<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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
_________________________
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FIRST BRANDS CORPORATION
_________________________
(NAME OF PERSON(S) FILING PROXY STATEMENT)
_________________________
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $125 FEE PAID WITH FILING OF PRELIMINARY MATERIAL
[ ] $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 transaction applies:
____________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11.1
____________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
____________________________________________________________________________
__________
1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
_________________________
[ ] 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>
[Logo]
FIRST BRANDS CORPORATION
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS TO BE
HELD ON OCTOBER 28, 1994
AND PROXY STATEMENT
<PAGE>
[Logo]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
FIRST BRANDS CORPORATION
DANBURY, CONNECTICUT
September 27, 1994
To the Stockholders of
FIRST BRANDS CORPORATION:
The Annual Meeting of Stockholders of First Brands Corporation will be held
at the Danbury Hilton Hotel, 18 Old Ridgebury Road, Danbury, Connecticut on
Friday, October 28, 1994, commencing at 10:00 a.m., at which meeting only
holders of the common stock of record at the close of business on September 2,
1994, and those holding proxies from such stockholders will be entitled to vote,
for the following purposes:
1. To elect four directors;
2. To ratify the appointment of KPMG Peat Marwick as the Company's
independent auditors for the Company's 1995 fiscal year;
3. To transact such other business, if any, as may be properly brought
before the meeting.
We hope that you will be able to attend our annual meeting in person. If
you plan to do so, please return the enclosed ticket request. We will send your
ticket to you promptly. Please bring your ticket with you.
FIRST BRANDS CORPORATION
Dan Raymond
By: ..................................
Dan Raymond
Vice President and Secretary
EVEN THOUGH YOU MAY PLAN TO ATTEND THE MEETING IN PERSON, PLEASE MARK, DATE
AND EXECUTE THE ENCLOSED PROXY AND MAIL IT PROMPTLY. SHOULD YOU ATTEND THE
MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON IF YOU DESIRE. A RETURN
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES IS ENCLOSED
FOR YOUR CONVENIENCE.
<PAGE>
FIRST BRANDS CORPORATION
83 WOOSTER HEIGHTS ROAD
DANBURY, CONNECTICUT 06813-1911
------------------------
PROXY STATEMENT
------------------------
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD OCTOBER 28, 1994
This proxy statement is furnished to the stockholders of First Brands
Corporation ('First Brands' or the 'Company') in connection with the
solicitation of proxies for use at the Annual Meeting of Stockholders to be held
October 28, 1994, and at all adjournments thereof, for the purposes set forth in
the accompanying Notice of Annual Meeting of Stockholders. This proxy statement
and the enclosed form of proxy are first being mailed on or about September 27,
1994 to stockholders of record on September 2, 1994.
Whether or not you expect to be personally present at the meeting, you are
requested to fill in, sign, date and return the enclosed form of proxy. Any
person giving such proxy has the right to revoke it at any time before it is
voted by giving notice to the Secretary of the Company. All shares represented
by duly executed proxies in the accompanying form will be voted unless proxies
are revoked prior to the voting thereof.
The close of business on September 2, 1994, has been fixed as the record
date for the determination of stockholders entitled to vote at the Annual
Meeting of Stockholders. As of the record date, there were outstanding and
entitled to be voted at such meeting 22,015,907 shares of common stock. The
holders of the common stock will be entitled to one vote on each matter
submitted to stockholders for each share of common stock held of record on the
record date.
The Company's Annual Report for the fiscal year ended June 30, 1994
accompanies this Proxy Statement. The solicitation of this proxy is made by the
Board of Directors of the Company. The solicitation will be by mail and the
expense thereof will be paid by the Company. The Company has retained Morrow &
Co. Inc. to assist in the solicitation of proxies at an estimated cost of
$9,000. In addition, solicitation of proxies may be made by telephone or
telegram by directors, officers or regular employees of the Company.
A majority of the outstanding shares entitled to vote must be present in
person or represented by proxy at the Annual Meeting of Stockholders to
constitute a quorum. The shares represented by a proxy which is timely returned
and marked 'Abstain' as to any matter as well as broker non-votes will be
considered present at the Annual Meeting of Stockholders and will be included in
the calculation of those shares needed to constitute a quorum. The shares
represented by such proxies, although considered present for quorum purposes,
will not be considered present and entitled to vote with respect to any proposal
which is abstained from or to which the broker non-vote relates.
Directors of the Company are elected by a plurality of the votes cast at
the Annual Meeting of Stockholders if a quorum is present at such meeting. The
ratification of the appointment of independent auditors requires the approval of
a majority of the votes cast at the Annual Meeting of Stockholders, assuming
that a quorum is present.
I. ELECTION OF DIRECTORS
The Board of Directors is divided into three classes of membership, with
terms expiring on different Annual Meeting dates. Three or four of the members
of the Board of Directors are elected each year to serve as directors for a term
of three years or such lesser term as consistent with the class. Directors are
elected for the terms specified and continue in office until their respective
successors have been elected and have qualified.
The following change has occurred in the Board of Directors since the last
Annual Meeting of Stockholders. Gary E. Gardner has become a Director of the
Company effective January 21, 1994.
<PAGE>
The Board of Directors at its meeting held May 24, 1994, selected the
following four nominees for election at the Annual Meeting of Stockholders each
for three-year terms expiring on the date of the Annual Meeting of Stockholders
in 1997 and until their successors are elected and qualified: James R. Maher,
Dwight C. Minton, William V. Stephenson and Robert G. Tobin. Certain information
with respect to the nominees for election as director is set forth below.
Should any one or more of the nominees be unable or unwilling to serve
(which is not expected) the proxies (except proxies marked to the contrary) may
be voted for such other person or persons as the Board of Directors of the
Company may recommend.
<TABLE>
<CAPTION>
SHARES OF
FIRST BRANDS
COMMON STOCK
NAME, AGE, PRINCIPAL OCCUPATION OR POSITION, SERVED AS BENEFICIALLY
OTHER DIRECTORSHIPS AND COMMITTEES OF THE BOARD DIRECTOR SINCE OWNED(1)(2)
- - ------------------------------------------------------------------------------ -------------- ------------
<S> <C> <C>
TO BE ELECTED FOR TERMS ENDING IN 1997
JAMES R. MAHER, 44 ........................................................... 1988 2,135
President & CEO
National Health Laboratories (Health Services)
Committee: *Compensation
DWIGHT C. MINTON, 59 ......................................................... 1991 3,000
Chairman and CEO
Church & Dwight Co., Inc. (Consumer and Specialty Products)
Director, Chemical Bank of New Jersey, Crane Co. and
Medusa Corporation
Committees: Audit and Pension
WILLIAM V. STEPHENSON, 53 .................................................... 1992 122,400
President and CEO
First Brands Corporation
Committee: Executive
ROBERT G. TOBIN, 56 .......................................................... 1991 3,000
President and CEO
The Stop & Shop Companies, Inc. (Retail Food)
Committee: *Pension
TO CONTINUE IN OFFICE UNTIL 1996
ALFRED E. DUDLEY, 66 ......................................................... 1986 211,000
Chairman
First Brands Corporation
Director, Hampshire Chemical Corporation
Committee: *Executive
ALAN C. EGLER, 66 ............................................................ 1986 84,000
Former Vice Chairman
First Brands Corporation
Committees: Executive and Audit
JAMES R. MCMANUS, 60 ......................................................... 1986 13,427
Chairman, CEO and Founder
Marketing Corporation of America (Marketing Services)
Director, Au Bon Pain Co. Inc. and Neutrogena Corporation
Committee: Compensation
</TABLE>
(table continued on next page)
2
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
SHARES OF
FIRST BRANDS
COMMON STOCK
NAME, AGE, PRINCIPAL OCCUPATION OR POSITION, SERVED AS BENEFICIALLY
OTHER DIRECTORSHIPS AND COMMITTEES OF THE BOARD DIRECTOR SINCE OWNED(1)(2)
- - ------------------------------------------------------------------------------ -------------- ------------
<S> <C> <C>
TO CONTINUE IN OFFICE UNTIL 1995
GARY E. GARDNER, 40 .......................................................... 1994
President
Soft Sheen Products Inc.
Director, Amethyst Investment Group Inc. and
William Wrigley Jr. Company
Committee: Pension
DENIS NEWMAN, 64 ............................................................. 1986 49,442
Managing Director
MidMark Management, Inc. (Financial Services)
Director, GMIS, Inc.
Committees: *Audit and Executive
ERVIN R. SHAMES, 54 .......................................................... 1987 7,082
President and CEO
Borden, Inc. (Consumer and Specialty Products)
Committee: Compensation
</TABLE>
- - ------------
* Chairman
(1) Beneficial ownership of First Brands common stock is stated as of September
2, 1994. Under rules of the Securities and Exchange Commission, persons who
have power to vote or dispose of securities, either alone or jointly with
others, are deemed to be the beneficial owners of such securities.
Accordingly, shares owned separately by spouses are not included. Each
nominee and continuing director has both sole voting power and sole
investment power with respect to the shares set forth in the table, except
as described in the footnotes below.
(2) No nominee or continuing director is the beneficial owner of more than 0.96%
of the outstanding shares of First Brands common stock.
----------------------------------------------------------
Each of the nominees and directors has had the same position or other
executive positions with the same employer during the past five years, except as
follows:
Alfred E. Dudley relinquished on September 1, 1994 the title of Chief
Executive Officer to Mr. W. V. Stephenson. He has been Chairman of the Company
since 1986.
Alan C. Egler was Vice Chairman and consultant to the Company from 1986
through 1991.
Gary E. Gardner has been President of Soft Sheen Products since March,
1983. He was elected Director of First Brands Corporation on January 21, 1994.
James R. Maher has been President and CEO of National Health Laboratories
(health services) since December 1992. Mr. Maher was Vice Chairman of The First
Boston Corporation (financial services) from September, 1990 through June 30,
1992. He was a Managing Director of The First Boston Corporation from January,
1983 to September, 1990.
Denis Newman has been a Managing Director of MidMark Management, Inc.
(financial services) since December, 1989. From April, 1988 until December,
1989, Mr. Newman was President and a director of The Dunmore Group, Inc.,
(merchant banking).
Ervin R. Shames has been President and Chief Executive Officer of Borden,
Inc. (consumer and specialty products) since December, 1993. He was President
and Chief Operating Officer from June, 1993 to December, 1993. Mr. Shames was
Chairman of The Stride Rite Corporation (footwear) from June, 1992 to June, 1993
and President and Chief Executive Officer of The Stride Rite Corporation from
June, 1990 to June, 1993. From November, 1989 to June, 1990, he was Chairman,
President and
3
<PAGE>
Chief Executive Officer of the Kendall Company (health care). From March, 1989
to August, 1989, Mr. Shames was President of Kraft USA (food products).
William V. Stephenson has been President and Chief Executive Officer of the
Company since September 1, 1994. He was President and Chief Operating Officer
from August 11, 1992 to August 31, 1994. From October, 1991 to August, 1992 he
was Executive Vice President of the Company and President of the Home Products
Division. From January, 1990 through September, 1991 Mr. Stephenson was Senior
Vice President/General Manager, Home Products Division. From March, 1987 through
December, 1989, Mr. Stephenson was Vice President and Director of Sales, Home
Products Division.
Robert G. Tobin has been President and Chief Executive Officer of The Stop
& Shop Companies, Inc. (retail food) and The Stop & Shop Supermarket Company
(retail food) since May, 1994. He has been President and Chief Operating Officer
of The Stop & Shop Companies, Inc. and The Stop & Shop Supermarket Company a
wholly owned subsidiary, since March 1993 and November, 1989, respectively. From
September, 1985 to November, 1989, Mr. Tobin was Executive Vice-President and
Chief Operating Officer of the latter company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the
beneficial ownership of common stock by each stockholder who is known by the
Company to own beneficially in excess of 5% of the outstanding common stock as
of September 2, 1994.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- - ---------------------------------------------------------- -------------------- ----------------
<S> <C> <C>
Ariel Capital Management, Inc. 2,574,975(a) 11.70%
307 North Michigan Ave.
Chicago, IL 60601.......................................
Harris Associates 1,825,533(b) 8.29%
2 North LaSalle Street
Chicago, IL 60602.......................................
Pioneering Management Corporation 1,171,000(b) 5.32%
60 State Street
Boston, MA 02109........................................
</TABLE>
- - ------------
(a) Information concerning beneficial ownership by Ariel Capital Management,
Inc. is based on a report on Form 13F filed with the SEC as of June 30,
1994. To the Company's knowledge Ariel Capital Management, Inc. has not
filed a Schedule 13D or Schedule 13G with respect to any change in
ownership of Company's common stock.
(b) Information concerning ownership by Harris & Associates and Pioneering
Management Corporation is based on reports on Form 13F filed with the SEC
as of June 30, 1994. To the Company's knowledge Harris & Associates and
Pioneering Management Corporation have not filed a Schedule 13D or Schedule
13G with respect to their ownership of the Company's common stock.
The following table sets forth certain information concerning the
beneficial ownership of common stock by the Chief Executive Officer, the four
other most highly compensated executive officers of the Company, and all
Directors and Executive Officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(c) PERCENT OF CLASS
- - --------------------------------------------------------- ----------------------- ----------------
<S> <C> <C>
Alfred E. Dudley......................................... 211,000 .96%
William V. Stephenson.................................... 122,400 .56%
Thomas H. Rowland........................................ 26,500 .12%
Donald A. DeSantis....................................... 69,782 .32%
J. Bruce Ipe............................................. 67,600 .31%
All Directors and Executive Officers
as a group............................................. 892,403 4.05%
</TABLE>
(footnotes continued on next page)
4
<PAGE>
(footnotes continued from previous page)
(c) Includes 57,000, 34,000, 26,000, 34,000, 22,000 and 263,125 shares which
respectively Alfred E. Dudley, William V. Stephenson, Thomas H. Rowland,
Donald A. DeSantis, J. Bruce Ipe and all Directors and Executive Officers as
a group, have a right to acquire within 60 days of September 2, 1994 upon
the exercise of stock options. The shares issuable upon exercise of options
included herein were deemed to be outstanding for purposes of calculating
the percentage of shares.
BOARD OF DIRECTORS AND COMMITTEES
There were six regular meetings of the Board of Directors during fiscal
1994. All of the incumbent directors attended at least 75% of the meetings of
the Board and committees on which they served. Directors who are employees of
the Company do not receive any compensation for service as directors. Each other
director is currently paid an annual retainer of $20,000 and fees of $1,000 for
attendance at each Board or committee meeting not held in conjunction with a
Board meeting. Board members are paid $500 for attendance at each telephonic
meeting or committee meeting held in conjunction with a Board meeting. Pursuant
to a resolution adopted on September 6, 1991, these Directors are reimbursed for
reasonable expenses involved in attending Board and Committee Meetings of the
Company.
The members of the Board of Directors are elected to various committees.
The standing committees of the Board are: Audit Committee, Compensation
Committee, Executive Committee and Pension Committee. The Company does not have
a nominating committee.
The functions of the Audit Committee are to recommend the firm of
independent auditors to perform the annual audit; review and approve the scope
of the independent and internal auditors' work; review the effectiveness of the
Company's internal controls; review and approve the fees of the independent
auditors and related matters. The Audit Committee met once in fiscal 1994. The
members of the Audit Committee are Denis Newman, Chairman; Alan C. Egler and
Dwight C. Minton.
The functions of the Compensation Committee are to review and approve the
salaries of senior officers and managers of the Company; approve the amount
authorized for the Annual Incentive Plan; approve awards under and administer
the Company's Long-Term Incentive Plan; and review additional compensation
arrangements. The Compensation Committee met three times in fiscal 1994. The
members of the Compensation Committee are James R. Maher, Chairman; James R.
McManus and Ervin R. Shames.
The function of the Executive Committee is to act for the Board between
regular meetings to the extent permitted by Delaware Corporation Law on matters
that need timely attention. The Executive Committee met twice in fiscal 1994.
The members of the Executive Committee are Alfred E. Dudley, Chairman; Alan C.
Egler, Denis Newman and William V. Stephenson.
The functions of the Pension Committee are to supervise the administration
of the Company's pension and savings plans; review the levels of funding and
allocation of funds invested in the plans; and review the performance of the
investments and investment managers against goals. The Pension Committee met
once in fiscal 1994. The members of the Pension Committee are Robert G. Tobin,
Chairman; Gary E. Gardner and Dwight C. Minton.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board consists of three non-employee
directors who make decisions pertaining to executive compensation and benefits.
The Committee utilizes the services of an outside compensation consultant to
assist in making objective decisions based on data from consumer products
companies of similar size, some of which are in the peer group of companies
included in the stock performance graph. Additional similar data is provided by
the consultant as well as management.
During the past fiscal year the Compensation Committee met three times.
5
<PAGE>
COMPENSATION PHILOSOPHY
The Company's executive compensation program has three objectives:
1. To provide compensation that rewards executives for meeting and
exceeding internal performance goals and standards.
2. To maintain a compensation program that attracts and retains high
quality executives.
3. To create a link between the interests of the Company's
shareholders, the Company's financial performance and the total
compensation opportunities for its executive officers.
The executive compensation program consists of base salary, an annual cash
incentive plan, long-term stock option incentive plans, a non-qualified deferred
compensation plan and qualified and non-qualified retirement plans.
Base salaries are targeted slightly below the 50th percentile of
competitive salaries for executives of consumer products companies of similar
size. Salary ranges are established using published surveys and other external
data. Variation in compensation between individuals is based on position value,
experience level and performance against pre-established objectives. Individual
increases are typically given at thirteen to sixteen month intervals, and the
amount is based on the individual's performance and place in the salary range.
Prior to approving individual increases, the Compensation Committee reviews each
senior executive's performance against previously established performance goals.
The Annual Incentive Plan provides for an annual cash award based on
attainment of operating income goals and the awards are targeted at slightly
above the 50th percentile for executives of consumer products companies of
similar size. The plan triggers if a pre-approved threshold is achieved.
Individual awards are determined by total corporate, business unit, and
individual performance levels. The performance level of the business unit is
measured on an unweighted basis by sales growth, market share, and operating
income. Individual performance goals are established for each senior executive
at the commencement of each year. The Compensation Committee approves the total
dollar pool available and the amount awarded to each senior executive
participant. In respect to the named executives in the Summary Compensation
Table, the Compensation Committee will also assess the Company's relative
financial performance against peer group consumer products companies considering
such measures as EPS growth, ROE, ROC, net income growth, acquisition success
and increase in market share.
The Long Term Incentive Plans were established in 1989 and 1994. All option
shares available under the 1989 plan have been granted. The 1989 plan provides
for non-qualified stock options, limited stock appreciation rights ('LSAR'S')
and restricted stock. LSAR's are exercisable only in change of control
situations. The 1994 Plan provides for the stock options, LSAR's and restricted
stock. Options may have an exercise price of either 100 percent of the fair
market value of the underlying shares of common stock ('Market Priced Options')
or more than 100% of such fair market value ('Premium Priced Options'). Of the
Market Priced Options, a portion may vest as of specific dates and a portion may
be subject to performance vesting. At the time of the grant a 'trigger stock
price' or other performance criteria upon which the vesting of performance
options will be based may be established. These options will be exercisable at
the earlier of the date that the market price equals or exceeds the trigger
stock price or the ninth anniversary of the grant. No options under the 1994
program have been granted during the fiscal year ended June 30, 1994, and no
restricted stock has been granted under either program. The Compensation
Committee approves grants of a sufficient number and type of stock options to
retain executives based on its review of surveys of long-term incentive and
long-term capital accumulation plans available to similar positions at other
consumer product companies of similar size.
The Company maintains a benefit program that is competitive with other
consumer products companies of similar size. The program includes qualified
retirement, savings, life insurance, and disability programs as well as medical,
dental and business travel insurance programs.
In addition to the qualified retirement plans, officers of the Company also
participate in a non-qualified retirement plan that alleviates the impact of tax
or legal restrictions imposed upon qualified plan limits when total compensation
is used in calculation of pension benefits.
6
<PAGE>
During the past fiscal year the Company established a non-qualified
deferred compensation plan for senior executives. This plan permits deferral of
a portion of base salary and/or annual incentive awards to a later date,
normally until after retirement. Interest on deferred compensation is based on 7
year U.S. Treasury Bond yields plus a margin which is intended to approximate
the margin First Brands would incur if it were issuing a senior unsecured bond
with a 7-year maturity. If the participant defers salary or bonus for seven (7)
or more years or until death, disability or retirement, the interest on the
deferred amount for the entire period will be the Treasury Bond yield, the
margin, plus 3%.
The Compensation Committee endorses the position that stock ownership by
management provides linkage in aligning management's and shareholder's interest
in enhancing shareholder value although the Committee does not set target
ownership levels for executive equity holdings.
RELATIONSHIP OF CORPORATE PERFORMANCE TO EXECUTIVE COMPENSATION
The Company has two types of executive compensation incentive plans, The
Annual Incentive Plan and The Long Term Incentive Plans (both previously
described), which reward executives based on the performance of the Company.
The Annual Incentive Plan provides compensation based on the attainment of
operating income objectives which are contained in the annual business plan. For
the named executives in the Summary Compensation Table, Company financial
performance relative to other consumer products companies is also considered in
order to validate incentive compensation in respect to these peer group
companies. The annual business plan is developed by Company management and
approved by the Board of Directors at the beginning of each fiscal year. The
financial measures used to validate incentive awards are approved by the
Compensation Committee at the beginning of each fiscal year.
The Long Term Incentive Plans use stock price appreciation as the incentive
to reward executives over the long term. Compensation gained as a result of this
program has a direct relationship to the gain achieved by investors in the
Company's stock.
1994 FISCAL YEAR COMPENSATION OF CHIEF EXECUTIVE OFFICER
The base salary received by Mr. Dudley during fiscal year 1994 was
increased after 14 months by 10.1% over the preceding year. He received an
annual incentive award of $400,000 for the fiscal year. The salary increase was
based on his overall performance level as determined by the Compensation
Committee. In determining Mr. Dudley's overall performance level, the
Compensation Committee considered the following measures of performance by the
Company on an unweighted basis: return on equity, sales growth, growth through
acquisitions, market share, operating income, return on capital, earnings per
share and overall management effectiveness. Since the Company's financial
results for the past fiscal year were significantly improved over fiscal year
1993, Mr. Dudley's annual incentive award was 62.50% higher than the preceding
year.
COMPENSATION COMMITTEE
James R. Maher, Chairman
James R. McManus
Ervin R. Shames
7
<PAGE>
SUMMARY COMPENSATION TABLE
Furnished below is a summary of the compensation paid and/or awarded to the
Chief Executive Officer and to each of the other four most highly compensated
executive officers of the Company during fiscal years 1992-1994.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
NAME AND --------------------------------- COMP.(1) ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OTHER(2) OPTIONS(#) COMPENSATION(2)
- - ------------------------------------------ ---- --------- -------- -------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Alfred E. Dudley ......................... 1994 466,666 400,000 -- -- --
Chairman 1993 425,000 250,000 25,000
1992 400,000 215,000 25,000
William V. Stephenson .................... 1994 223,000 200,000 -- -- --
President and CEO 1993 175,500 125,000 20,000
1992 143,500 55,000 16,000
Thomas H. Rowland ........................ 1994 164,000 80,000 -- -- --
Executive Vice 1993 138,283 50,000 35,000
President, Home 1992 118,700 38,000 10,000
Products
Donald A. DeSantis ....................... 1994 175,400 100,000 -- -- --
Sr. Vice President, 1993 167,380 38,000 12,000
CFO and Treasurer 1992 157,680 38,000 14,000
J. Bruce Ipe ............................. 1994 171,300 60,000 -- -- --
Vice President and 1993 165,300 32,000 8,000
General Counsel 1992 156,600 32,000 8,000
</TABLE>
- - ------------
(1) There were no grants under the Long Term Compensation Plan during 1994
fiscal year for any executive officers or other employees.
(2) In accordance with the transitional provisions applicable to the revised
rules on executive officer compensation disclosure adopted by the Securities
and Exchange Commission, as informally interpreted by the Commission's
Staff, amounts of Other Annual Compensation and All Other Compensation are
required only for fiscal years 1993 and 1994. Amounts under Other Annual
Compensation are not shown since the value of perquisites and other personal
benefits does not exceed the lesser of $50,000 or 10% of the total amount of
annual salary and bonus for any named individual.
OPTIONS GRANTED IN LAST FISCAL YEAR
Since the last grant of options occurred late in the previous fiscal year
(May 25, 1993) no options were granted during fiscal year 1994.
OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table lists the shares acquired on exercise of options by the
Chief Executive Officer and the other four most highly compensated executive
officers during the fiscal year 1994 and certain information as to options
unexercised at the end of fiscal year 1994.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FY END FISCAL YEAR END(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE # REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - -------------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
A.E. Dudley..................... -- 57,000 25,000 $ 776,813 $ 179,688
W.V. Stephenson................. -- 34,000 20,000 $ 454,500 $ 143,750
T.H. Rowland.................... -- 26,000 35,000 $ 360,125 $ 254,688
D.A. DeSantis................... -- 34,000 12,000 $ 467,125 $ 86,250
J.B. Ipe........................ 2,000 22,000 8,000 $ 302,250 $ 57,500
</TABLE>
- - ------------
(1) Values have been calculated based on the closing price of the Company's
Common Stock reported on the New York Stock Exchange Composite Tape on June
30, 1994, which was $36.625 per share.
8
<PAGE>
RETIREMENT PLAN
First Brands currently maintains a non-contributory defined benefit
retirement plan (the 'Retirement Plan') covering 82% of all U.S. employees
including those of subsidiaries. The officers listed in the foregoing Summary
Compensation Table are covered by the Retirement Plan. Outside the United
States, certain of First Brands' subsidiaries have retirement programs that are
generally administered by trustees or insurance companies.
Under the Retirement Plan, the monthly amount of an employee's retirement
benefit upon retirement at age 65 is the greatest of (a) 1.2% of average monthly
compensation received during the three year period preceding retirement, or 1.2%
of average monthly compensation received during the three best calendar years in
the final ten calendar years preceding retirement, if the latter average would
result in a higher pension benefit, multiplied by the number of years of
credited service plus $12 or (b) 1.5% of the average monthly compensation
computed as in (a) above, multiplied by the number of years of credited service,
less a percentage, based on service and not exceeding 50%, of the projected
primary Social Security benefit or such maximum percentage as is allowed under
the Internal Revenue Code.
An employee who is (i) age 62 or over with ten or more years of credited
service or (ii) whose age and years of credited service add up to 85, may
voluntarily retire earlier than age 65 with a retirement benefit, unreduced
because of early retirement, based on service upon date of retirement. Employees
may retire as early as age 50 with 10 years of credited service but will receive
an actuarially reduced pension benefit.
The amounts contributed by First Brands to the Retirement Plan are
calculated on a group basis that is actuarially determined. No specific amount
is set aside by First Brands for any individual officer or employee under the
Retirement Plan. The amounts shown in the following table are the estimated
annual retirement benefits payable at age 65 for the respective average annual
remuneration levels and years of service credit indicated. Actual benefits will
not exceed limits permitted under the Internal Revenue Code and applicable
regulations. Amounts shown are computed based upon straight life annuity amounts
and are reduced by 1.5% of the employee's primary Social Security benefit for
each year of the employee's credited service up to a maximum deduction of 50% of
such Social Security benefit. Annual retirement benefits are based on average
earnings.
For federal income tax purposes the amount of benefits that can be paid
from the qualified plan is restricted. First Brands maintains a nonqualified
plan ('Executive Retirement Plan') the effect of which is to award retirement
benefits to all employees on a uniform basis. The Executive Retirement Plan is
unfunded.
As of June 30, 1994, the credited years of service (credited service is
combined from First Brands and Union Carbide Corporation for the individuals
named in the Summary Compensation Table were as follows: Alfred E. Dudley had 42
years of company service credit; William V. Stephenson, 30 years; Thomas H.
Rowland, 20 years; Donald A. DeSantis, 8 years; and J. Bruce Ipe, 24 years.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
AT AGE 65 FOR YEARS OF SERVICE CREDIT
AVERAGE ANNUAL REMUNERATION --------------------------------------------------------
USED FOR CALCULATING RETIREMENT BENEFITS 25 30 35 40 45
- - ------------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$150,000................................... $ 56,250 $ 67,500 $ 78,750 $ 90,000 $101,250
$200,000................................... 75,000 90,000 105,000 120,000 135,000
$250,000................................... 93,750 112,500 131,250 150,000 168,750
$300,000................................... 112,500 135,000 157,500 180,000 202,500
$350,000................................... 131,250 157,500 183,750 210,000 236,250
$400,000................................... 150,000 180,000 210,000 240,000 270,000
$450,000................................... 168,750 202,500 236,250 270,000 303,750
$500,000................................... 187,500 225,000 262,500 300,000 337,500
$550,000................................... 206,250 247,500 288,750 330,000 371,250
$600,000................................... 225,000 270,000 315,000 360,000 405,000
$700,000................................... 262,500 315,000 367,500 420,000 472,500
$800,000................................... 300,000 360,000 420,000 480,000 540,000
</TABLE>
9
<PAGE>
SEVERANCE AGREEMENTS
The Company has also adopted an employment severance agreement with certain
management employees, including executive officers, generally providing
severance benefits if the employee is terminated for reasons other than 'cause'
within two years after a 'change in control.' The severance benefits include
cash payments equal to two year's salary and bonus and certain other employee
and retirement benefits. Provision for a tax gross-up payment is also included
to cover excise taxes, if any, on payments paid under these agreements.
STOCK PERFORMANCE GRAPH
The following table compares total shareholder returns for the Company to
the Standard & Poors 500 Stock Index ('S&P 500') and the Standard & Poors Midcap
400 Consumer Products Index ('S&P 400 CP')(1) for the period commencing on
December 29, 1989 through the fiscal year end of June 30, 1994 (the 'Performance
Period'). The initial public offering was December 13, 1989, therefore, five
year data is not available. The comparison assumes $100.00 was invested on
December 29, 1989 in the Company's Common Stock and in each of the foregoing
indices and assumes reinvestment of dividends, if any, on a quarterly basis. The
total return for the company's Common Stock increased by 99% during the
Performance Period as compared with total return during the same period for the
S&P 500 and S&P 400 CP of 45% and 29%, respectively. There can be no assurance
that the Company's stock performance will continue into the future with the same
or similar trends depicted in the graph below. The Company will not make or
endorse any predictions as to the future stock performance.
FIRST BRANDS CORPORATION
Total Return Performance (2)
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/89 6/90 12/90 6/91 12/91 6/92 12/92 6/93 12/93 6/94
FBC 100 153 109 150 139 146 157 158 187 199
S&P 500 100 103 97 111 126 126 136 143 150 145
S&P 400 CP 100 107 99 117 146 138 147 130 138 129
</TABLE>
(1) The S&P Midcap 400 Consumer Products Index is comprised of the following
companies: Church & Dwight, A.T. Cross, First Brands, Gibson Greetings,
Lancaster Colony, National Presto, Neutrogena, Stanhome and Tambrands. First
Brands has not been eliminated from this peer group for purposes of this
presentation.
(2) Data from the 'S&P 400 CP' index shows differences compared to last year's
even though the companies have not changed. This is due to the application
of a new SEC requirement requiring beginning of period weightings vs. end of
period weightings which were used last year.
10
<PAGE>
II. RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick as the independent
auditors to examine the financial statements of the Company and its consolidated
subsidiaries for the fiscal year 1995. KPMG Peat Marwick has served First Brands
in the capacity of independent auditors since its incorporation in 1986.
Representatives of KPMG Peat Marwick will be present at the Annual Meeting
of Stockholders to answer any appropriate questions. They will have the
opportunity to make a statement if they so desire.
MANAGEMENT RECOMMENDS THAT A VOTE IN FAVOR OF THE ELECTION OF THE DIRECTORS
AND RATIFICATION OF THE APPOINTMENT OF THE AUDITORS BE CAST.
III. OTHER MATTERS
The Company knows of no other matters to come before the meeting. If any
other matters properly come before the meeting, the proxies solicited hereby
will be voted on such matter in accordance with the judgment of the persons
voting such proxies and will be determined by the vote of a majority of the
shares voting thereon at the meeting.
IV. STOCKHOLDER PROPOSALS
Stockholders wishing to submit proposals for inclusion in the Board of
Directors' proxy material for the Annual Meeting of Stockholders tentatively
scheduled for October 27, 1995 should submit them in writing to the Secretary of
the Corporation, First Brands Corporation, 83 Wooster Heights Road, P.O. Box
1911, Danbury, CT 06813-1911 no later than April 30, 1995.
11
<PAGE>
[Logo]
<PAGE>
APPENDIX
Graphic and Image Information:
See reference to Performance Graph on page 10 of the Notice and Proxy Statement.
<PAGE>
PROXY
FIRST BRANDS CORPORATION
83 WOOSTER HEIGHTS ROAD
DANBURY, CT 06813-1911
[LOGO]
ANNUAL MEETING OF STOCKHOLDERS -- FRIDAY, OCTOBER 28, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ALFRED E. DUDLEY and DAN RAYMOND, and each
of them, with power of substitution, as proxies to represent the undersigned at
the Annual Meeting of Stockholders to be held at the Danbury Hilton Hotel, 18
Old Ridgebury Road, Danbury, Connecticut on Friday, October 28, 1994 at 10:00
a.m., local time and at any adjournment thereof, and to vote the shares of
common stock the undersigned would be entitled to vote if personally present, as
indicated on the reverse side hereof.
THE SHARES REPRESENTED BY THE PROXY WILL BE VOTED AS DIRECTED. IF NO
CONTRARY INSTRUCTION IS GIVEN, THE SHARES WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES FOR DIRECTOR SET FORTH BELOW, FOR THE RATIFICATION OF KPMG PEAT MARWICK
AS INDEPENDENT AUDITORS FOR FISCAL 1995 AND AT THE DISCRETION OF THE PROXY UPON
SUCH OTHER BUSINESS, IF ANY, AS MAY BE PROPERLY BROUGHT BEFORE THE MEETING.
PLEASE MARK BOXES [*] OR [x] IN BLUE OR BLACK INK.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees listed below (except as WITHHOLD AUTHORITY to vote for all
indicated to the contrary below) [ ] nominees listed below [ ]
</TABLE>
James R. Maher, Dwight C. Minton, William V. Stephenson, Robert G. Tobin
(Continued and to be signed on the other side)
<PAGE>
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
- - --------------------------------------------------------------------------------
<TABLE>
<S> <C>
2. Proposal to ratify the selection of 3. In their discretion, to vote upon
KPMG Peat Marwick as independent such other business, if any, as may be
auditors for the fiscal year 1995. properly brought before the meeting.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ]
</TABLE>
If no direction is made, this proxy will be voted for Proposals 1, 2 and 3.
Please sign exactly as
name appears below.
When shares are held by
joint tenants, both
should sign. When
signing as attorney, as
executor,
administrator, trustee
or guardian, please
give full title as
such. If a corporation,
please sign in full
corporate name by
President or other
authorized officer. If
a partnership, please
sign in partnership
name by authorized
person.
Dated:..........., 1994
.......................
Signature
.......................
Signature if held
jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
