<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Polaroid Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
POLAROID
CORPORATION
NOTICE TO
POLAROID
RETIREMENT
SAVINGS PLAN
PARTICIPANTS
AND 2000 PROXY
STATEMENT
<PAGE>
Polaroid Corporation
784 Memorial Drive
Cambridge, Massachusetts 02139
April 12, 2000
To Polaroid Employee Benefit Plan Participants:
This booklet contains important information to assist you in voting as a
participant in the Polaroid Retirement Savings Plan, which includes the ESOP
Fund and the Common Stock Fund. You should refer also to the Company's Annual
Report for 1999 and the voting instructions card enclosed with this booklet.
The Company's Annual Meeting will be held on Tuesday, May 16, 2000 for the
following purposes:
1. To elect eleven directors to serve until the next Annual Meeting of
Stockholders.
2. To ratify the appointment of KPMG LLP as independent auditors of the Company
for 2000, recommended by the Board of Directors.
3. To conduct such other business as may properly come before the meeting.
State Street Bank is the Trustee for this stock and will vote at the Annual
Meeting on your behalf. You have a right to instruct the Plan Trustee as a
"named fiduciary" on how to vote your stock. These instructions are
confidential. No one from Polaroid will know your decision. Subject to the
Trustee's responsibilities under the plans, your shares and fractions of shares
will be voted in accordance with your instructions received either
electronically via the Internet or telephone, or on the enclosed voting
instructions card. If voting instructions have not been received, 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/ Neal D. Goldman
Neal D. Goldman
Vice President, General Counsel and Secretary
YOU MUST MAKE SURE YOUR VOTING INSTRUCTIONS ARE MAILED IN SUFFICIENT TIME TO BE
RECEIVED BY NOON ON MAY 15, 2000. WE URGE YOU TO VOTE EITHER ELECTRONICALLY OR
BY TELEPHONE, OR BY MARKING, SIGNING AND DATING THE ENCLOSED VOTING INSTRUCTIONS
CARD AND RETURNING IT IN THE ENVELOPE PROVIDED NOT LATER THAN MAY 8, 2000.
<PAGE>
POLAROID
CORPORATION
NOTICE OF
2000 ANNUAL
MEETING OF
STOCKHOLDERS
AND PROXY
STATEMENT
<PAGE>
Polaroid Corporation
784 Memorial Drive
Cambridge, Massachusetts 02139
April 12, 2000
To Our Stockholders:
You are cordially invited to attend the Company's 2000 Annual Meeting on
Tuesday, May 16, 2000, at 3:00 p.m. at the American Academy of Arts and
Sciences, Cambridge, Massachusetts (entrance located at 200 Beacon Street,
Somerville, Massachusetts--see map on back page).
The principal items of business will be the election of directors and the
ratification of the appointment of independent auditors. 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. This year we are offering
stockholders the opportunity to vote electronically via the Internet or by
telephone. You can ensure that your shares are voted at the meeting by signing
and dating the enclosed proxy and returning it in the envelope provided, or by
casting your vote electronically via the Internet or telephone by following the
detailed instructions enclosed. Please note that casting your vote in advance
will not prevent you from voting in person at the meeting if you wish to do so.
Your cooperation in promptly signing, dating and returning your proxy or casting
your vote electronically 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 on
Tuesday, May 16, 2000, at 3:00 p.m. at the American Academy of Arts and
Sciences, Cambridge, Massachusetts (entrance located at 200 Beacon Street,
Somerville, Massachusetts) for the following purposes:
1. To elect eleven directors to serve until the next Annual Meeting of
Stockholders.
2. To ratify the appointment of KPMG LLP as independent auditors of the Company
for 2000, recommended by the Board of Directors.
3. To conduct such other business as may properly come before the meeting.
Stockholders of record at the close of business on March 20, 2000 are entitled
to vote at the meeting.
By order of the Board of Directors,
/s/ Neal D. Goldman
Neal D. Goldman
Vice President, General Counsel and Secretary
April 12, 2000
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, WE URGE YOU TO VOTE EITHER
ELECTRONICALLY VIA THE INTERNET OR BY TELEPHONE, OR BY MARKING, SIGNING AND
DATING THE ENCLOSED PROXY AND RETURNING IT PROMPTLY. THE ENVELOPE PROVIDED
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, 784 Memorial Drive,
Cambridge, Massachusetts 02139 (the "Company") to be voted at the Annual Meeting
of Stockholders of the Company on Tuesday, May 16, 2000, and any adjournment.
All holders of record of common stock of the Company as of the close of business
on March 20, 2000, the record date, are entitled to vote at the meeting. As of
that date, 44,718,874 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, or is voted via the Internet or telephone,
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 or vote via the Internet or telephone
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. If a stockholder submits a proxy without 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 by whom
it was submitted.
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 April 12, 2000.
ELECTION OF DIRECTORS
At the Annual Meeting, eleven 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 Mr. Bernazzani and Mr. Poe were elected directors at the
last Annual Meeting.
3
<PAGE>
The following information is submitted respecting the nominees for election:
<TABLE>
<S> <C>
Gary T. DiCamillo, 49, has been a director since 1995. He is
Chairman and Chief Executive Officer of the Company. Prior
to joining the Company in 1995 he was employed at Black &
Decker Corporation (a global marketer and manufacturer of
Photo of products for consumer and commercial applications). He is
Gary T. also a director of Pella Corporation, Sheridan Group, and
DiCamillo Whirlpool Corporation.
Stephen A. Bernazzani, 49, has been a director since
Photo of January 2000. Since 1998 he has been a Senior Engineer for
Stephen A. the Company. From 1995 to 1998 he was an Advanced Engineer
Bernazzani for the Company.
Dr. Ralph E. Gomory, 70, has been a director since 1993. He
is President of the Alfred P. Sloan Foundation (a
Photo of philanthropic foundation) and has held that position since
Ralph E. 1989. He is also a director of Ashland, Inc., Lexmark
Gomory International, Inc., and Washington Post Company.
Stephen P. Kaufman, 58, has been a director since 1997. He
is Chairman and Chief Executive Officer of Arrow
Electronics, Inc. (a distributor of semiconductors, computer
peripherals and components). From 1986 until mid 1999 he was
President and Chief Executive Officer. He is currently a
Photo of director of Harris Corporation and has been Chairman of the
Stephen P. Kaufman Board of Arrow Electronics, Inc. since 1994.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
John W. Loose, 58, has been a director since 1994. On
January 1, 2000 he was named President and Chief Operating
Officer, Corning, Incorporated (a manufacturer of advanced
glass materials and components). From 1996 to 1999 he was
President, Corning Communications, Corning, Incorporated.
From 1993 to 1996 he was Executive Vice President, Corning,
Photo of Incorporated and also President and CEO, Corning Consumer
John W. Products Company. He is also a director of Corning,
Loose Incorporated.
Albin F. Moschner, 47, has been a director since 1994. Since
October 1999 he has been President and Chief Executive
Officer of OnePoint Services, L.L.C. (a telecommunications
company). From 1997 to 1999 he was President and Chief
Executive Officer of MilleCom, Inc. (an Internet-based
communications company). From 1996 to 1997 he was Vice
Chairman of DIBA Inc. (a computer software company). From
1995 to 1996 he was President and Chief Executive Officer of
Zenith Electronics (a TV manufacturer). From 1993 to 1995 he
was President and Chief Operating Officer, Zenith
Photo of Electronics. He is also a director of Pella Corporation,
Albin F. Vision Solutions Inc., Wintrust Financial Corporation, and
Moschner OnePoint Services, L.L.C.
Alfred Poe, 51, has been a director since January 2000. From
1997 through 1999 he was Chief Executive Officer of
MenuDirect Corporation (a division of B&G Foods and a
provider of specialty meals for people on restricted diets).
From 1991 to 1996 he was Corporate Vice President, Campbell
Soup Company (a manufacturer and marketer of convenience
Photo of food products). From 1993 through 1996 he was the President
Alfred of Campbell's Meal Enhancement Group. He is currently a
Poe director of State Street Bank Holding Co.
Dr. Ralph Z. Sorenson, 66, has been a director since 1984.
Since 1993 he has been Professor Emeritus, University of
Photo of Colorado. He is also a director of Eaton Vance Corporation,
Ralph Z. Exabyte Corporation, Houghton Mifflin Company, and Whole
Sorenson Foods Market, Inc.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Carole F. St. Mark, 57, has been a director since 1998.
Since 1997 she has been President of Growth Management, LLC,
(a business development and strategic management company).
From 1994 to 1997 she was President and Chief Executive
Officer of Pitney Bowes Business Services, a unit of Pitney
Photo of Bowes, Inc. She is currently non-executive director of Royal
Carole F. and SunAlliance Insurance Group PLC, and a director of
St. Mark SuperValu, Inc. and Gerber Scientific, Inc.
Bernee D. L. Strom, 52, has been a director since 1996.
Since January 2000 she has been President of InfoSpace.com
Ventures, LLC (the venture capital arm of
InfoSpace.com, Inc.). From 1998 through 1999 she was
President and Chief Operating Officer of InfoSpace.com, Inc.
(a global provider of information and commerce
infrastructure services for wireless devices and web sites).
From 1997 to 1998 she was President and Chief Executive
Officer of The Strom Group (an investment and business
advisory firm). From 1995 to 1997 she was President and
Chief Executive Officer of USA Digital Radio Partners, LP (a
communication and technology company). She is also a
director of InfoSpace.com, Inc., Hughes Electronics,
ImageX.com, and a member of the Board of Advisors of the
Photo of J. L. Kellogg Graduate School of Management of Northwestern
Bernee D. L. Strom University.
Alfred M. Zeien, 70, has been a director since 1985. He has
been retired since April 1999. From 1991 to 1999, he was
Chairman of the Board and Chief Executive Officer of The
Gillette Company (a manufacturer of consumer products). He
Photo of is also a director of EMC Corporation, The Gillette Company,
Alfred M. Massachusetts Mutual Life Insurance Company, and Raytheon
Zeien Company.
</TABLE>
6
<PAGE>
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 of the Company as of December 31, 1999 and (i) the CEO and the four
other most highly compensated executive officers of the Company during 1999;
(ii) each director of the Company; and (iii) all directors and executive
officers as a group as of January 14, 2000, unless otherwise noted. Individuals
have sole voting and investment power with regard to the stock unless otherwise
indicated in the footnotes.
<TABLE>
<CAPTION>
Common Stock Percent of
Name Beneficially Owned(1)(2) Class
<S> <C> <C>
- ----------------------------------------------------------------------------------------------
EXECUTIVE OFFICERS AND DIRECTORS
Gary T. DiCamillo 450,704(3) 1%
Judith G. Boynton 53,242(4) *
Thomas M. Lemberg 67,342 *
William J. O'Neill, Jr. 77,968 *
Brian D. Poggi 37,076 *
Stephen A. Bernazzani 2,959 *
Dr. Ralph E. Gomory 20,366 *
Stephen P. Kaufman 6,456 *
John W. Loose 14,166 *
Albin F. Moschner 19,421 *
Alfred Poe 0 *
Dr. Ralph Z. Sorenson 9,366 *
Carole F. St. Mark 2,978 *
Bernee D. L. Strom 8,516 *
Alfred M. Zeien 39,166 *
All directors and executive officers as a
group (21 persons) 949,820 2%
FIVE PERCENT OWNERS
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110 7,364,287(5) 16.5%
Mellon Financial Corporation
One Mellon Bank Center
500 Grant Street
Pittsburgh, Pennsylvania 15258-0001 3,764,273(6) 8.4%
Massachusetts Financial Services Company
("MFS")
500 Boylston Street, 15th Floor
Boston, Massachusetts 02116 3,045,971(7) 6.8%
- ----------------------------------------------------------------------------------------------
</TABLE>
* Less than 1%
(1) The number of shares set forth opposite the name of each director or
executive officer includes the following numbers of 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 14, 2000
(March 14, 2000): 392,250 for Mr. DiCamillo; 22,084 for Ms. Boynton; 61,884
for Mr. Lemberg; 62,800 for Mr. O'Neill; 30,687 for Mr. Poggi; and 8,000
shares for each other director (with the exception of Ms. Strom who holds
5,250 options which are exercisable, Mr. Kaufman who holds 3,000 options
which are exercisable, Ms. St. Mark who holds 750
7
<PAGE>
options which are exercisable, and Mr. Bernazzani and Mr. Poe who each hold
0 options which are exercisable), and 726,279 for all directors and
executive officers as a group.
(2) Includes the following numbers of allocated shares under the Polaroid
Retirement Savings Plan: 582 for Mr. DiCamillo; 2,959 for Mr. Bernazzani;
609 for Ms. Boynton; 573 for Mr. Lemberg; 6,845 for Mr. O'Neill; 4,024 for
Mr. Poggi; and 15,592 for all directors and named executive officers as a
group.
(3) Includes 5,000 shares of restricted stock as to which Mr. DiCamillo has sole
voting power. Mr. DiCamillo disclaims beneficial ownership of 8,000
unrestricted shares held in trust for his children under the Uniform Gifts
to Minors Act.
(4) Includes 10,000 shares of restricted stock issued pursuant to Ms. Boynton's
employment contract (see Footnote (2) to Summary Compensation Table).
Ms. Boynton elected to defer receipt of these shares pursuant to the
Polaroid Elective Deferred Compensation Plan. No actual shares have been
issued to Ms. Boynton's account under the Plan and there are no voting
rights. These shares are therefore being treated as Phantom Stock Units.
(5) As reported on the State Street Bank and Trust Company Schedule 13G, State
Street Bank and Trust Company beneficially owned 7,364,287 shares as trustee
of the Polaroid Retirement Savings Plan. State Street also held 868,465
shares in various other fiduciary capacities, with sole voting power for
822,836 shares, shared voting power for 99 shares, sole investment power for
851,273 shares and shared investment power for 17,192 shares.
(6) As reported on Mellon Financial Corporation Schedule 13G, Mellon Financial
Corporation and its subsidiaries hold such shares in various fiduciary
capacities and have sole power to vote or to direct the vote over 2,838,994
shares, shared power to vote or to direct the vote over 164,200 shares, sole
power to dispose or to direct the disposition over 3,233,863 shares and
shared power to dispose or to direct the disposition of 496,397 shares.
(7) As reported on MFS Amended Schedule 13G, MFS has sole power to vote or
direct the vote over 2,917,071 shares, no shared power to vote or to direct
the vote over any shares, sole power to dispose or to direct the disposition
over 3,045,971 shares and no shared power to dispose or to direct the
disposition of any shares.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
Committee memberships set forth below are effective as of January 14, 2000:
The EXECUTIVE COMMITTEE, which met four times in 1999, may meet between
scheduled meetings of the Board of Directors, and has the authority to exercise
all the powers of the Board except as to matters for which Board action is
specifically required by law or the Company's by-laws. Members are: Gary T.
DiCamillo (Chairman), Dr. Ralph E. Gomory, John W. Loose, Albin F. Moschner, and
Alfred M. Zeien.
The AUDIT COMMITTEE, which met four times in 1999, monitors 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. Members are: Dr. Ralph E. Gomory
(Chairman), John W. Loose, Carole F. St. Mark, and Alfred Poe.
The FINANCE COMMITTEE, which met six times in 1999, is responsible for the
issuance or purchase of equity securities and credit facilities, approval of
capital expenditures and third party guarantees in excess of $10 million, and
approval of all material contracts relating to financing matters. Members are:
Albin F. Moschner (Chairman), Stephen A. Bernazzani, Dr. Ralph E. Gomory,
Stephen P. Kaufman, and Bernee D. L. Strom.
8
<PAGE>
The HUMAN RESOURCES COMMITTEE, which met six times during 1999, recommends to
the Board of Directors the remuneration of the Company's officers and other
senior personnel, administers the Company's stock compensation plans, and
proposes the adoption of various employee benefit plans in which directors,
officers and senior personnel are eligible to participate. Members are: John W.
Loose (Chairman), Albin F. Moschner, Dr. Ralph Z. Sorenson, Bernee D. L. Strom,
and Alfred M. Zeien.
The COMMITTEE ON DIRECTORS, which met one time in 1999, recommends nominees to
the Board of Directors, determines the size and composition of the Board and the
criteria for nominees and members, and provides guidance with respect to the
Board's effectiveness. The Committee will consider director nominations made by
the Company's stockholders. Stockholder recommendations must be in writing,
addressed to the Corporate Secretary at the address set forth at the beginning
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: Alfred M. Zeien (Chairman), Stephen P. Kaufman, Carole
F. St. Mark, and Dr. Ralph Z. Sorenson.
The COMMITTEE OF OUTSIDE DIRECTORS, which met one time during 1999, considers
matters of corporate governance, including such matters suggested by any of its
own members. Members are the non-employee directors: Alfred M. Zeien (Chairman),
Dr. Ralph E. Gomory, Stephen P. Kaufman, John W. Loose, Albin F. Moschner,
Alfred Poe, Dr. Ralph Z. Sorenson, Carole F. St. Mark, and Bernee D. L. Strom.
During 1999, the average attendance of directors at meetings of the Board of
Directors was 88%. 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 Dr. Gomory, whose attendance was 70%.
FURTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS
Directors' fees are paid only to directors who are not employees of the Company.
Each such director standing for re-election is paid a retainer of $35,000 per
year, of which $15,000 is granted as unrestricted common stock. This stock grant
is based on the fair market price of common stock on May 1st of each year. Other
compensation paid to directors includes $5,000 per year for the Chairperson of
each Committee, $1,500 for each Board or Committee meeting a director attends;
and may include, from time to time, a small additional fee for consultations
with management.
Pursuant to the terms of the Polaroid Board of Directors Stock Option Plan, a
one-time grant of an option to purchase 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. In addition, a one-time grant of an option to purchase 2,000
shares of common stock was awarded to each non-employee director who was a
director on July 25, 1995.
Polaroid has had a Board of Directors Retirement Plan for each retired
non-employee director who has served for at least five years. This plan is
available to current retirees. Future accruals under this plan have now ceased.
In its place, under the Board of Directors Stock Plan, members of the Board of
Directors receive annual stock option grants on May 1st of each year valued at
$35,000 which vest one year from the grant date and are exercisable for ten
years from date of grant.
BOARD PROPOSAL--TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS
Subject to stockholder ratification, the Board of Directors has appointed KPMG
LLP as the independent auditors of the financial statements of the Company for
2000.
9
<PAGE>
KPMG LLP has performed audit and non-audit services for the Company for many
years. Representatives of KPMG 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. If the appointment of KPMG LLP is not approved by the
shareholders, or KPMG LLP ceases to act as the Company's independent
accountants, the Board will appoint other independent accountants. The
engagement of new accountants for periods following the year 2001 Annual Meeting
will be subject to ratification by the stockholders at that meeting.
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 is comprised
entirely of Board members who are independent, non-employee directors of the
Company. None of the members of the Committee receives remuneration from the
Company other than for his/her capacity as a director. The Committee is
responsible for the Company's executive compensation policies and practices
and for the actual pay structure for the executive officers of the Company. It
also makes recommendations to the Board of Directors on the compensation paid to
the CEO. The Board of Directors has final approval on the CEO's compensation
package.
COMPENSATION PHILOSOPHY
One of the essential elements of the Company's compensation policy is to align
the interests of the CEO, executive officers and key employees with the
interests of stockholders. This objective is being achieved in two ways. First,
the compensation program is designed to attract and retain outstanding
executives and to motivate these individuals to achieve superior levels of
performance and thereby maximize stockholder value. The total compensation
package is designed to provide a significant percentage of executive
compensation through variable programs such as the bonus plan and stock based
long-term incentive programs, which link executive rewards to long-term
shareholder rewards. The variable proportion of an executive's compensation
opportunity increases at each higher level of management. The Committee believes
that the current executive compensation program, which promotes rewards based on
enhancement in stockholder value, will contribute to the Company's success.
Second, stock ownership guidelines developed by the Board of Directors require
the CEO to own common stock valued at five times base pay, corporate officers at
three times base pay, and other executives at one times base pay. Over the past
year, the CEO and corporate officers continued to make progress toward meeting
these guidelines.
In designing the executive compensation program, the Committee considers the
following basic compensation components: base salary, annual bonuses and
long-term incentive opportunities. The Committee reviews the compensation
standards of a group of ten comparison companies. The companies included in the
comparison group represent a cross-section of general industry, with a focus on
consumer products companies. Two of those companies are included in the industry
index used by the Company in the Performance Graph at the end of this booklet.
The Committee uses an average of the comparison group's compensation information
to provide a basis for comparison. An independent consultant provides the
comparative data, which is based on annual sales volumes.
10
<PAGE>
COMPONENTS OF COMPENSATION
BASE SALARY. In 1999 the base salary range for each executive officer was
established by considering their position, the Company's assessment of the
importance of the position to achieving the long-term performance objectives of
the Company and the base salaries of executives in the Company's comparison
group. An actual salary was then determined based on individual performance. The
base salary for the CEO and each named executive officer remains comparable with
the average base salaries of executive officers in similarly held positions in
the Company's comparison group.
While the CEO's salary is periodically reviewed by the Board and is consistent
with the Compensation Philosophy, a significantly higher proportion of the CEO's
total compensation is based on the achievement of corporate performance
objectives designed to produce long-term growth in stockholder value.
ANNUAL BONUS AWARDS. The CEO, named executives, and other executives are
eligible for annual cash bonuses pursuant to the Polaroid Incentive Plan for
Executives. The key factor for determining whether an award will be paid under
this plan is Economic Value Added (EVA[RegTM]). EVA[RegTM] is a financial metric
that is calculated using profits of the business less a charge for the use of
the capital employed to generate those profits. The EVA[RegTM] targets and
thresholds are determined by the Board.
The bonus award pool is comprised of two basic components: a corporate
EVA[RegTM] component and a business area (region or division) EVA[RegTM]
component. For the CEO and other executives who are not assigned to a specific
business area, the bonus pool is determined based solely upon achieving a
corporate EVA[RegTM] target. In addition, an award may be increased or decreased
based upon an executive's individual performance. The bonus opportunity for each
named executive officer and the CEO was comparable with the bonus opportunity of
executive officers in similarly held positions in the Company's comparison
group. In 1999 the corporate EVA[RegTM] bonus entry targets were achieved and
special bonus awards were granted to some corporate officers.
LONG-TERM INCENTIVES. The Company's long-term incentive programs are comprised
of stock and performance awards. Pursuant to the Company's Stock Incentive Plan,
executives may receive common stock-based incentive awards as determined by the
Committee. Stock-based awards provide incentives for executives for improvements
in shareholder value. The Committee seeks to align the economic interests of
senior management with the Company's stockholders by increasing the equity
interest of its executives. The Plan provides for this through options and
performance share awards.
Most executive awards under this Plan are options. The Company issues options at
fair market value on the date of grant, and the executive receives compensation
from the grant only if the stock appreciates in value. The primary factors the
Committee considers in making option awards are: (i) the executive's level of
responsibility in the Company, (ii) industry standards and norms as reflected in
the practices of the Company's comparison group, (iii) the anticipated value of
the executive's contributions to the long-term growth of the Company, and
(iv) the size of the option pool.
A supplemental stock option grant was issued in June of 1999. The grant was not
part of the annual compensation process. This grant was awarded to some officers
and executives to recognize performance and skills critical to the Company's
future. The 1999 grants for the named executive officers under this Plan are set
forth below in the table captioned "Option/SAR Grants in 1999."
- ------------------------
EVA[RegTM] is a registered trademark of Stern Stewart & Co.
11
<PAGE>
Additionally, officers and a limited number of senior executives are eligible to
receive performance share awards. These awards are tied to the achievement of
specific financial metrics critical to the long-term success of the Company.
Performance is measured over a three-year period and is based on improvements in
revenue and Return on Net Assets (RONA). No awards are granted unless both
threshold performance targets are reached. In making these grants to the select
group of officers and senior executives, adjustments have been made to the size
of their option awards to keep their overall long-term incentives in line with
the Company's comparison group. Shares will be issued pursuant to the awards
that came due at the end of 1999 at approximately target since the performance
targets for 1999 were met.
For the named executive officers and the CEO, the value of the Company's
long-term incentives is comparable with those incentives for executives in
similarly held positions of the Company's comparison group. Other perquisites
include the Executive Life Insurance Program and the Elective Deferred
Compensation Plan.
The Committee has studied the provisions of Section 162(m) of the Code, which
limits the deductibility of executive compensation 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. The $1,000,000 limit was
exceeded for the CEO.
Submitted by the Human Resources Committee:
John W. Loose, Chairman
Albin F. Moschner
Dr. Ralph Z. Sorenson
Bernee D. L. Strom
Alfred M. Zeien
12
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid to the CEO and the four
other most highly compensated executive officers in 1999.
<TABLE>
<CAPTION>
Long-term
Annual Compensation Compensation
----------------------------------- --------------------------
Other Restricted All
Annual Stock Stock Other
Salary Bonus Compensation Awards Options/SARs Compensation
Name and Position Year ($) ($) ($)(1) ($)(2) (#)(3) ($)(4)
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
G. T. DiCamillo 1999 785,010 795,000 0 0 295,000 61,946
Chairman and Chief 1998 715,008 0 0 0 269,500 52,981
Executive Officer 1997 650,004 0 0 0 60,000 0
- --------------------------------------------------------------------------------------------------------------------------
J. G. Boynton 1999 386,543 400,000 0 0 80,000 29,698
Executive Vice President 1998 249,041 225,000 120,159 186,900 75,000 16,732
and Chief Financial Officer 1997 0 0 0 0 0 0
- --------------------------------------------------------------------------------------------------------------------------
T. M. Lemberg 1999 327,318 116,000 0 0 50,000 24,924
Senior Vice President 1998 310,002 30,000 0 0 41,500 20,820
Global Alliances 1997 287,502 75,000 0 0 60,400 0
- --------------------------------------------------------------------------------------------------------------------------
W. J. O'Neill, Jr. 1999 364,625 180,000 61,680 0 101,000 27,907
Executive Vice President 1998 347,313 0 63,373 0 49,000 23,726
Corporate Business 1997 336,258 0 64,491 0 12,000 81,654
Development
- --------------------------------------------------------------------------------------------------------------------------
B. D. Poggi 1999 270,009 215,000 118,072 0 30,000 20,388
Senior Vice President 1998 204,617 0 11,462 0 22,000 61,979
Sales and Marketing 1997 184,071 0 117,240 0 5,000 44,511
North America
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) Amounts shown in this column for all years include dividend equivalents paid
under the OCEP and the Polaroid Stock Incentive Plans to each named
executive, except for Ms. Boynton the amount in 1998 represents relocation
expenses and for Mr. Poggi the amounts in 1997 and 1999 include relocation
expenses.
(2) As of December 31, 1999, Mr. DiCamillo held 5,000 shares of unvested
restricted stock, valued at $94,050, based on the closing stock price of
$18.81 at year-end.
In 1998, Ms. Boynton's employment agreement included an award of 10,000
shares of restricted stock that vest at the rate of 2,500 shares per year as
long as she is employed by the Company. Ms. Boynton elected to defer receipt
of these shares pursuant to the Polaroid Elective Deferred Compensation
Plan. No actual shares have been awarded to Ms. Boynton's account under the
Plan and there are no voting rights in respect thereof. These shares are
therefore being treated as Phantom Stock units. Ms. Boynton's account under
the Plan will, however, be credited for the equivalent of the dividends paid
on the underlying shares.
(3) For 1999, Mr. O'Neill received an award of 101,000 units under the Phantom
Stock Plan. The award was issued to replace equivalent stock option awards
previously granted and has the same vesting and exercise prices associated
with it as the original stock option grants (see employment contract
discussion in the back of this booklet).
For 1998, includes an award of 20,000 units received by Mr. DiCamillo under
the Phantom Stock Plan, which vests at the rate of 25% over a period of four
years beginning on October 27, 1998 and expires ten years from date of
issue, assuming continued employment. The award, which is treated as the
equivalent of a stock appreciation right for purposes hereof, provides a
13
<PAGE>
cash benefit equal to the incremental increase in stock price on the date
Mr. DiCamillo elects to receive these units from the issue price of $24.69,
which produced a negative number at year end.
(4) For 1997, the amounts shown in this column include the value of shares of
common stock allocated in the Retirement Savings Plan (RSP) and the value of
units allocated to participants under the OCEP. For 1998 and 1999, the
amounts shown include the value of shares of common stock allocated in the
RSP and amounts allocated to participants under the Elective Deferred
Compensation Plan (EDCP), except for Mr. Poggi the amount includes a special
overseas allowance in 1998. The value of the shares or units was calculated
by using a year-end closing price of $18.81 per share of common stock for
1999, $18.69 per share of common stock for 1998, and $48.69 for 1997. For
1999, the amounts represent $11,946 RSP and $50,000 EDCP for Mr. DiCamillo;
$11,575 RSP and $18,123 EDCP for Ms. Boynton; $11,539 RSP and $13,385 EDCP
for Mr. Lemberg; $11,537 RSP and $16,370 EDCP for Mr. O'Neill, and $11,587
RSP and $8,801 EDCP for Mr. Poggi. For 1998, the amounts represent $8,580
RSP and $44,401 EDCP for Mr. DiCamillo; $9,609 RSP and $7,123 EDCP for
Ms. Boynton; $8,820 RSP and $12,000 EDCP for Mr. Lemberg; $8,741 RSP and
$14,985 EDCP for Mr. O'Neill; and $9,186 RSP and $3,569 EDCP for Mr. Poggi.
OPTION/SAR GRANTS IN 1999
The following table sets forth information concerning stock options and stock
appreciation right (SAR) equivalents granted in 1999 under the 1993 Polaroid
Stock Incentive Plan to the CEO and the four other most highly compensated
executive officers.
<TABLE>
<CAPTION>
Individual Grants
- ----------------------------------------------------------------------------------------------------------------
Percent of Total
Options/ Options/SARs
SARs Granted to Exercise or Market Price Grant Date
Granted Employees Base Price on Grant Date Expiration Present
Name (#)(1) in Fiscal Year ($/Sh) ($/Sh)(2) Date Value $(3)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
G. T. DiCamillo 295,000 21.2 25.875 25.875 6-29-09 3,640,300
- ----------------------------------------------------------------------------------------------------------------
J. G. Boynton 80,000 5.8 25.875 25.875 6-29-09 987,200
- ----------------------------------------------------------------------------------------------------------------
T. M. Lemberg 50,000 3.6 25.875 25.875 6-29-09 617,000
- ----------------------------------------------------------------------------------------------------------------
W. J. O'Neill, Jr. 0 0
- ----------------------------------------------------------------------------------------------------------------
B. D. Poggi 30,000 2.2 25.875 25.875 6-29-09 370,200
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) See note (3) above.
(2) All grants (i) were made at the fair market value of the stock on the date
of the grant; (ii) vest 33 1/3% per year normally 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 and death); (iv) accelerate to full vesting upon a change in
control or death, and (v) for awards issued prior to September, 1999,
accelerate to full vesting upon 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.
(3) Option valuations are based on the Black-Scholes option pricing model using
various assumptions regarding common stock price volatility, future dividend
yield and interest rates. In calculating the grant date present values for
the options with expiration dates of June 29, 2009 set forth in the table
above: (i) a factor of 44.29% has been assigned to the volatility of the
common stock, based on daily stock market quotations for the 12 months
preceding the date of
14
<PAGE>
grant; (ii) the yield on the common stock has been set at 2.32% based upon
its annual dividend rate of $.60 per share at date of grant; (iii) the
risk-free rate of return has been fixed at 5.9%, the rate for a ten-year
U.S. Treasury Note with a maturity date corresponding to that of the option
term; and (iv) the actual option term to the expiration date has been used.
The actual value that an executive may realize, if any, will depend on the
amount by which the common stock price at the time of exercise exceeds the
exercise price. There is no assurance that the value realized by an
executive will equal or approximate the value estimated by the Black-Scholes
model.
AGGREGATED OPTION EXERCISES IN 1999 AND 1999 YEAR-END OPTION VALUES
The following chart shows the number of shares obtained by stock option exercise
in 1999 and the number of shares covered by both exercisable (vested) and
unexercisable (unvested) stock options as of December 31, 1999.
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised Options In-the-money Options
Shares as of 12/31/99 as of 12/31/99 ($)(1)(2)
Acquired on Value --------------------------- ---------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
G. T. DiCamillo 0 0 356,125 498,375 0 0
- ----------------------------------------------------------------------------------------------------------------
J. G. Boynton 0 0 22,084 132,916 0 0
- ----------------------------------------------------------------------------------------------------------------
T. M. Lemberg 0 0 55,259 96,641 0 0
- ----------------------------------------------------------------------------------------------------------------
W. J. O'Neill, Jr. 0 0 62,800 0 0 0
- ----------------------------------------------------------------------------------------------------------------
B. D. Poggi 0 0 26,437 49,666 0 0
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Aggregate fair market value underlying unexercised options at the year-end
price of the common stock of $18.81, less the exercise price.
(2) As of December 31, 1999, the options set forth in this table had no value
because at that date the market value of the underlying shares was below the
option price.
15
<PAGE>
LONG-TERM INCENTIVE AWARDS
PERFORMANCE SHARES
<TABLE>
<CAPTION>
Estimated Future Payouts (Shares)
Number of Performance Period ----------------------------------
Name Shares (1) Until Payout Threshold Target Maximum
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
G. T. DiCamillo 23,000 1997 - 1999 11,500.0 23,000.0 34,500.0
28,000 1998 - 2000 14,000.0 28,000.0 42,000.0
35,000 1999 - 2001 17,500.0 35,000.0 52,500.0
46,000 2000 - 2002 23,000.0 46,000.0 69,000.0
- -----------------------------------------------------------------------------------------------
J. G. Boynton 4,000 1997 - 1999 2,000.0 4,000.0 6,000.0
4,000 1998 - 2000 2,000.0 4,000.0 6,000.0
13,000 1999 - 2001 6,500.0 13,000.0 19,500.0
10,000 2000 - 2002 5,000.0 10,000.0 15,000.0
- -----------------------------------------------------------------------------------------------
T. M. Lemberg 3,450 1997 - 1999 1,725.0 3,450.0 5,175.0
3,575 1998 - 2000 1,787.5 3,575.0 5,362.5
8,000 1999 - 2001 4,000.0 8,000.0 12,000.0
6,000 2000 - 2002 3,000.0 6,000.0 9,000.0
- -----------------------------------------------------------------------------------------------
W. J. O'Neill, Jr. 4,050 1997 - 1999 2,025.0 4,050.0 6,075.0
4,175 1998 - 2000 2,087.5 4,175.0 6,262.5
8,000 1999 - 2001 4,000.0 8,000.0 12,000.0
0 2000 - 2002 0 0 0
- -----------------------------------------------------------------------------------------------
B. D. Poggi 2,500 1997 - 1999 1,250.0 2,500.0 3,750.0
3,000 1998 - 2000 1,500.0 3,000.0 4,500.0
5,000 1999 - 2001 2,500.0 5,000.0 7,500.0
7,000 2000 - 2002 3,500.0 7,000.0 10,500.0
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) Number of shares underlying the grant, assuming target is achieved. These
awards are tied to the achievement of specific financial metrics critical to
the long-term success of the Company. Performance is based on improvements
in revenue growth and Return on Net Assets (RONA). No awards are granted
unless both threshold performance targets are reached. In making these
grants to the select group of officers and senior executives, adjustments
have been made to the size of their option awards to keep their overall
long-term incentives in line with the Company's comparison group.
PENSION PLAN
The Polaroid Pension Plan is a defined benefit plan qualified under the rules of
the Internal Revenue Code of 1986, as amended, ("Code"), which provides a
pension benefit to all eligible employees, including officers. The Plan has a
five-year vesting provision. To the extent that any participant's benefit
exceeds limitations imposed by the Code, the excess benefits are paid out of
unfunded supplementary plans.
Effective January 1, 1998 the Polaroid Pension Plan was amended to include a
cash balance feature for its eligible employees. Under the cash balance feature,
pension benefits for eligible employees are determined by multiplying the
employee's eligible wages for the period by an annual earning rate of 4.5% for
the first seven years of employment; 6% for the next eight years of employment;
and 8% for all remaining years of employment. This benefit is credited quarterly
by the Company and interest is also provided to the accrued benefit. At the
participant's election, the accumulated, vested account balance is payable in
one lump sum or in a series of annuity payments. The opening account balance
under the cash balance feature was determined by multiplying the participant's
1997 Compensation (as defined below) by the participant's applicable annual
earning rate for each year of the participant's years of credited benefit
accrual.
16
<PAGE>
The cash balance formula is the primary manner for calculating the pension
benefit. However, there is a ten-year transition benefit based upon the final
average pay formula. A participant is eligible to receive this transition
benefit if he or she was an active employee on January 1, 1998 with (i) an age
of at least 45 and fifteen years of service, or (ii) an age of at least 55 with
at least five years of service and a combined age and service factor of at least
65.
An estimated annual retirement benefit, payable at age 65, using the cash
balance formula and based on projected current compensation and continued
employment for the named executives, is as follows: for Mr. DiCamillo $415,000;
for Ms. Boynton $382,000; for Mr. Lemberg $56,000; and for Mr. Poggi $215,000.
Mr. O'Neill was eligible for the transition benefit, and his pension was
calculated using the final average compensation formula. Final average
compensation is a participant's average annual compensation for the five
consecutive highest compensation years in the participant's last ten years of
employment. Based on that value and a social security offset, a formula produces
an annual crediting amount, which is multiplied by the participant's years of
pension service to determine their annual benefit. Upon his retirement,
Mr. O'Neill's age 65 annual benefit was $184,414, which he elected to receive in
a single lump sum payment.
Under the terms of his employment agreement, Mr. DiCamillo is entitled to the
greater of the benefit calculated under the final average pay formula (referred
to as the transitional pension benefit) or the cash balance benefit as
determined pursuant to the Company's pension plan. For purposes of both
formulas, Mr. DiCamillo is credited with two years of benefit service for each
of his first ten years of service. The transitional pension benefit is frozen at
December 31, 2007 levels, at which time Mr. DiCamillo will have 22 years of
credited service. Although the formula that produces the greater benefit for
Mr. DiCamillo will depend on his pay increases, bonus history and retirement
age, the projected age 65 benefit shown above based on current pay levels is
greatest under the cash balance formula.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934--FORM 3 AND
4 REPORTING OBLIGATION
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, named 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. Mr. Carl L. Lueders, Vice President and Controller,
inadvertently filed his Form 4 after the November 10, 1999 deadline. The Company
believes that during 1999 all other 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 upon certain events effectively
constituting a change in control of the Company. Such events (the date on which
any such event occurs is referred to as a "Trigger Date" in this plan and
"Change in Control" in the employment agreements referenced in the section
below) include: (i) a change in control within the meaning of certain federal
securities laws; (ii) a specified change in composition of the Company's Board
of Directors within two years following the acquisition by a person or group
(other than a subsidiary of the Company or an employee benefit plan of the
Company or any of its subsidiaries) of 20% or more of the outstanding common
stock; (iii) following such an acquisition of 20% or more of the outstanding
common stock, a merger or consolidation involving the Company or a disposition
by the Company and its subsidiaries of a major part of the assets of the Company
and its subsidiaries; (iv) the acquisition by a person or
17
<PAGE>
group (other than a subsidiary of the Company or an employee benefit plan of the
Company or any of its subsidiaries) of 30% or more of the outstanding common
stock; (v) the date stockholders approve either the liquidation of the Company
or the disposition of substantially all its assets; or (vi) the date
stockholders approve any merger or consolidation other than one in which at
least 50% of the voting securities of the Company immediately prior thereto
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 that adversely
affect the participant. This severance payment will be the greater of (i) twice
the highest amount provided under any Company layoff or severance plan;
(ii) one-twelfth of one month's Compensation (as defined) 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.
EMPLOYMENT AGREEMENTS
The Company recently entered into a new three-year contract with Mr. DiCamillo,
Chief Executive Officer, beginning January 1, 2000. In addition to the normal
benefits provided to any executive and the stock-based awards and pension
benefits previously described, Mr. DiCamillo's contract provides: (i) if
Mr. DiCamillo's employment is terminated without "Cause" or has a "Constructive
Termination" (as each such terms are defined), he will receive a severance
package for a three-year period, equal to base pay, annual bonus based on actual
Company performance, and other incremental benefits, and (ii) if there is a
Change in Control and Mr. DiCamillo's employment terminates for any reason
within eighteen months, a severance payment equal to three times the sum of his
base salary and annual target bonus plus (a) payment of a pro-rata bonus for the
year in which the termination of Mr. DiCamillo's employment occurs; (b) a
gross-up in the event any payments are subject to the excise tax imposed by
Section 4999 of the Code; and (c) other incremental benefits. For purposes of
this contract, Change in Control has the same meaning as set forth above with
one additional trigger. This new provision provides that the Change in Control
is triggered the day that the Incumbent Board ceases for any reason to
constitute at least a majority of the Board. Incumbent Board members are those
members on the Board as of the effective date of this Agreement or who received
at least 75% approval of such other Incumbent Board members.
The Company has a contract with Ms. Boynton, Executive Vice President and Chief
Financial Officer. In addition to the normal benefits provided to any executive
at Ms. Boynton's level, her contract provides: (i) at sign-up, a bonus of
$100,000; 15,000 stock options and 10,000 shares of restricted stock, both with
four-year ratable vesting; (ii) a guaranteed 1998 bonus of $125,000;
(iii) pension enhancements which include an opening account balance of $350,000,
three years of credited benefit accrual for each year of credited benefit
accrual earned under the Plan for a period of up to seven years, and full
vesting in these and the pension plan benefits upon the completion of three
years of service; (iv) a severance benefit equal to two years base pay upon the
execution of a full and complete release if she is terminated by the Company for
any reason within the first twenty-four months of employment, other than serious
or willful misconduct or if she voluntarily terminates her employment following
a reassignment to a position of significantly lesser responsibility or
relocation outside of the Boston metropolitan area without her consent; and
(v) the Change in Control protection described below.
18
<PAGE>
The Company has a contract with Mr. Lemberg, Senior Vice President, Global
Alliances. Provisions of this contract which are currently applicable include:
(i) an enhancement to the benefit provided by the Polaroid Pension Plan equal to
one additional year of credited benefit accrual for every four years of credited
benefit accrual earned under the Plan with full vesting in the Plan upon the
completion of four years of credited vested service; and (ii) the Change in
Control protection as described below.
On October 29, 1999, the Company entered into a contract with Mr. O'Neill,
Executive Vice President, Corporate Business Development, which provides that
upon his retirement, in addition to the normal retirement benefits provided to
executives, Mr. O'Neill shall receive: (i) a payment equal to
twenty-four months base pay paid in a stream of payments; (ii) an unreduced
normal retirement age pension benefit; (iii) full vesting of all options granted
in 1990, 1991, 1992 and after January 30, 1998 with a maximum of two years from
termination date to exercise such options; (iv) a Phantom Stock Award of 101,000
units; (v) a pro-rata distribution of common stock from previously granted
performance awards based upon actual performance; plus (vi) miscellaneous
outplacement, financial planning and life insurance benefits.
In addition to the named executives referenced above, the Company has also
entered into a Change in Control Severance Agreement (the "Agreement") with
Mr. Poggi (the "Executive"). Under the terms of the Agreement, the severance
protections contained therein apply only if: (i) there is a Change in Control
(as referenced in previous section); and (ii) an Executive is terminated without
Cause or has a Constructive Termination (as each such term is defined) within
two years following the Change in Control. The severance amount is equal to the
greater of: (i) the amount that is provided for under the Extended Severance
Plan; or (ii) two times the sum of their respective base salaries and annual
target bonuses. The Agreements also provide for: (i) payment of a pro-rata bonus
(based on the annual target bonus) for the year in which the termination of an
Executive's employment occurs; (ii) a gross-up in the event any payments to the
Executives are subject to the excise tax imposed by Section 4999 of the Code;
and (iii) continuation of benefits (including additional pension benefit
accruals) for the greater of twenty-four months or the protected period under
the Extended Severance Plan.
19
<PAGE>
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total stockholder 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 1999: Applied Materials Inc., Beckman
Coulter Inc., Eastman Kodak Co., KLA-Tencor Corp., Minnesota, Mining &
Manufacturing Co., PE Corp. Biosystems, PerkinElmer Inc., Polaroid Corp.,
Tektronix Inc., Teradyne Inc. and Varian Medical Systems Inc.).
COMPARISON OF FIVE-YEAR
CUMULATIVE TOTAL STOCKHOLDER RETURN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
POLAROID CORP. S&P 500-REGTM- FORTUNE 500 INDUSTRY GROUP
<S> <C> <C> <C>
Dec-94 $100 $100 $100
Dec-95 $148 $138 $139
Dec-96 $138 $169 $169
Dec-97 $156 $226 $172
Dec-98 $61 $290 $185
Dec-99 $63 $351 $329
</TABLE>
20
<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 facsimile. 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 common 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 2001 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, 2000. In addition, under
the Company's by-laws, if a stockholder wishes to present a proposal at the 2001
Annual Meeting outside the proxy inclusion process, such proposal must be
received by the Company on or before February 16, 2001. After that date, the
proposal will be considered untimely and the person named in the enclosed proxy
will have discretionary voting authority with respect to such matter.
The Board of Directors does not know of any other business to be presented to
the 2000 Annual Meeting of Stockholders. If any other matters are presented to
the meeting, the persons named in the enclosed proxy have discretionary
authority to vote and will vote all proxies with respect to such matters in
accordance with their judgment.
By order of the Board of Directors,
/s/ Neal D. Goldman
Neal D. Goldman
Vice President, General Counsel and Secretary
April 12, 2000
21
<PAGE>
AMERICAN ACADEMY OF ARTS AND SCIENCES
DRIVEWAY ENTRANCE: 200 BEACON STREET, SOMERVILLE
Parking is not available on the Academy grounds; however, for the Annual Meeting
the Academy has arranged to have the "Parking Permit Only" restrictions waived
on Scott, Bryant and Irving Streets surrounding the House. In addition, the "Two
Hour Limit" restriction on Beacon Street (200 block), Somerville will also be
waived for the Annual Meeting. The map shown below details the surrounding area
and provides directions to the Academy from four well-known locations: Harvard,
Porter, Inman and Kendall Squares.
[Map Graphic]
From HARVARD SQUARE: Take Massachusetts Avenue (north) from Harvard Square.
After passing the Harvard Yard, bear right down through the underpass. Stay to
the left, following signs for Kirkland Street. Turn left at the lights onto
Quincy Street. Continue to the next set of lights and turn right onto Kirkland
Street. Follow Kirkland four blocks. Turn left onto Irving Street. Bear right at
the next intersection onto Scott Street. At the next corner is the pedestrian
entrance to the Academy. Enter the Academy grounds by the gate; follow the
pathway to the main entrance.
From PORTER SQUARE: Take Somerville Avenue (southeast) 1/4 mile to the blinking
traffic light. Turn right over the bridge onto Beacon Street. Follow Beacon
about 1/2 mile. Pass by the vehicle entrance to the Academy and continue to the
second set of lights. Turn right on Kirkland Street. Take the first right onto
Holden Street. Go two short blocks to the corner of Bryant and Scott Streets.
Park and enter the Academy grounds by the gate; follow the pathway to the main
entrance.
From KENDALL and INMAN SQUARES: From just north of Kendall Square, take
Hampshire Street (northwest) about 1 mile to Inman Square. Continue straight
through Inman Square onto Beacon Street. Go 1/2 mile to the lights at the first
major intersection. Turn left onto Kirkland Street. Take the first right onto
Holden Street. Go two short blocks to the corner of Bryant and Scott Streets.
Park and enter the Academy grounds by the gate; follow the pathway to the main
entrance.
22
<PAGE>
DETACH HERE
POLAROID CORPORATION
EMPLOYEE BENEFIT PLAN
VOTING INSTRUCTIONS
To Plan Participants:
As a participant and a "named fiduciary" in the Polaroid benefit plan under
which Polaroid common stock is held in trust, the Polaroid Retirement Savings
Plan, you may instruct the Plan Trustee or Trustees to vote the stock
allocated to your accounts in such Plan ("benefit stock") at the Company's
2000 Annual Meeting of Stockholders as you direct. For additional information
on voting procedures, please refer to the booklet which accompanies this
Voting instructions card.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
ON THE REVERSE SIDE OR VOTING ELECTRONICALLY VIA TELEPHONE OR THE INTERNET
(SEE DETAILED INSTRUCTIONS ON REVERSE SIDE). IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS, YOU MAY DO SO BY
VOTING ELECTRONICALLY VIA THE TELEPHONE OR THE INTERNET, OR BY SIGNING,
DATING AND RETURNING THIS VOTING INSTRUCTIONS CARD, WITHOUT THE NECESSITY OF
MARKING ANY BOXES. IF VOTING INSTRUCTIONS HAVE NOT BEEN RECEIVED, BENEFIT
STOCK WILL BE VOTED IN THE SAME PROPORTION AS BENEFIT STOCK OF OTHER
PARTICIPANTS IN THE PLAN FROM WHOM INSTRUCTIONS ARE RECEIVED. UNALLOCATED
ESOP SHARES WILL BE VOTED IN THE SAME PROPORTION AS THE VOTING OF BENEFIT
STOCK ALLOCATED TO ESOP PARTICIPANTS ACCOUNTS.
Election of Directors, Nominees:
(01) Gary T. DiCamillo, (02) Stephen A. Bernazzani, (03) Dr. Ralph E. Gomory,
(04) Stephen P. Kaufman, (05) John W. Loose, (06) Albin F. Moschner,
(07) Alfred Poe, (08) Dr. Ralph Z. Sorenson, (09) Carole F. St. Mark,
(10) Bernee D.L. Strom, (11) Alfred M. Zelen
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
<PAGE>
POLAROID CORPORATION
784 MEMORIAL DRIVE
CAMBRIDGE, MA 02139
VOTE BY TELEPHONE
It's fast, convenient, and immediate!
Call Toll-Free on a Touch-Tone Phone
1-877-PRX-VOTE (1-877-779-8683).
Follow these four easy steps:
1. Read the accompanying Proxy Statement and Proxy Card.
2. Call the toll-free number 1-877-PRX-VOTE (1-877-779-8683).
3. Enter your 14-digit Voter Control Number located on your Proxy Card
above your name.
4. Follow the recorded instructions.
YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime!
VOTE BY INTERNET
It's fast, convenient, and your vote is immediately confirmed and
posted.
Follow these four easy steps:
1. Read the accompanying Proxy Statement and Proxy Card.
2. Go to the Website http://www.eproxyvote.com/prd
3. Enter your 14-digit Voter Control Number located on your Proxy Card
above your name.
4. Follow the instructions provided.
YOUR VOTE IS IMPORTANT!
Go to http://www.eproxyvote.com/prd anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR
INTERNET
DETACH HERE
/X/ Please mark votes as in this example.
These instructions when properly executed will direct the voting of your
benefit stock in the manner you indicate, subject to the responsibilities of
the Plan Trustee or Trustees. If no direction is made, benefit stock will be
voted FOR election of directors and FOR Item 2.
The Board of Directors recommends a vote FOR Items 1 and 2.
1. Election of Directors. (see reverse)
FOR ALL NOMINEES / /
/ / WITHHELD FROM ALL NOMINEES
For, except vote withheld from the following nominee(s):
--------------------------------------------------------
2. Board Proposal to ratify the appointment of independent public
accountants.
FOR AGAINST ABSTAIN
/ / / / / /
3. In the discretion of the proxies appointed by the Plan Trustee or Trustees
upon other matters as may properly come before the meeting.
If the corporation offers the capability to access the annual report and
proxy statement electronically for the 2001 Annual Meeting, please check the
box at right if you would like to receive only a proxy card with instructions
detailing how to access this material electronically next year.
/ /
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
The signer revokes any voting instructions prior to this time.
NOTE: Please sign name exactly as it appears on this card.
Signature: Date:
----------------------------------- -------------------
Signature: Date:
----------------------------------- -------------------
<PAGE>
DETACH HERE
PROXY
POLAROID CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY FOR ANNUAL MEETING, MAY 16, 2000
The undersigned hereby appoints Neal D. Goldman and Judith G.
Boynton, individually, with the power of substitution, proxies to represent
the undersigned at the Annual Meeting of Stockholders of POLAROID CORPORATION
to be held at the American Academy of Arts and Sciences, Cambridge,
Massachusetts (entrance located at 200 Beacon Street, Somerville,
Massachusetts), on Tuesday, May 16, 2000 at 3:00 p.m. on all matters
coming before the meeting or any adjournment of the meeting.
Stockholders are encouraged to specify their choices by marking the
appropriate boxes on the reverse side, or voting electronically via telephone
or the Internet (see detailed instructions on reverse side). To vote
in accordance with the Board of Directors' recommendations it is not necessary
to mark any boxes. Shares cannot be voted unless we receive your voting
instructions, either electronically via the telephone or the Internet, or by
signing and returning this card.
Election of Directors, Nominees:
(01) Gary T. DiCamillo, (02) Stephen A. Bernazzani, (03) Dr. Ralph E. Gomory,
(04) Stephen P. Kaufman, (05) John W. Loose, (06) Albin F. Moschner,
(07) Alfred Poe, (08) Dr. Ralph Z. Sorenson, (09) Carole F. St. Mark,
(10) Bernee D.L. Strom, (11) Alfred M. Zelen
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
<PAGE>
POLAROID CORPORATION
784 MEMORIAL DRIVE
CAMBRIDGE, MA 02139
VOTE BY TELEPHONE
It's fast, convenient, and immediate!
Call Toll-Free on a Touch-Tone Phone
1-877-PRX-VOTE (1-877-779-8683).
Follow these four easy steps:
1. Read the accompanying Proxy Statement and Proxy Card.
2. Call the toll-free number 1-877-PRX-VOTE (1-877-779-8683).
3. Enter your 14-digit Voter Control Number located on your Proxy Card
above your name.
4. Follow the recorded instructions.
YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime!
VOTE BY INTERNET
It's fast, convenient, and your vote is immediately confirmed and
posted.
Follow these four easy steps:
1. Read the accompanying Proxy Statement and Proxy Card.
2. Go to the Website http://www.eproxyvote.com/prd
3. Enter your 14-digit Voter Control Number located on your Proxy Card
above your name.
4. Follow the instructions provided.
YOUR VOTE IS IMPORTANT!
Go to http://www.eproxyvote.com/prd anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR
INTERNET
DETACH HERE
/X/ Please mark votes as in this example.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR election of
directors and FOR Item 2.
The Board of Directors recommends a vote FOR Items 1 and 2.
1. Election of Directors. (see reverse)
FOR ALL NOMINEES / /
/ / WITHHELD FROM ALL NOMINEES
For, except vote withheld from the following nominee(s):
--------------------------------------------------------
2. Board Proposal to ratify the appointment of independent public
accountants.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, upon other matters as may properly come before the
meeting.
If the corporation offers the capability to access the annual report and
proxy statement electronically for the 2001 Annual Meeting, please check the
box at right if you would like to receive only a proxy card with instructions
detailing how to access this material electronically next year.
/ /
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
The signer revokes the appointment of any other agent or proxy prior to this
time.
NOTE: Please sign name exactly as it appears on this card. Joint owners
should each sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such.
Signature: Date:
----------------------------------- -------------------
Signature: Date:
----------------------------------- -------------------
