FIRST BRANDS CORP, DEF 14A, 1997-09-22

FIRST BRANDS CORP
DEF 14A, 1997-09-22
UNSUPPORTED PLASTICS FILM & SHEET

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Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
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

FIRST BRANDS 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:

.......................................................

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[Logo]

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
FIRST BRANDS CORPORATION

September 22, 1997

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 24, 1997, 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,
1997, and those holding proxies from such stockholders will be entitled to vote,
for the following purposes:

1. To elect four directors; and

2. To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the Company's 1998 fiscal year; and

3. To approve the First Brands Corporation 1998 Performance Stock
Option and Incentive Plan; and

4. To transact such other business, if any, as may properly come
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 and we will
promptly send your ticket to you. Please bring your ticket with you to the
meeting.

FIRST BRANDS CORPORATION

JOSEPH B. FUREY
Joseph B. Furey
Vice President, Secretary and
Controller

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.
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FIRST BRANDS CORPORATION
83 WOOSTER HEIGHTS ROAD
DANBURY, CONNECTICUT 06813-1911
--------------------------
PROXY STATEMENT
--------------------------
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD OCTOBER 24, 1997

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 24, 1997, 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 24,
1997 to stockholders of record on September 2, 1997.

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 a 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 a
duly executed proxy in the accompanying form will be voted unless such proxy is
revoked prior to the voting thereof.

The close of business on September 2, 1997, 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 40,056,544 shares of First Brands Common
Stock ('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, 1997
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 who will
receive no extra compensation for such solicitation.

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 and approval of the
First Brands Corporation 1998 Performance Stock Option and Incentive Plan (the
'1998 Incentive Plan') 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. Directors are elected for the terms specified and continue in
office until their respective successors have been elected and have qualified.

The following changes have occurred in the Board of Directors since the
last Annual Meeting of Stockholders held on November 1, 1996. Mr. Dwight C.
Minton, Chairman of Church & Dwight Co., Inc. (a consumer specialty products
company), resigned effective June 6, 1997. Mr. John C. Ferries,

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Executive Vice President of DMB&B, Inc. (an advertising agency) was unanimously
elected by the Board of Directors effective June 6, 1997.

The Board of Directors at its meeting held August 6, 1997, 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 the year 2000 and until their successors are elected and qualified: James R.
Maher, John C. Ferries, William V. Stephenson and Robert G. Tobin. Certain
information with respect to the nominees for election as director and with
respect to directors whose terms extend beyond the date of the Annual Meeting of
Stockholders is set forth below.

The Board of Directors recommends a vote FOR these nominees.

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.

NOMINEES FOR ELECTION FOR TERM ENDING IN 2000

[Photo] JOHN C. FERRIES, Age 59 Director since 1997
EXECUTIVE VICE PRESIDENT
DMB&B, INC. (ADVERTISING AGENCY)
DIRECTOR
INTERNATIONAL ADVERTISING ASSOCIATION
Committees: Audit and Pension
Mr. Ferries has been Executive Vice President of DMB&B, Inc. since mid-1997,
and was President of DMB&B Americas from 1993 to mid-1997. Prior to that Mr.
Ferries served as President of DMB&B's Asia-Pacific/Africa Divisions from
1991 to 1993. He is a member of the DMB&B, Inc. Board of Directors and
Executive Committee.

[Photo] JAMES R. MAHER, Age 47 Director since 1988
PRESIDENT AND CEO
MAFCO CONSOLIDATED GROUP, INC. (DIVERSIFIED MANUFACTURER)
Committees: Audit and Pension
Mr. Maher has been President and Chief Executive Officer of MAFCO
Consolidated Group, Inc. (diversified manufacturer) since July, 1995. Mr.
Maher was Chairman of the Board of Laboratory Corporation of America (health
services) from April, 1995 to April, 1996. He was President and Chief
Executive Officer of Laboratory Corporation of America from December, 1992 to
April, 1995.

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[Photo] WILLIAM V. STEPHENSON, Age 56 Director since 1992
CHAIRMAN, PRESIDENT AND CEO
FIRST BRANDS CORPORATION
Committees: Executive and Nominating
Mr. Stephenson became Chairman of the Board on January 1, 1997. He has been
President and Chief Executive Officer of the Company since September 1, 1994.
He was President and Chief Operating Officer from August, 1992 to September,
1994.

[Photo] ROBERT G. TOBIN, Age 59 Director since 1991
CHAIRMAN
THE STOP & SHOP COMPANIES, INC. (RETAIL FOOD)
Committees: *Pension and Compensation
Mr. Tobin has been Chairman and Chief Executive Officer of The Stop & Shop
Supermarket Companies, Inc. and The Stop & Shop Supermarket Company (retail
food) since January, 1995. He was President and Chief Executive Officer of
The Stop & Shop Supermarket Company from May, 1994 to January, 1995, and was
President and Chief Operating Officer of The Stop & Shop Supermarket
Companies, Inc. and The Stop & Shop Supermarket Company, a wholly-owned
subsidiary, since 1993 and November, 1989, respectively.

DIRECTORS CONTINUING IN OFFICE UNTIL 1999

[Photo] ALFRED E. DUDLEY, Age 69 Director since 1986
Committees: *Executive and Nominating
Mr. Dudley was Chairman and Chief Executive Officer of the Company from 1986
to January 1, 1997 and September 1, 1994, respectively.

[Photo] JAMES R. MCMANUS, Age 63 Director since 1986
CHAIRMAN, CEO AND FOUNDER
MARKETING CORPORATION OF AMERICA (MARKETING SERVICES)
DIRECTOR, AU BON PAIN CO. INC.
Committees: Compensation and Nominating
Mr. McManus has been Chairman and CEO of Marketing Corporation of America
(marketing consulting and marketing services), since 1971. On February 1,
1994, Mr. McManus resigned as President and Chief Executive Officer of
Business Express, Inc., a regional airline operating in the Northeastern
United States. On January 22, 1996, a petition for Chapter IX Bankruptcy
Protection was filed against Business Express, Inc. in Federal Court in
Manchester, New Hampshire by Saab Aircraft of America and two of its
operating subsidiaries.

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[Photo] THOMAS H. ROWLAND, Age 52 Director since 1996
EXECUTIVE VICE PRESIDENT
FIRST BRANDS CORPORATION
Committees: Executive
Mr. Rowland was elected Executive Vice President of the Company on August 11,
1992, and simultaneously was appointed President of the Home Products
Division. He is also President of Himolene, Inc., a wholly-owned subsidiary
of the Company.

DIRECTORS CONTINUING IN OFFICE UNTIL 1998

[Photo] DENIS NEWMAN, Age 67 Director since 1986
MANAGING DIRECTOR
MIDMARK ASSOCIATES, INC. (FINANCIAL SERVICES)
DIRECTOR, CLEARVIEW CINEMA GROUP, INC.
Committees: *Audit and Executive
Mr. Newman has been Managing Director of MidMark Associates (financial
services) since December 1989.

[Photo] ERVIN R. SHAMES, Age 57 Director since 1987
CHAIRMAN
SELECT COMFORT CORPORATION (MATTRESS MANUFACTURER AND RETAILER)
VISITING LECTURER, UNIVERSITY OF VIRGINIA, DARDEN GRADUATE SCHOOL OF BUSINESS
Committees: *Compensation and Nominating
Mr. Shames has been Chairman of Select Comfort Corporation (mattress
manufacturer and retailer) since April, 1996 and was appointed Visiting
Lecturer at the University of Virginia's Darden Graduate School of Business
in September, 1996. He was a private investor and consultant from January,
1995 to April, 1996 and was President and Chief Executive Officer of Borden,
Inc. (consumer products) from December, 1993 to January, 1995, and was
President and Chief Operating Officer of Borden, Inc. from July, 1993 to
December, 1993. Mr. Shames was Chairman and Chief Executive Officer of The
Stride Rite Corporation (footwear manufacturer) from June, 1992 to July,
1993.

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* Denotes Committee Chairman

BENEFICIAL OWNERSHIP OF VOTING SECURITIES

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.

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AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- --------------------------------------------------------------- -------------------- ----------------
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Harris Associates LP
2 North LaSalle Street
Chicago, IL 60602............................................ 7,308,798(a) 18.2%
GSB Investment Management
301 Commerce Street
Fort Worth, TX 76102......................................... 3,781,961(b) 9.4%
Ariel Capital Management,
307 North Michigan Avenue,
Chicago, IL 60601............................................ 3,190,990(c) 8.0%
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(a) Information concerning beneficial ownership by Harris Associates LP is
based on a report on Form 13F filed with the Securities and Exchange
Commission (the 'SEC') as of June 30, 1997. To the Company's knowledge,
Harris & Associates LP has not filed a Schedule 13D or Schedule 13G with
respect to their ownership of the Company's common stock.

(b) Information concerning beneficial ownership by GSB Investment Management is
based on a report on Form 13F filed with the SEC as of June 30, 1997. To
the Company's knowledge, GSB Investment Management has not filed a Schedule
13D or Schedule 13G with respect to their ownership of the Company's common
stock.

(c) Information concerning beneficial ownership by Ariel Capital Management is
based on their letter dated September 2, 1997 confirming ownership as of
August 31, 1997. To the Company's knowledge, Ariel Capital Management has
not filed a Schedule 13D or Schedule 13G with respect to their ownership of
the Company's common stock.

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The following table sets forth certain information concerning the
beneficial ownership of common stock as of September 2, 1997 by each Director,
by each of the Executive Officers named in the 'Summary Compensation Table' and
by all Directors and Executive Officers as a group:

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AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(c) PERCENT OF CLASS
- -------------------------------------------------------------- ----------------------- ----------------

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Alfred E. Dudley.............................................. 442,000 1.10
John C. Ferries............................................... 1,000 .00
James R. Maher................................................ 4,270 .01
James R. McManus.............................................. 10,000 .02
Denis Newman.................................................. 90,684 .23
Ervin R. Shames............................................... 14,164 .04
Robert G. Tobin............................................... 6,000 .01
William V. Stephenson......................................... 383,325 .96
Thomas H. Rowland............................................. 180,900 .45
Donald A. DeSantis............................................ 174,739 .44
Patrick J. O'Brien............................................ 99,361 .25
Mark E. Haglund............................................... 91,890 .23
All Directors and Executive Officers as a group............... 1,755,778 4.38
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(c) Under rules of the SEC, persons who have power to vote or dispose of
securities, either alone or jointly with others, are deemed for purposes of
this table, to be the beneficial owners of such securities. Each nominee,
continuing director and officer has both sole voting power and sole
investment power with respect the shares set forth in the table.

(footnotes continued on next page)

(footnotes continued from previous page)

(d) No nominee or continuing director is the beneficial owner of more than 1.1%
of the outstanding shares of common stock.

(e) Includes 196,000, 166,000, 112,000, 95,500, 86,250 and 964,750 shares which
respectively William V. Stephenson, Thomas H. Rowland, Donald A. DeSantis,
Patrick J. O'Brien and Mark E. Haglund and all Directors and Executive
Officers as a group, have a right to acquire within 60 days of September 2,
1997 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 percentages of shares.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The Company is required to identify any officer, director or owner of more
than 10% of the common stock who during the last fiscal year failed to file
timely with the SEC a required report under Section 16(a) of the Securities
Exchange Act of 1934 relating to beneficial ownership of common stock. Based
solely on a review of information provided to the Company, all persons subject
to the reporting requirements of Section 16(a) of the Securities and Exchange
Act of 1934 filed the required reports on a timely basis for fiscal year 1997.

BOARD OF DIRECTORS AND COMMITTEES

There were five regular and two telephonic meetings of the Board of
Directors during fiscal 1997. All of the incumbent directors attended at least
88% of the total number of 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. Mr. Dudley, who retired from the Company
on September 1, 1994, received an annual fee of $300,000 as Chairman and for
other consulting services through December 31, 1996. From January 1, 1997
through June 30, 1997 he was paid $112,500 for consulting services. 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 not held in conjunction with a Board meeting.
Pursuant to a resolution adopted on September 6, 1991, Directors are also
reimbursed for reasonable expenses involved in attending Board and committee
meetings of the Company. In addition, under the Non-Employee Director Stock
Option Plan adopted at the 1995 Annual Meeting, outside directors receive 2,000
non-qualified stock options on the first Friday following the Company's Annual
Meeting of Stockholders. The options vest on the second anniversary of the grant
and have an exercise price equal to the average of the high and low prices on
the date of grant.

The members of the Board of Directors are elected to various committees.
The standing committees of the Board are: Audit Committee, Compensation
Committee, and Executive Committee, Nominating Committee and Pension 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 1997. The
members of the Audit Committee are Denis Newman, Chairman, and John C. Ferries
and James R. Maher.

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 Plans; and review additional compensation
arrangements. The Compensation Committee met twice in fiscal 1997. The members
of the Compensation Committee are Ervin R. Shames, Chairman, James R. McManus
and Robert G. Tobin.

The function of the Executive Committee is to act for the Board between
regular meetings to the extent permitted by the Delaware General Corporation
Law on matters that need timely attention. The

Executive Committee met once in fiscal 1997. The members of the Executive
Committee are Alfred E. Dudley, Chairman, Denis Newman, Thomas H. Rowland and
William V. Stephenson.

The functions of the Nominating Committee are to establish criteria for
Board membership; search for and screen candidates to fill vacancies on the
Board; recommend an appropriate slate of candidates for election each year;
assess the overall performance of the Board; and consider issues regarding the
composition, tenure and size of the Board. The Nominating Committee will
consider nominations by stockholders. Recommendations should be sent to the
Secretary at 83 Wooster Heights Road, Danbury, CT 06813 no later than May 7,
1998 with respect to the 1998 Annual Meeting of Stockholders and should include
the candidate's name and qualifications and a statement from the candidate that
he or she consents to being named in the Proxy Statement if nominated and will
serve if elected. The Nominating Committee met twice in fiscal 1997. The members
of the Nominating Committee are Alfred E. Dudley, James R. McManus, Ervin Shames
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
twice in fiscal 1997. The members of the Pension Committee are Robert G. Tobin,
Chairman; John C. Ferries and James R. Maher.

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.

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
stockholders, 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, an executive life insurance plan, and qualified and
non-qualified retirement plans.

The Company maintains a benefit program that is competitive with other
consumer products companies of similar size. The program includes qualified
retirement, savings, and disability programs as well as medical, dental and
business travel insurance programs.

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 twelve 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 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 of 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 earnings per share growth, sales growth, improvement in return
on equity and acquisition success.

The Long Term Incentive Plans were established in 1989 and 1994. All option
shares available under the 1989 Long Term Incentive 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 Performance Stock Option and Incentive Plan
provides for 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 exceeds the trigger stock price or the ninth anniversary of the
grant. During fiscal year 1997, 559,000 options were granted. No restricted
stock has been granted under the 1989 or the 1994 Plan. 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.

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 the qualified plan when total compensation is
used in calculation of pension benefits.

The Company has 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, plus 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. During fiscal year 1995,
shareholders approved an amendment to the Annual Incentive Plan which permits
certain members of senior management to elect to receive all or a portion of
their annual incentive award in First Brands common stock instead of cash. Those
who elect stock instead of cash receive a premium of 25% in stock thereby
encouraging management to increase stock ownership. The stock acquired under the
Annual Incentive Plan is restricted in its transferability or sale for a period
of two years from the date of issuance.

Section 162(m) of the Internal Revenue Code, enacted in 1993, limits the
tax deduction that corporations may take with respect to the compensation of
certain executive officers, unless the compensation is 'performance based' as
defined in the Code. The Committee believes that all compensation received by
the executive officers is performance based and in any event the deductibility
limits in the Code have not been reached. There is no loss of deduction for
fiscal year 1997.

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

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Compensation Table, Company financial performance relative to a peer group of
companies is also considered in order to validate incentive compensation in
comparison with these 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.

1997 FISCAL YEAR COMPENSATION OF CHIEF EXECUTIVE OFFICER

Mr. Stephenson earned $440,000 in base salary during fiscal year 1997 and
received an annual incentive award of $210,000 for his overall performance for
the year. Mr. Stephenson's base salary was increased during the past fiscal year
to reflect the additional responsibilities of becoming Chairman of the Board in
addition to President and Chief Executive Officer plus a merit increase. The
Compensation Committee determined that these amounts were justified when
considering the company's financial performance for the fiscal year as well as
Mr. Stephenson's personal performance measured against pre-determined measures
including return on equity, sales growth, acquisition success, market share,
operating income, earnings per share growth and overall management
effectiveness. The Compensation Committee also considered Mr. Stephenson's
compensation as compared to chief executive officers of the peer group of
consumer products companies that the company traditionally monitors. Mr.
Stephenson's total cash compensation (base salary and annual incentive) for
fiscal year 1997 was 4.3% lower than the preceding fiscal year.

COMPENSATION COMMITTEE

Ervin R. Shames, Chairman
James R. McManus
Robert G. Tobin

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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 for fiscal years 1995-1997.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
NAME AND ------------------------------------ COMP.(2) ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OTHER($)(1) OPTIONS(#) COMPENSATION($)(3)
- ------------------------------------- ---- --------- -------- ----------- --------- ------------------

<S> <C> <C> <C> <C> <C> <C>
William V. Stephenson ............... 1997 440,000 210,000 -- 70,000 32,058
Chairman, President and CEO 1996 379,167 300,000 -- 80,000 35,669
1995 312,500 300,000 -- 100,000 5,175
Thomas H. Rowland ................... 1997 241,263 90,000 11,250 40,000 13,404
Executive Vice President, President 1996 195,030 120,000 22,500 48,000 15,724
Home Products 1995 184,535 120,000 -- 60,000 4,251
Donald A. DeSantis .................. 1997 210,080 82,000 -- 25,000 12,155
Senior Vice President 1996 199,530 110,000 -- 32,000 13,133
CFO and Treasurer 1995 188,160 110,000 -- 40,000 4,262
Patrick J. O'Brien .................. 1997 146,500 51,000 6,375 25,000 7,102
Vice President, 1996 137,600 60,000 11,250 32,000 8,076
President, A&M Products, Inc. 1995 115,600 65,000 -- 40,000 3,038
Mark E. Haglund ..................... 1997 146,500 42,000 10,500 25,000 8,742
Vice President, 1996 137,600 60,000 15,000 32,000 9,365
President STP Products, Inc. 1995 113,483 75,000 -- 40,000 2,985
</TABLE>

- ------------

(1) The amount in this column represents the premium that these individuals
received by selecting First Brands stock rather than cash for a portion, or
all, of their award under the Annual Incentive Plan.

(2) There were 559,000 options granted under the 1994 Performance Stock Option
and Incentive Plan during 1997 fiscal year for executive officers and other
employees.

(3) All Other Compensation includes the employer match under the Company's
savings plan and the compensation to each individual attributable to the
current dollar value of the premium payable by the Company under its
executive split dollar life insurance program. The employer match under the
savings plan and the life insurance compensation for all executive officers
totaled $43,484 and $79,297, respectively, for fiscal year 1997. Prior to
fiscal 1996, the Company-provided life insurance for the executive officers
was included in the Company's group insurance program.

<PAGE>
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR

The following table shows the individual grants of non-qualified stock
options, pursuant to the 1994 Performance Stock Option and Incentive Plan, to
the executive officers of the Company named in the Summary Compensation Table
for fiscal year 1997.

<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES PRICE APPRECIATION
UNDERLYING % OF TOTAL FOR 10 YEAR OPTION
OPTIONS OPTIONS EXERCISE TERM
GRANTED GRANTED PRICE PER EXPIRATION ----------------------
NAME (#)(1) IN FY 1996 SHARE($)(2) DATE 5%($)(3) 10%($)(3)
- ------------------------------------- ---------- ---------- ----------- ---------- --------- ---------

<S> <C> <C> <C> <C> <C> <C>
W.V. Stephenson...................... 70,000 12.5% $ 26.00 5/05/07 1,144,500 2,900,800
T.H. Rowland......................... 40,000 7.2% 26.00 5/05/07 654,000 1,657,600
D.A. DeSantis........................ 25,000 4.4% 26.00 5/05/07 408,750 1,036,000
P.J. O'Brien......................... 25,000 4.4% 26.00 5/05/07 408,750 1,036,000
M.E. Haglund......................... 25,000 4.4% 26.00 5/05/07 408,750 1,036,000
</TABLE>

- ------------

(1) The exercise price of stock options is not less than the fair market value
of the Company's common stock on the date of grant; such stock options vest
on the earlier of the date the market price exceeds the trigger stock price
determined by the Compensation Committee of the Board of Directors for a
period of 10 consecutive trading days or nine years from the date of grant.
The stock options granted in the fiscal year 1997 to the executive officers
named above are performance-based (using a trigger stock price in excess of
$34.00 per share) for all. LSAR's were granted in tandem with the stock
option grants to the named executive officers in amounts equal to the number
of stock options granted. LSAR's are exercisable only upon a change of
control of the Company. Upon exercise, the recipient would receive, in
cancellation of the underlying stock option, cash equal to the excess of the
fair market value of each share of common stock subject to the LSAR over the
exercise price of the underlying stock option. The Compensation Committee
has discretion to adjust the terms of outstanding awards, including the
exercise price of stock options, in the event of an extraordinary or unusual
corporate event.

(2) The exercise price was determined by averaging the high and low market price
on May 6, 1997, the day the options were granted.

(3) The potential realizable value portion of the foregoing table illustrates
value that might be realized upon exercise of the options immediately prior
to the expiration of their term, assuming the specified compounded rates of
appreciation on the Company's common stock over the full term of the
options.

The rates of appreciation are assumed rates established by the Securities
and Exchange Commission and are not intended as a forecast of future
appreciation. 5% annual appreciation results in a stock price appreciation
of $16.35 per share and 10% results in a stock price appreciation of $41.44
per share. The actual gain, if any, realized by the recipient will depend
upon the actual performance of the Company's common stock. There can be no
assurance that the amounts reflected in this table will be achieved.

<PAGE>
<PAGE>
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
executive officers named in the Summary Compensation Table during the fiscal
year 1997 and certain information as to options outstanding at the end of fiscal
year 1997.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR END FISCAL YEAR END(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ----------- -------- ----------- ------------- ----------- -------------

<S> <C> <C> <C> <C> <C> <C>
W.V. Stephenson............... -- -- 196,000 150,000 $ 1,604,996 $37,496
T.H. Rowland(2)............... 5,000 $ 79,263 166,000 88,000 $ 1,368,183 $22,498
D.A. DeSantis................. 20,000 $321,688 112,000 57,000 $ 979,623 $14,998
P.J. O'Brien(2)............... 2,500 $ 32,813 95,500 57,000 $ 746,123 $14,998
M.E. Haglund.................. -- -- 86,250 57,000 $ 851,561 $14,998
</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, 1997, which was $23.00 per share.

(2) Options were exercised to acquire additional Company common stock.

RETIREMENT PLAN

First Brands currently maintains a non-contributory defined benefit
retirement plan (the 'Retirement Plan') covering 78% 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 greater 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. In January 1995, the Company announced a change in
this formula beginning January 2000, to a defined benefit based on years of
credited service and career average compensation. Effective January 1, 2000 the
formula for the retirement program is changed as follows: (a) a pension benefit
will be calculated for each individual as of December 31, 1999 using the present
formulas and, (b) 1.5% of eligible annual earnings for each year will be added
to the amount in (a) above, to determine the total benefit.

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. 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.

<PAGE>
<PAGE>
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.

The Company also maintains a savings plan as part of its long term
retirement/savings program to which it contributes to the account of each
eligible employee who chooses to participate. Effective January 1995, the
Company contributes 50% of the first 6% of the amount of employee basic 401(k)
contributions. Any regular employee of First Brands or its subsidiaries is
eligible to participate. In fiscal year 1996, the Company instituted a Profit
Sharing contribution based on the Company's operating performance. Profit
Sharing will be contributed in shares of First Brands common stock, allocated to
separate employee 401(k) accounts based on Company service credit.

As of June 30, 1997, 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: William V. Stephenson,
33 years; Thomas H. Rowland, 23 years; Donald A. DeSantis, 11 years; Mark E.
Haglund 24 years; and Patrick J. O'Brien, 13 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
- ------------------------------------------- -------- -------- -------- -------- --------

SEVERANCE AGREEMENTS

The Company has also adopted an employment severance agreement with certain
management employees, including all 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, except for William V.
Stephenson, who would receive payments equal to three years 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.

<PAGE>
<PAGE>
FIVE YEAR STOCK PERFORMANCE GRAPH

The following table compares total shareholder returns for the Company to
the Standard & Poor's 500 Stock Index ('S&P 500') and the Standard & Poor's
Midcap 400 Consumer Products Index ('S&P 400 CP')(1) for the five-year period
beginning June 30, 1992 through the fiscal year end of June 30, 1997 (the
'Performance Period'). Assuming $100 was invested on June 30, 1992 in the
Company's common stock and in each of the foregoing indices and the reinvestment
of dividends, if any, on a quarterly basis, the total return for the Company's
common stock was 76% during the Performance Period as compared with a total
return during the same period for the S&P 500 and S&P 400 CP of 146% and -2%,
respectively. The compound annual growth rate for the Company's stock was 12%
for the five-year period.

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
TOTAL SHAREHOLDER RETURNS

[GRAPH]

<TABLE>
<CAPTION>
COMPARISON SINCE JUNE 1992

<S> <C> <C> <C> <C> <C> <C> <C>
6/92 6/93 6/94 6/95 6/96 6/97 CAGR(2)
FIRST
BRANDS 100 106 136 161 205 176 12.0%
S&P 500 100 114 115 145 183 246 19.8%
S&P 400 CP 100 87 83 91 95 98 - 0.4%
</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, Stanhome, Perrigo and CarterWallace.
First Brands has not been eliminated from this peer group for purposes of
this presentation.

(2) Compound Annual Growth Rate.

<PAGE>
<PAGE>
STOCK PERFORMANCE GRAPH SINCE DECEMBER 1989

The following table compares total shareholder returns for the Company to
the Standard & Poor's 500 Stock Index ('S&P 500') and the Standard & Poor's
Midcap 400 Consumer Products Index ('S&P 400 CP')(1) for the seven and a half
year period beginning on December 29, 1989, the end of the first month following
the Company's initial public offering ('IPO') through the fiscal year end of
June 30, 1997. Assuming $100 was invested on December 29, 1989 in the Company's
common stock and in each of the foregoing indices and the reinvestment of
dividends, if any, on a quarterly basis, the total return for the Company's
common stock was 157% as compared with a total return during the same period for
the S&P 500 and S&P 400 CP of 210% and 32%, respectively. The compound annual
growth rate for the Company's stock was 13.4% for the seven and a half year
period.

FIRST BRANDS CORPORATION
Total Return Performance
TOTAL SHAREHOLDER RETURNS

[GRAPH]

<TABLE>
<CAPTION>
COMPARISON SINCE DECEMBER 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/89 6/90 6/91 6/92 6/93 6/94 6/95 6/96 6/97 CAGR(2)
FIRST
BRANDS 100 153 150 146 158 199 235 299 257 13.4%
S&P 500 100 103 111 126 143 145 182 230 310 16.2%
S&P 400
CP(1) 100 108 119 140 117 112 123 126 132 3.9%
</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, Stanhome, Perrigo and Carter Wallace.
First Brands has not been eliminated from this peer group for purposes of
this presentation.
(2) Compound Annual Growth Rate.

<PAGE>
<PAGE>
II. RATIFY APPOINTMENT OF INDEPENDENT AUDITORS

The Board of Directors has selected KPMG Peat Marwick LLP as the
independent auditors to audit the financial statements of the Company and its
consolidated subsidiaries for the fiscal year 1998. KPMG Peat Marwick LLP has
served First Brands in the capacity of independent auditors since its
incorporation in 1986.

Representatives of KPMG Peat Marwick LLP 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.

The Board of Directors recommends a vote FOR the appointment of KPMG Peat
Marwick LLP.

III. APPROVAL OF THE 1998 PERFORMANCE STOCK OPTION
AND INCENTIVE PLAN

The Board of Directors believes that it is in the best interest of the
Company and its stockholders for the holders to approve the 1998 Performance
Stock Option and Incentive Plan (the '1998 Incentive Plan') for certain key
employees of the Company. The 1998 Incentive Plan is intended to continue the
Company's policy of encouraging ownership of the Company's common stock by
employees of the Company and its subsidiaries and of providing incentive for
them to put forth maximum efforts for the success of the Company.

The Company currently has in effect its 1989 Long-Term Incentive Plan (the
'1989 Incentive Plan') and its 1994 Long-Term Incentive Plan (the '1994
Incentive Plan'). All options associated with the 1989 Incentive Plan have been
granted and are fully vested. Based on the number of shares authorized under the
1994 Incentive Plan and the number of awards outstanding, only 220,000 shares of
common stock currently remain available for the grant of awards thereunder.

1998 INCENTIVE PLAN

The Company has established the 1998 Incentive Plan for certain key
employees of the Company. The 1998 Incentive Plan was designed to promote the
interests of the Company and its stockholders by establishing a direct link
between the financial interest of eligible employees and the performance of the
Company and by enabling the Company to attract and retain outstanding personnel.
Any employee of the Company or a subsidiary of the Company who has demonstrated
significant potential to contribute to the successful performance of the Company
or such subsidiary is eligible to participate in the 1998 Incentive Plan. As of
the date of this Proxy Statement, the Compensation Committee has not determined
which employees will be eligible for selection as participants under the 1998
Incentive Plan. The 1998 Incentive Plan will be administered by the Compensation
Committee of the Board of Directors, which determines the employees to whom
awards are granted, the number of shares of Common Stock covered by such awards
and the terms of such awards.

Under the 1998 Incentive Plan, awards of incentive stock options ('ISO's'),
as defined in Section 422 of the Internal Revenue Code of 1986, as amended ('the
Code'), non-qualified stock options ('NQSO's'), i.e., stock options that do not
qualify as ISO's, performance stock units ('PSU's'), and Limited Stock
Appreciation Rights ('LSAR's') may be granted to eligible employees of the
Company. The 1998 Incentive Plan authorizes the issuance of up to 1,800,000
shares of incentive options thereunder. Assuming the repurchase of approximately
1,200,000 shares of the Company's stock under existing stock repurchase
programs, the 1,800,000 shares would equate to approximately 4.6% of the then
outstanding common stock. Of the 4,990,000 options granted under the 1989 Plan
and the 1994 Plan, approximately 3,200,000 are outstanding of which
approximately 2,000,000 are exercisable as of the record date.

Stock options granted under the 1998 Incentive Plan will have a term of ten
years from the date of grant. The Compensation Committee has the discretion to
establish the exercise price of stock options as either (1) 100% of the fair
market value of the underlying shares of Common Stock ('Market-Priced Options')
or (2) more than 100% of such fair market value ('Premium-Priced Options'). It
is anticipated that awards of Premium-Priced Options may be granted every three
to five years as a

<PAGE>
<PAGE>
supplement to annual grants of Market-Priced Options. The Compensation Committee
may authorize the Company to provide or guarantee a loan to an employee in order
to assist with the financing of the exercise of a stock option or the payment of
the withholding taxes with respect to any award under the 1998 Incentive Plan.
The exercise price of a stock option is payable at the time of exercise in cash,
by the tender of shares of common stock or in a combination of cash and shares.
As of September 2, 1997, the closing price of the common stock on the New York
Stock Exchange was $25.50 per share.

Except as described below in the case of 'Insiders,' Premium-Priced Options
will vest and be exercisable on the date established by the Compensation
Committee. Of the Market-Priced Options granted to an employee, a portion will
vest as of specific dates established by the Compensation Committee and a
portion will be subject to performance vesting. At the time of grant, the
Compensation Committee will establish a 'trigger stock price' or other
performance criterion upon which the vesting of such options will be based for
each Market-Priced Option subject to performance vesting. These options will
become exercisable the earlier of the date when the market price of the common
stock equals or exceeds the trigger stock price for a period of ten consecutive
trading days (or such longer period as shall be determined by the Compensation
Committee) or the ninth anniversary of the grant. The vesting of stock options
will be accelerated upon a change in control of the Company (as defined in the
1998 Incentive Plan), the death, disability or retirement of the grantee, or
other circumstances the Compensation Committee deems appropriate. Under no
circumstances, however, will stock options granted to employees who are subject
to the short-swing profit rules under Section 16 of the Securities Exchange Act
of 1934 ('Insiders') be exercisable until six months following the date of grant
thereof.

Unless the Compensation Committee determines otherwise, stock options will
remain exercisable for sixty days following the date of termination of the
grantee's employment for reasons other than death, disability or retirement, but
not beyond the ten-year term of the options. In the case of death, disability or
retirement of the grantee, however, stock options will remain exercisable for
two years from date of such event, but not beyond the ten-year term of options.

LSAR's may be granted in tandem with a stock option grant or at any time
following the stock option grant. An LSAR will be deemed exercised automatically
upon the occurrence of a change in control of the Company, or if later, six
months and one-day from the date of grant of the LSAR. Upon such exercise, the
grantee, in cancellation of the underlying stock options, will receive cash
equal to the excess of the fair market value of the shares of common stock
subject to the LSAR over the total exercise price of the related stock option.

In the event of a change in the outstanding shares of common stock of the
Company due to a stock split, stock dividend, recapitalization,
reclassification, spin-off, merger, consolidation, combination or exchange of
shares or other similar corporate change, or in the event of any special
distribution to stockholders (other than a normal cash dividend), the
Compensation Committee, in its discretion, may adjust the number and kind of
shares available for awards under the 1998 Incentive Plan and the terms of
outstanding awards, including in the case of outstanding stock options, the
exercise price of and the number of shares of common stock subject to such stock
options, and such other adjustments as the Compensation Committee shall deem to
be appropriate and equitable under the circumstances.

The Board of Directors of the Company may amend, suspend or terminate the
1998 Incentive Plan at any time, except that the approval by the Company's
stockholders of an amendment will be required if the amendment increased the
number of shares reserved for issuance under the 1998 Incentive Plan (other than
adjustments authorized by the Compensation Committee in connection with certain
significant corporate events, as described above).

FEDERAL INCOME TAX CONSEQUENCES

The following is a brief summary of the federal income tax attributes of
ISO's, NQSO's, and LSAR's granted under the 1998 Incentive Plan:

The grant of an ISO has no tax consequences to the Company or to the
grantee. In addition, the grantee recognizes no taxable income at the time of
exercise of an ISO. However, upon exercise, the difference between the fair
market value of the underlying common stock and the exercise price of the

<PAGE>
<PAGE>
ISO is an item of tax preference subject to the possible application of the
alternative minimum tax. If the grantee holds the shares acquired upon exercise
of an ISO for at least two years from the date of the grant of the ISO and at
least one year from the date of exercise, he or she will recognize taxable
long-term capital gain or long-term capital loss upon a subsequent sale of the
shares at a price different from the option exercise price. In either of these
events, no deduction would be allowed to the Company for federal income tax
purposes.

If the grantee disposes of the shares acquired upon exercise of an ISO
within either of the holding periods described above (i) the grantee will
recognize taxable ordinary income in the year of such disposition in an amount
equal to the fair market value of the shares on the exercise date minus the
exercise price of the ISO, provided that if the disposition is a sale or
exchange with an unrelated party, then the ordinary income will be limited to
the excess of the amount realized upon the sale or exchange of the shares over
the exercise price; (ii) the Company will be entitled to a deduction for such
year equal to the amount of taxable ordinary income recognized by the grantee;
(iii) the grantee will recognize capital gain or loss, short-term or long-term,
as the case may be, in an amount equal to the difference between (a) the amount
realized by him upon such sale or exchange of the shares and (b) the option
exercise price paid by him increased by the amount of ordinary income, if any,
recognized by him upon such disposition.

The grant of an NQSO has no tax consequences to the Company or to the
grantee. Upon the exercise of an NQSO, however, the grantee will recognize
taxable ordinary income in the amount equal to the excess of the fair market
value on the date of exercise of the shares of common stock acquired over the
exercise price of the NQSO, and such amount will be deductible for federal
income tax purposes by the Company. The holder of such shares will, upon a
subsequent disposition of the shares, recognize short-term or long-term capital
gain or loss, depending on the holding period of the shares.

The grant of an LSAR has no tax consequences to the Company or to the
grantee. To the extent that an LSAR is exercised, in the amount paid to the
grantee will be taxed to him or her as ordinary income, and the Company will
receive a corresponding deduction at the same time.

As of the date of this Proxy Statement, the Compensation Committee has made
no grants under the 1998 Incentive Plan, and for this reason the benefits or
amounts that will be received by or allocated to the following persons and
groups are not now determinable: the Chief Executive Officer; the Company's four
most highly compensated executive officers other than the Chief Executive
Officer; all current executive officers as a group; all employees, including all
current officers who are not executive officers as a group, and each nominee for
election as a director.

This summary of the 1998 Incentive Plan is qualified in its entirety by
reference to the entire text of the 1998 Incentive Plan which is attached hereto
as Exhibit A.

The Board of Directors recommends a vote FOR the approval of the 1998
Incentive Plan.

IV. 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.

V. 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 23, 1998 should submit them in writing to the Secretary of
the Company, First Brands Corporation, 83 Wooster Heights Road, P.O. Box 1911,
Danbury, CT 06813-1911 no later than May 7, 1998.

18
<PAGE>
<PAGE>
EXHIBIT A

FIRST BRANDS CORPORATION

1998 PERFORMANCE STOCK OPTION AND INCENTIVE PLAN

1. GENERAL PROVISIONS.

1.1. PURPOSE.

The purpose of the 1998 Performance Stock Option and Incentive Plan (the
'Plan') of First Brands Corporation (the 'Company') is to advance the interests
of the Company and its Shareholders by (i) motivating those key employees of the
Company, upon whose judgment, initiative and efforts the successful conduct of
the business of the Company largely depends, to achieve long-range corporate
objectives, (ii) enabling such employees to participate in the long-term growth
and financial success of the Company, and (iii) attracting and retaining
employees of outstanding ability.

1.2. DEFINITIONS.

For the purposes of the Plan, the following terms shall have the following
meanings:

1.2a Award. A grant of one or more Incentive Stock Options,
Non-qualified Stock Options, Limited Stock Appreciation Rights, or
Performance Stock Units under this Plan.

1.2b Base Price. Base Price shall have the meaning set forth in
Section 4.3.

1.2c Change in Control. Change in Control means:

(i) a merger of the Company into or with another entity, other than
a merger in which the former stockholders of the Company own immediately
following the transaction more than 50% of the total combined voting
power of all classes of stock of the surviving entity having voting
rights or convertible into the stock having voting rights;

(ii) the sale or other disposition of all or substantially all of
the assets of the Company;

(iii) the sale or other disposition (except by means of a
registered public offering of the Common Stock of the Company on a form
other than Form S-4 or any successor form) of an amount of stock
comprising more than 50% of the total combined voting rights of all
classes of stock having voting rights or convertible into stock having
voting rights;

(iv) the liquidation or dissolution of the Company; or

(v) a change in the composition of the Board of Directors of the
Company such that at any time a majority of the Board of Directors have
been members of the Board of Directors for less than twenty-four months,
and the appointment or election of such new members of the Board of
Directors was not endorsed by at least three-fourths of the directors
who were members of the Board of Directors at the beginning of such
twenty-four month period.

1.2d Committee. The Compensation Committee of the Board of Directors
of the Company. The Committee shall be constituted so as to comply with the
disinterested administration requirement under Rule 16b-3 promulgated by
the Securities and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended, or any successor provision. In addition, the
Committee shall be comprised solely of two or more 'outside directors' as
such term is defined under Section 162(m) of the Internal Revenue Code, as
promulgated by the Internal Revenue Service, or any successor provision.

1.2e Disability. Disability means the inability of a Participant to
perform the duties of his employment for a period of ninety consecutive
days.

1.2f Exchange Act. The Securities Exchange Act of 1934, as amended or
any successor.

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<PAGE>
1.2g Fair Market Value. The average of the high and low stock prices
of the Common Stock on the date on which it is to be valued under the Plan,
as reported for the New York Stock Exchange Composite Transactions.

1.2h Incentive Stock Option. An option qualifying for tax treatment as
an 'incentive stock option' as such term is defined under Section 422 of
the Internal Revenue Code.

1.2i Internal Revenue Code. The Internal Revenue Code of 1986, as
amended, or any successor.

1.2j Limited Stock Appreciation Right (or LSAR). A stock appreciation
right that is exercised only in the event of a Change in Control as set
forth in Section 3.

1.2k Market-Priced Option. A Stock Option with an option price equal
to 100% of the Fair Market Value of the Common Stock underlying the Stock
Option on the date the Stock Option is granted.

1.2l Non-qualified Stock Option. An option that does not qualify for
tax treatment as an 'incentive stock option' as such term is defined under
Section 422 of the Internal Revenue Code.

1.2m Participant. An employee of the Company or its Subsidiaries
chosen by the Committee to participate in the Plan.

1.2n Performance Stock Unit. An Award made pursuant to Section 4 of
this Plan of the right to receive the appreciation in value of a share of
Common Stock or cash of an equivalent value after set intervals contingent
upon the achievement of specified performance criteria.

1.2o Premium-Priced Option. A Stock Option with an option price
greater than 100% of the Fair Market Value of the Common Stock underlying
the Stock Option on the date the Stock Option is granted.

1.2p Retirement. Retirement from the company with a full, unreduced
benefit under the applicable retirement plan or at, or after, age 65 if the
Participant is not covered by a company sponsored retirement plan.

1.2q Stock Option. Either an Incentive Stock Option or a Non-qualified
Stock Option.

1.2r Subsidiary. Any corporation in which the Company possesses
directly or indirectly more than 50% of the total voting rights of all
classes of stock having voting rights, or convertible into stock having
voting rights.

1.3. ADMINISTRATION.

The Committee shall have discretionary authority to administer the Plan.
The Committee is authorized, subject to the provisions of the Plan, to authorize
Awards to Participants, determine the terms and conditions of such Awards,
establish such rules and regulations as it deems necessary for the proper
administration of the Plan and to make such determinations and interpretations
in connection with the Plan as it deems necessary and advisable. All decisions
and acts of the Committee shall be final and binding upon all Participants and
on their legal representatives and beneficiaries.

The Committee may delegate to one or more of its members or to one or more
agents who may be employees of the Company such authority as it may deem
advisable, and the Committee or any person to whom it has delegated authority as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the Plan.
Notwithstanding the foregoing, the Committee must approve in advance all Awards
to Participants who are subject to the short-swing profit rules of Section 16 of
the Exchange Act. The Committee may employ attorneys, consultants, accountants
or other persons, and the Committee, the Company and its officers and directors
shall be entitled to rely upon the advice, opinions or valuations of such
persons.

1.4. ELIGIBILITY.

Any employee of the Company or a Subsidiary who has demonstrated
significant potential to contribute to the successful performance of the Company
or such Subsidiary, as determined by the

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Committee, shall be eligible to participate in the Plan. Directors who are not
employees of the Company or a Subsidiary shall not be eligible to receive Awards
under the Plan.

1.5. EFFECTIVE DATE AND PLAN TERM.

The Plan shall be effective January 1, 1998, subject to the approval of the
Plan by the Company's shareholders. Unless sooner terminated pursuant to Section
1.15, the Plan shall remain in effect until December 31, 2007.

1.6. TYPES OF AWARDS.

Awards under the Plan may be granted in any one or a combination of
Non-Qualified Stock Options, Incentive Stock Options, Limited Stock Appreciation
Rights, or Performance Stock Units as defined below in Sections 2, 3, and 4.
Options granted pursuant to the Plan may be either Incentive Stock Options or
Non-qualified Stock Options. It is the intent of the Company that Non-qualified
Stock Options granted under the Plan not be classified as Incentive Stock
Options, that Incentive Stock Options granted under the Plan be consistent with
and contain or be deemed to contain all provisions required under Section 422 of
the Internal Revenue Code and the other appropriate provisions thereof and any
implementing regulations (and any successor provisions thereof), and that any
ambiguities in construction shall be interpreted in order to effectuate such
intent.

1.7. STOCK SUBJECT TO THE PLAN.

There shall be reserved for issuance under the Plan a total of 1,800,000
shares of Common Stock of the Company, subject to adjustments pursuant to
Section 1.8. These shares of Common Stock may be authorized but unissued shares
or shares previously issued and reacquired by the Company.

In the event that any Stock Option or Performance Stock Unit under the Plan
expires or is terminated unexercised, then the shares covered by such option
shall again be available for issuance under the Plan.

1.8. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.

In the event of any change in the outstanding shares of the Common Stock of
the Company by reason of any stock split, stock dividend, recapitalization,
reclassification, spin-off, merger, consolidation, combination or exchange of
shares, or other similar corporate change, or in the event of any special
distribution to stockholders (other than a normal cash dividend), then the
Committee will make such adjustment or substitution in the kind and number of
shares and prices per share applicable to Awards outstanding and in the number
of shares which are available thereafter for awards, both under the Plan as a
whole and with respect to individuals, as the Committee determines to be
equitable and appropriate.

1.9. TRANSFERABILITY OF AWARDS.

No Incentive Stock Option and no Performance Stock Unit shall be subject to
any lien, obligation or liability of a Participant or be assignable or
transferable by a Participant, except by will or the laws of descent and
distribution or pursuant to beneficiary designation procedures approved by the
Committee. During a Participant's lifetime, Incentive Stock Options granted
under Plan shall be exercisable only by such Participant or his guardian or
legal representative.

The Committee may, in its discretion, authorize all or a portion of the
Non-qualified Stock Options to be granted to a Participant to be on terms which
permit transfer by such Participant to:

(i) the spouse, children or grandchildren of the Participant (the
'Immediate Family Members');

(ii) a trust or trusts for the exclusive benefit of such Immediate
Family Members; or

(iii) a partnership in which such Immediate Family Members are the
only partners, provided that the stock option agreement pursuant to which
such Non-qualified Stock Options are granted

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<PAGE>
must be approved by the Committee, and must expressly provide for
transferability in a manner consistent with this Section, and subsequent
transfers of transferred Non-qualified Stock Options shall be prohibited
except by will or the laws of descent and distribution. Following transfer,
any such Non-qualified Stock Options shall continue to be subject to the
same terms and conditions as were applicable immediately prior to transfer,
provided that for purposes of Section 2.6 hereof the term 'Participant'
shall be deemed to refer to the transferee. The events of termination of
employment of Sections 2.7 and 2.10 hereof shall continue to be applied
with respect to the Participant, following which the Non-qualified Stock
Options shall be exercisable by the transferee only to the extent, and for
the periods specified in Sections 2.7 and 2.10.

1.10. BENEFICIARIES.

A Participant may, with the consent of the Committee, designate a
beneficiary or beneficiaries to receive, in the event of the Participant's
death, any Awards to which the Participant would then be entitled. Such
designation will be made upon forms supplied by and delivered to the Company and
may be revoked in writing. If a Participant fails to designate a beneficiary,
then the Participant's estate will be deemed to be the beneficiary and any
rights with respect to such Awards may be transferred to the person or entity
(including a trust) entitled thereto by bequest of, or inheritance from, the
holder of such Award.

1.11. TAX WITHHOLDING.

1.11a Payment. The Company shall notify a participant of any income tax
withholding requirements arising at any time in connection with any Award
granted under the Plan. The Company shall have the right to require a
Participant to pay such withholding taxes in either of the following two ways:

(i) Cash. Such payment may be made in cash, through withholding from
the Participant's salary or otherwise; or

(ii) Common Stock. At the election of the Participant, subject to the
approval of the Committee, such payment may be made in whole or in part, in
shares of Common Stock.

1.11b Payment in Shares of Common Stock. Payment of withholding taxes in
shares of Common Stock may be made in any of the following three ways, at the
election of the Participant, subject to approval of the Committee and compliance
with such limitations, conditions and restrictions as the Committee may impose,
or by a combination of any of such ways:

(i) Surrender of Option Shares. A Participant may have shares of
Common Stock withheld from shares otherwise issuable to him in connection
with the exercise of a Stock Option;

(ii) Previously Acquired Shares. A Participant may deliver previously
acquired shares of Common Stock, acquired by him at least six months
previously, to the Company prior to transfer to such Participant of shares
issuable or deliverable to him in connection with an Award made under the
Plan; or

(iii) Tender Back of Shares. A Participant may tender shares of Common
Stock back to the Company from shares issued to or vested in such
Participant in connection with an Award made under the Plan. Shares so
withheld, delivered or tendered back shall be valued at their Fair Market
Value on the date on which the amount of tax to be withheld is determined.

1.12. FINANCING.

The Committee, in its discretion, may provide a Participant with a loan or
a guarantee of a loan in order to assist the Participant in financing the
exercise of a Stock Option or the payment of applicable income taxes incurred by
reason of the exercise of Stock Options the grant of Performance Stock Units or
the receipt of shares of Common Stock due to an Award of Performance Stock
Units.

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<PAGE>
1.13. NO RIGHT TO EMPLOYMENT.

No employee of the Company or any Subsidiary shall have any right or claim
to be granted any Award under this Plan, and the grant of any Award to a
Participant shall not give such Participant any right to continued employment.

1.14. CONFIRMING AGREEMENTS.

All Awards granted under the Plan shall be confirmed by the execution by
the Participant and the Company of an agreement setting forth the terms and
conditions of such Award, as determined by the Committee.

1.15. AMENDMENT AND TERMINATION.

The Board of Directors of the Company may, insofar as permitted by law,
amend, suspend, or terminate, the Plan at any time, provided that no amendment
may be made without the approval of the stockholders of the Company if such
approval (i) increases the aggregate number of shares reserved for issuance
under the Plan (except as provided in Section 1.8) or (ii) is required to
maintain the performance-based compensation exception under Section 162(m) of
the Internal Revenue Code for Awards granted under the Plan.

1.16. REGISTRATION OF SHARES SUBJECT TO THE PLAN.

The Company shall register the shares reserved for issuance subject to the
Plan on a Form S-8 or any successor form and shall maintain the effectiveness of
such registration unless the Committee determines that maintaining such
effectiveness would be impracticable or materially adverse to the interests of
the Company.

1.17. AWARDS IN FOREIGN COUNTRIES.

The Committee shall have the authority to adopt such modifications,
procedures and subplans as may be necessary or desirable to comply with
provisions of the laws of foreign countries in which the Company or a Subsidiary
may operate to assure the viability of the benefits of Awards made to
individuals employed in such countries and to meet the objectives of the Plan.

1.18. BENEFIT PLANS AND OTHER STOCK PLANS.

Awards under the Plan are discretionary, are not part of regular salary and
may not be used in determining the amount of compensation for any purpose under
the benefit plans of the Company or its Subsidiaries, except as the Committee
may otherwise expressly provide.

The adoption of the Plan shall have no effect on awards made or to be made
pursuant to other stock plans covering employees of the Company, a Subsidiary,
or any predecessors or successors thereto.

1.19. GOVERNING LAW.

The Plan shall be construed and its provisions enforced and administered in
accordance with the General Corporation Law of the State of Delaware and
applicable federal securities laws and regulations.

2. STOCK OPTIONS.

2.1. GRANTS OF STOCK OPTIONS.

Subject to the provisions of the Plan, the Committee shall have the sole
authority to determine the Participants to whom Stock Options shall be granted,
the number of shares to be covered by each Stock Option, and the conditions and
limitations applicable thereto. The Committee shall have the discretion to grant
Incentive Stock Options or Non-qualified Stock Options.

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<PAGE>
2.2. LIMITATION ON GRANTS OF STOCK OPTIONS TO INDIVIDUAL PARTICIPANTS.

No more than 200,000 shares may be granted to an individual Participant in
the form of Stock Options in any calendar year, subject to adjustments pursuant
to Section 1.8.

2.3. OPTION PRICE.

The option price of shares of Common Stock covered by a particular Stock
Option shall be determined by the Committee at the time the Stock Option is
granted. Such option price shall be equal to, or greater, than 100% of the Fair
Market Value of the Common Stock underlying the Stock Option on the date the
Stock Option is granted. Incentive Stock Options granted to an employee owning
stock possessing more than 10 percent of the total combined voting power of all
of the classes of stock of the Company shall have exercise prices no less than
110% of the Fair Market Value of a share of Common Stock on the date the Stock
Option is granted. Such price shall be subject to adjustment as provided in
Section 1.8.

2.4. TERM OF STOCK OPTIONS.

The term of each Stock Option granted under the Plan shall be not more than
ten years from the date of grant. Incentive Stock Options granted to an employee
owning stock possessing more than 10 percent of the total combined voting power
of all of the classes of stock of the company shall have terms no longer than 5
years from the date of grant of the Stock Option.

2.5. VESTING.

2.5a General. Stock Options shall vest and become exerciseable in
accordance with this Section 2.5a. The Stock Options will vest as follows:

(i) All Stock Options. If so required under rule 16b-3 under the
Exchange Act as in effect during the term of the Plan, no Stock Option
granted to a Participant who is subject to the short-swing profit rules of
Section 16 of the Exchange Act shall become exercisable until six months
following the date on which it is granted.

(ii) Premium-Priced Options. The Committee in its sole discretion,
subject to the above limitation, shall determine the vesting schedule for
Premium-Priced Options.

(iii) Market-Priced Options. A portion of the Market-Priced Options
granted to a Participant may be subject to performance-based vesting (as
described in Section 2.5b below) and the remainder may be subject to
time-based vesting (as described in Section 2.5c below), subject to the
above limitation.

2.5b Performance-Based Vesting. Stock Options subject to performance-based
vesting will vest upon the earlier of the (i) achievement of specified
performance criteria or (ii) the ninth anniversary of the date of grant of such
Stock Options. The Committee, in its sole discretion, shall establish the
performance criteria upon which the vesting of such options will be based. If
the Committee does not set other performance criteria, it shall establish a
'Trigger Price' for the Common Stock as the performance criterion. If the Fair
Market Value of the Common Stock exceeds the Trigger Price for a period of ten
consecutive trading days, or such longer period as the Committee determines, the
performance criterion shall have been achieved (and the Stock Options will
vest).

2.5c Time-Based Vesting. With respect to Stock Options subject to
time-based vesting, the Committee, in its sole discretion, shall determine a
schedule of one or more dates as of which all, or a specified portion, of such
stock options shall vest.

2.6. EXERCISE OF OPTIONS.

Subject to the vesting provisions set forth in the applicable stock option
agreement, a Stock Option granted under the Plan may be exercised by the
Participant in whole or, from time to time, in part. The option price of each
share as to which a stock option is exercised shall be paid in full at the time
of exercise. Such payment shall be made, at the discretion of the Participant,
in cash, by the tender of

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<PAGE>
shares of Common Stock acquired at least six months previously, or in a
combination of cash and such shares of Common Stock. Any shares of Common Stock
that are so tendered by a Participant shall be valued at their Fair Market Value
on the date of exercise.

2.7. DEATH, DISABILITY AND RETIREMENT.

2.7a Vesting. All Stock Options granted to a Participant shall become
immediately exercisable upon Death, Disability or Retirement of such Participant
provided, however, that, if so required under Rule 16b-3 under the Exchange Act
as in effect during the term of the Plan, in no event other than Death or
Disability shall Stock Options granted to a Participant who is subject to the
short-swing profit rules of Section 16 of the Exchange Act become exercisable
prior to six months following the date of grant.

2.7b Exercise. Stock Options granted to a Participant shall remain
exercisable for a period of two years from the Death, Disability or Retirement
of such Participant, but shall not remain exercisable beyond the original option
term.

2.8. CHANGE IN CONTROL.

All Stock Options granted under the Plan shall become immediately
exercisable upon the occurrence of a Change in Control.

2.9. COMMITTEE DISCRETION TO ACCELERATE VESTING.

The Committee shall have the discretion to accelerate the vesting dates
applicable to any Stock Options granted to a Participant under the Plan under
any circumstances it may deem appropriate. Any such acceleration shall have no
effect on the vesting dates applicable to other Stock Options, if any, granted
to that Participant or to Stock Options granted to other Participants.

2.10. TERMINATION OF EMPLOYMENT.

Upon termination of employment of a Participant for any reason other than
Death, Disability, or Retirement, Stock Options held by such Participant may be
exercised for a period ending on the earlier of: (i) the expiration of the
original option term, or (ii) sixty days following the date of termination of
employment. Thereafter, all such Stock Options shall terminate and shall no
longer be exercisable, provided however, that the Committee, in its discretion,
may notify a Participant that any or all Stock Options granted to him shall
remain exercisable for a particular period or time following such Participant's
termination of employment.

3. LIMITED STOCK APPRECIATION RIGHTS.

3.1. GRANTS OF LIMITED STOCK APPRECIATION RIGHTS.

Limited Stock Appreciation Rights ('LSARs') may be granted to a Participant
in tandem with Stock Options granted to such Participant or at any time
following the date of grant of Stock Options to such Participant. LSARs that are
granted to a particular Participant shall relate to specifically identified
Stock Options granted to such Participant either in tandem with such LSARs or at
an earlier time.

3.2. EXERCISE.

Upon the occurrence of a Change in Control of the Company, all LSARs that
have been granted under the Plan shall immediately, and without any action or
discretion on the part of the Participant, be exercised, provided, however,
that, if so required under Rule 16b-3 under the Exchange Act as in effect during
the term of the Plan, LSARs granted to Participants who are subject to the
short-swing profit rules of Section 16 of the Exchange Act shall be exercised on
the later of: (i) the occurrence of a Change in Control; or (ii) six months and
one day following the date of grant. Upon the exercise of an LSAR, the Stock
Option to which such LSAR relates shall terminate and shall no longer be
exercisable.

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3.3. VALUE AND PAYMENT.

The exercise of an LSAR shall entitle the Participant to receive from the
Company an amount equal to the excess of the Fair Market Value on the date of
such exercise of a share of the Common Stock of the Company and the option price
of the Stock Options to which such LSAR relates, provided, however, that for the
purpose of this Section 3.3, Fair Market Value shall mean the price per share
paid in the transaction resulting in the Change in Control. Such amount shall be
paid by the Company to the Participant in cash on or within five days following
the date of the exercise of the LSAR.

4. PERFORMANCE STOCK UNITS.

4.1. GRANTS OF PERFORMANCE STOCK UNITS.

Subject to the provisions of the Plan, the Committee shall have the sole
authority to determine the Participants to whom Performance Stock Units shall be
granted, the number of shares to be covered by each Performance Stock Unit, and
the conditions and limitations applicable thereto. It is the intention of the
Committee to limit the grant of Performance Stock Units to key employees located
in countries where grants of Options cannot be made.

4.2. LIMITATION ON GRANTS OF PERFORMANCE STOCK UNITS TO INDIVIDUAL PARTICIPANTS.

No more than 150,000 shares may be granted to an individual Participant in
the form of Performance Stock Units in any calendar year, subject to adjustments
pursuant to Section 1.8.

4.3. PERFORMANCE STOCK UNIT BASE PRICE.

The base price of shares of Common Stock covered by a particular
Performance Stock Unit (the 'Base Price') shall be determined by the Committee
at the time the Performance Stock Unit is granted. Such Base Price shall be
equal to, or greater, than 100% of the Fair Market Value of the Common Stock
underlying the Performance Stock Unit on the date the Performance Stock Unit is
granted. Such Base Price shall be subject to adjustment as provided in Section
1.8.

4.4. TERM OF PERFORMANCE STOCK UNITS.

The term of each Performance Stock Unit granted under the Plan shall be not
more than seven (7) years from the date of grant.

4.5. VESTING.

4.5a General. Performance Stock Units shall vest and become exerciseable in
accordance with this Section 4.5a. The Performance Stock Units will vest as
follows:

(i) All Performance Stock Units. If so required under Rule 16b-3 under
the Exchange Act as in effect during the term of the Plan, no Performance
Stock Unit granted to a Participant who is subject to the short-swing
profit rules of Section 16 of the Exchange Act shall become exercisable
until six months following the date on which it is granted.

(ii) Time-Based Vesting Requirement. The Committee, in its sole
discretion, shall determine a schedule of one or more dates as of which
all, or a specified portion, of such Performance Stock Units shall vest.
Unless the Committee determines otherwise, the Performance Stock Units
shall vest 20% per year beginning on the third anniversary of the grant.

(iii) Performance Requirement. The Committee, in its sole discretion,
shall determine whether the vesting of an Award of Performance Stock Units
shall also be contingent on the achievement of specified performance
criteria. The Committee, in its sole discretion, shall establish the
performance criteria upon which the vesting of such Performance Stock Units
will be based. If the Committee does not set other performance criteria, it
shall establish a 'Trigger Price' for the Common Stock as the performance
criterion. If the Fair Market Value of the Common Stock exceeds the Trigger
Price for a period of ten consecutive trading days, or such longer period
as the

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<PAGE>
Committee determines, the performance criterion shall have been achieved.
If the performance criteria are not achieved, the vesting of the
Performance Stock Units shall be deferred until the seventh anniversary of
the grant or the Performance Stock Units shall be forfeited, as set forth
in the Performance Stock Unit agreement at the discretion of the Committee.

4.6. EXERCISE OF PERFORMANCE STOCK UNITS.

4.6a Exercise. Performance Stock Units will be exercised automatically upon
vesting. The number of Performance Stock Units vested shall be determined based
on the degree to which the time-based and performance requirements have been
met.

4.6b Payment. Share certificates or, at the discretion of the Committee,
cash of an equivalent value, shall be delivered to the Participant in a number
equal to the product of (i) the number of Performance Stock Units vested and
(ii) the difference between (x) the Fair Market Value of the Common Stock on the
date of vesting and the Performance Stock Unit's Base Price (per share).

4.6c Deferral. A Participant may elect to defer receipt of payment to a
later date, subject to terms and conditions that the Committee may impose. The
Committee may provide for the payment of interest on the deferred amounts in its
sole discretion.

4.7. DEATH, DISABILITY AND RETIREMENT.

All Performance Stock Units granted to a Participant shall become
immediately vested upon Death, Disability or Retirement of such Participant
provided, however, that, if so required under Rule 16b-3 under the Exchange Act
as in effect during the term of the Plan, in no event other than Death or
Disability shall Performance Stock Units granted to a Participant who is subject
to the short-swing profit rules of Section 16 of the Exchange Act become
exercisable prior to six months following the date of grant.

4.8. CHANGE IN CONTROL.

All Performance Stock Units granted under the Plan shall become immediately
vested upon the occurrence of a Change in Control.

4.9. COMMITTEE DISCRETION TO ACCELERATE VESTING.

The Committee shall have the discretion to accelerate the vesting dates
applicable to any Performance Stock Units granted to a Participant under the
Plan under any circumstances it may deem appropriate. Any such acceleration
shall have no effect on the vesting dates applicable to other Performance Stock
Units, if any, granted to that Participant or to Performance Stock Units granted
to other Participants.

4.10. TERMINATION OF EMPLOYMENT.

Upon termination of employment of a Participant for any reason other than
Death, Disability, or Retirement, unvested Performance Stock Units held by such
Participant shall be forfeited and any deferred amounts shall be paid within
sixty days.

27
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[Logo]
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ANNEX 1

PROXY

FIRST BRANDS CORPORATION
83 WOOSTER HEIGHTS ROAD
DANBURY, CT 06813-1911

[LOGO]

ANNUAL MEETING OF STOCKHOLDERS -- FRIDAY, OCTOBER 24, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints WILLIAM V. STEPHENSON and JOSEPH B. FUREY,
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 24,
1997 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
LLP AS INDEPENDENT AUDITORS FOR FISCAL 1998, AND FOR THE RATIFICATION OF A NEW
PERFORMANCE STOCK OPTION AND INCENTIVE PLAN 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 [ ]

J.R. Maher, J.C. Ferries, W.V.
Stephenson, R.G. Tobin
</TABLE>

(Continued and to be signed on the other side)

<PAGE>
<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 KPMG Peat 3. Proposal to ratify a new performance stock
Marwick as independent auditors for the fiscal option and incentive plan.
year 1998.
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:...................., 1997

................................
Signature

................................
Signature if held jointly

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.