___________________________________________
9.01 Effective Date. This Plan shall become effective as of April 1,
1990 upon a resolution by the Board of Directors for its adoption,
to be presented at the Annual Meeting of Shareholders of the
Company on May 8, 1990 or any adjournment thereof, receiving the
affirmative vote of a majority of the votes cast by the holders of
the Common Stock, Series B Preferred Stock and Series C Preferred
Stock voting together and not separately. Notwithstanding the
foregoing, for the Plan to become effective, it must be approved by
the shareholders prior to August 6, 1990.
11
<PAGE>
9.02 Termination, Amendment, and Modification of Plan. The Board of
Directors may at any time terminate or suspend, and may at any time
and from time to time and in any respect amend or modify, the Plan;
provided, however, that no such action of the Board of Directors
without approval of the shareholders of the Company may:
(a) Increase the total number of shares of Stock subject to
the Plan except as contemplated in Section 3.03 hereof;
(b) Decrease the minimum Option Price except as contemplated
in Section 3.03 hereof;
(c) Alter the class of persons eligible to receive Options
under the Plan;
(d) Extend the termination date of the Plan or the period
during which the Option may be exercised;
or
(e) Materially alter the Plan in any other respect in a manner
then requiring shareholder approval under the Securities Act or
the Exchange Act.
No termination, amendment, or modification of the Plan shall in any
manner adversely affect any Option granted hereunder without the
written consent of the affected Participant.
IN WITNESS WHEREOF, Polaroid has caused this instrument to be
executed this 18th day of December, 1996, effective as of July 25, 1995.
Attest: POLAROID CORPORATION
/s/ Richard F. deLima By: /s/ Gary T. DiCamillo
________________________________ _______________________
Secretary Chief Executive Officer
12
