<PAGE> 1
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SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
PPG INDUSTRIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PPG INDUSTRIES, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which 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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<PAGE> 2
[PPG Logo]
PPG Industries, Inc. One PPG Place Pittsburgh, Pennsylvania 15272
March 7, 1997
DEAR SHAREHOLDER:
You are cordially invited to attend the Annual Meeting of Shareholders of
PPG Industries, Inc. to be held on Thursday, April 17, 1997, at 2:00 P.M. in The
Westin William Penn Hotel, William Penn Place, Pittsburgh, Pennsylvania. We look
forward to personally greeting those shareholders who will be able to be
present.
This booklet includes the Notice of the Annual Meeting and the Proxy
Statement, which contains information about the business of the Annual Meeting
and about your Board of Directors and its committees and certain executive
compensation. This year, in addition to the election of four Directors and the
election of Auditors, you are being asked to consider a proposal to amend and
restate the PPG Industries, Inc. 1984 Stock Option Plan. Your Board of Directors
recommends that you vote in favor of the proposal. The amended and restated Plan
will continue to provide the Company with a means of tying executive
compensation directly to share value. The proposal is fully described in the
accompanying Proxy Statement which you are urged to read carefully before giving
your proxy.
It is important that your shares be represented at the Annual Meeting. You
are, therefore, urged to complete, sign and date the accompanying Proxy and
Voting Instruction Card and return it promptly in the enclosed return envelope
whether or not you plan to attend the Meeting.
Sincerely yours,
Jerry E. Dempsey
Chairman of the Board
<PAGE> 3
PPG INDUSTRIES, INC.
One PPG Place, Pittsburgh, Pennsylvania 15272
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 17, 1997
Notice is hereby given that the Annual Meeting of Shareholders of PPG
Industries, Inc. will be held on Thursday, April 17, 1997, at 2:00 P.M.,
prevailing time, in THE WESTIN WILLIAM PENN HOTEL, WILLIAM PENN PLACE,
PITTSBURGH, PENNSYLVANIA, for the purpose of considering and acting upon the
following:
1. The election of four Directors;
2. The election of Auditors;
3. A proposal to amend and restate the PPG Industries, Inc. 1984 Stock
Option Plan; and
4. Such other matters as may properly come before the Meeting or any
adjournment thereof.
Only shareholders of record of the Company as of the close of business on
February 18, 1997 are entitled to notice of and to vote at the Meeting or any
adjournment thereof.
Admission to the Meeting will be by Admission Card only. If you are a
shareholder of record or a Savings Plan participant and plan to attend, you may
obtain an Admission Card by marking the box provided on the Proxy and Voting
Instruction Card. If your shares are not registered in your name, please advise
the shareholder of record (your bank, broker, etc.) that you wish to attend.
That firm will request an Admission Card for you or provide you with evidence of
your ownership that will gain you admission to the Meeting.
H. Kennedy Linge, Secretary
Pittsburgh, Pennsylvania
March 7, 1997
<PAGE> 4
PPG INDUSTRIES, INC.
One PPG Place, Pittsburgh, Pennsylvania 15272
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS--APRIL 17, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Voting Securities........................................................... 2
Election of Directors....................................................... 5
Committees of the Board................................................ 8
Compensation of Directors.............................................. 10
Other Transactions..................................................... 11
Compensation of Executive Officers.......................................... 11
Compensation Committee Report on Executive Compensation................ 11
Summary of Named Executives' Compensation.............................. 16
Option Grants.......................................................... 17
Option Exercises and Fiscal Year-End Values............................ 19
Retirement Plans....................................................... 20
Employment Agreements and Change In Control Arrangements............... 22
Shareholder Return Performance Graph................................... 23
Election of Auditors........................................................ 24
Proposal to Approve Amendments to, and the Restatement of, the PPG
Industries, Inc. 1984 Stock Option Plan................................... 24
Background and Brief Description of Amendments......................... 24
Summary of Material Features of the PPG Industries, Inc. Stock Plan.... 26
Miscellaneous............................................................... 32
Vote Required.......................................................... 32
Solicitation Costs..................................................... 33
Shareholder Proposals.................................................. 33
Section 16(a) Beneficial Ownership Reporting Compliance................ 33
Other Matters.......................................................... 34
Exhibit A--PPG Industries, Inc. 1984 Stock Option Plan, Amended and Restated
as the PPG Industries, Inc. Stock Plan.................................... 35
</TABLE>
<PAGE> 5
PPG INDUSTRIES, INC.
One PPG Place, Pittsburgh, Pennsylvania 15272
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS--APRIL 17, 1997
This Proxy Statement is being mailed to the shareholders of PPG Industries,
Inc. (herein sometimes called "PPG" or the "Company") on or about March 7, 1997,
in connection with the solicitation of proxies by the Board of Directors of the
Company (herein sometimes called the "Board of Directors" or the "Board"). Such
proxies, which may be given in the form of the accompanying Proxy and Voting
Instruction Card, will be voted at the Annual Meeting of Shareholders of the
Company (herein sometimes called the "Meeting") to be held on Thursday, April
17, 1997, at 2:00 P.M., prevailing time, in THE WESTIN WILLIAM PENN HOTEL,
WILLIAM PENN PLACE, PITTSBURGH, PENNSYLVANIA and at any adjournment thereof.
Proxies may be revoked at will before they have been exercised, but the
revocation of a proxy will not be effective until written notice thereof has
been given to the Secretary of the Company.
------------------------
VOTING SECURITIES
As of the close of business on February 18, 1997, there were outstanding
182,470,438 shares of the Common Stock of the Company, par value $1.66 2/3 per
share, the only class of voting securities of the Company outstanding. Only
shareholders of record as of the close of business on February 18, 1997 are
entitled to notice of and to vote at the Meeting. Except with respect to the
election of Directors, each such shareholder is entitled to one vote for each
share so held. With respect to the election of Directors, the right of
cumulative voting exists. That right permits each shareholder to multiply the
number of shares the shareholder is entitled to vote by the number of Directors
to be elected in order to determine the number of votes the shareholder is
entitled to cast for the nominees, and, then, to cast all or any number of such
votes for one nominee or to distribute them among any two or more nominees. The
proxies solicit discretionary authority to vote cumulatively.
Set forth below is certain information with respect to the beneficial
ownership of shares of the Common Stock as of February 18, 1997 by certain
persons, including (i) the nominees for Directors, one of whom is the Chief
Executive Officer of the Company (hereinafter sometimes
2
<PAGE> 6
called the "CEO"), the continuing Directors, one of whom is the President and
Chief Operating Officer of the Company (hereinafter sometimes called the
"President"), and the three other most highly compensated Executive Officers (as
defined under the Securities Exchange Act of 1934) of the Company (in addition
to the CEO and the President) and (ii) such persons and all other Executive
Officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership(1)
--------------------------------------
Name of Shares of Common Stock
Beneficial Owner Common Stock(2)(3) Equivalents(4)
------------------------------------ ------------------ ---------------
<S> <C> <C>
Jerry E. Dempsey.................... 315,800 56,829
Erroll B. Davis, Jr................. 1,105 2,021
Michele J. Hooper................... 1,600 603
Allen J. Krowe...................... 4,000 8,826
Raymond W. LeBoeuf.................. 280,587 29,644
Steven C. Mason..................... 2,000 6,958
Harold A. McInnes................... 2,400 8,979
Robert Mehrabian.................... 2,000 4,892
Vincent A. Sarni.................... 317,374 463
Thomas J. Usher..................... 1,000 51
David G. Vice....................... 7,000 3,588
David R. Whitwam.................... 2,000 6,837
E. Kears Pollock.................... 151,013 17,837
Frank A. Archinaco.................. 157,052 6,187
William H. Hernandez................ 120,718 4,039
All of the above and all other
Executive Officers as a
Group(5)....................... 1,708,168 195,903
</TABLE>
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(1) Each of the named beneficial owners has sole voting power and sole
investment power as to all of the shares beneficially owned by him or her
with the exception of (i) shares held by certain of them jointly with, or
directly by, their spouses and (ii) the Common Stock Equivalents which are
described more fully below and which carry no voting rights.
(2) Shares of Common Stock considered to be beneficially owned include both
Common Stock actually owned and shares of Common Stock as to which there is
a right to acquire ownership
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<PAGE> 7
within sixty days of February 18, 1997. Of the shares shown, 288,128,
192,284, 239,463, 119,057, 111,848 and 115,780 of the shares of Messrs.
Dempsey, LeBoeuf, Sarni, Pollock, Archinaco and Hernandez, respectively, and
1,353,120 of the shares held by all of the beneficial owners named above and
all other Executive Officers as a Group are shares as to which the
beneficial owner has the right to acquire beneficial ownership within sixty
days of February 18, 1997, upon the exercise of Options granted under the
PPG Industries, Inc. 1984 Stock Option Plan (sometimes also referred to in
this Proxy Statement as the "1984 Stock Option Plan" or the "Plan").
(3) None of the identified beneficial owners, including all of the named
beneficial owners and all other Executive Officers as a Group, beneficially
owns shares of Common Stock in excess of 1% of the total beneficially owned
shares of Common Stock of the Company.
(4) Certain Directors hold Common Stock Equivalents in their accounts in the
Directors' Common Stock Plan and in their accounts in the Deferred
Compensation Plan for Directors (which plans are described under
"Compensation of Directors" below). Certain Executive Officers hold Common
Stock Equivalents in their accounts in the Company's Deferred Compensation
Plan as a result of their deferral of salary under that plan or their
deferral of awards made to them under the Company's Incentive Compensation
and Deferred Income Plan for Key Employees (the "Incentive Compensation
Plan") and the 1984 Earnings Growth Plan. Common Stock Equivalents are
hypothetical shares of Common Stock having a value on any given date equal
to the value of a share of Common Stock. Common Stock Equivalents earn
dividend equivalents until the Common Stock Equivalents are paid, but their
holders have no voting rights or other rights of a holder of the Common
Stock.
(5) The Group consists of seventeen persons: the seven Executive Officers of the
Company as of February 18, 1997 (Messrs. Dempsey, LeBoeuf, Pollock,
Archinaco and Hernandez and Messrs. R. L. Crane and G. A. Zoghby), the three
nominees for Directors in addition to Mr. Dempsey and the seven continuing
Directors who are not Executive Officers.
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ELECTION OF DIRECTORS
Four Directors are to be elected to a class which will serve until the year
2000 and until their successors have been elected and qualified, with the
exception of Mr. Dempsey who will retire on November 1, 1997. It is intended
that the shares represented by each proxy will be voted cumulatively as to each
class, in the discretion of the proxies, for the nominees for Directors set
forth below, each of whom is an incumbent, or for any substitute nominee or
nominees designated by the Board of Directors in the event any nominee or
nominees become unavailable for election. The principal occupations of, and
certain other information regarding, the nominees and the continuing Directors
are set forth below.
------------------
Nominees to Serve in the Class whose Term Expires in the Year 2000
------------------
JERRY E. DEMPSEY, Chairman of the Board and Chief Executive
Officer, PPG Industries, Inc. Mr. Dempsey, 64, has been a
Director of PPG since 1993. He joined PPG in August, 1993 as
Chairman of the Board and Chief Executive Officer-Elect and in
September, 1993 he became Chairman of the Board and Chief
Photo Executive Officer. From 1991 until he joined PPG, he was
Senior Vice President of WMX Technologies, Inc., a waste
treatment and disposal company, and Chairman of its publicly
traded, majority-owned subsidiary, Chemical Waste Management,
having served as President and Chief Executive Officer of
Chemical Waste Management since 1985. He is also a director of
WMX Technologies, Inc. and Navistar International.
STEVEN C. MASON, Chairman of the Board and Chief Executive
Officer, Mead Corporation. Mr. Mason, 61, has been a Director
Photo of PPG since 1990. He has been Chairman of the Board and Chief
Executive Officer of Mead Corporation, a forest products
company, since 1992, having served as Vice Chairman from 1991
to 1992.
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<PAGE> 9
THOMAS J. USHER, Chairman of the Board and Chief Executive
Officer, USX Corporation. Mr. Usher, 54, has been a Director
of PPG since October, 1996. He has been Chairman of the Board
Photo and Chief Executive Officer of USX Corporation, a major
producer of energy and metal products, since July, 1995. He
served as President of the U.S. Steel Group from 1991 until
1994 and as President and Chief Operating Officer of USX from
1994 until 1995. He is also a director of PNC Bank Corp. and
Transtar, Inc.
DAVID R. WHITWAM, Chairman of the Board and Chief Executive
Officer, Whirlpool Corporation. Mr. Whitwam, 55, has been a
Photo Director of PPG since 1991. He has been Chairman of the Board
and Chief Executive Officer of Whirlpool Corporation, a
manufacturer and distributor of household appliances and
related products, since 1987.
------------------
Continuing Directors-Term Expires in the Year 1998
------------------
ERROLL B. DAVIS, JR., President and Chief Executive Officer,
Wisconsin Power and Light Company and WPL Holdings, Inc. Mr.
Davis, 52, has been a Director of PPG since 1994. He has been
President of Wisconsin Power and Light Company, an electric,
Photo gas and water utility company, since 1987, and Chief Executive
Officer since 1988. He has been President and Chief Executive
Officer of WPL Holdings, Inc., the parent company of Wisconsin
Power and Light Company, since 1990. He is also a director of
Sentry Insurance Company and Amoco Corporation.
ALLEN J. KROWE, Vice Chairman, Texaco Inc. Mr. Krowe, 64, has
been a Director of PPG since 1987. He has been Vice Chairman
of Texaco Inc., an international petroleum company, since
Photo 1993, having served as Chief Financial Officer from 1988 to
1994 and as Senior Vice President from 1988 to 1993. He is
also a director of I.B.J. Schroder Bank & Trust Company,
Texaco Inc. and Greenwich Air Services, Inc.
6
<PAGE> 10
ROBERT MEHRABIAN, President, Carnegie Mellon University. Dr.
Mehrabian, 55, has been a Director of PPG since 1992. He has
Photo been President of Carnegie Mellon University, an educational
institution, since 1990. He is also a director of Allegheny
Teledyne Inc., DQE Inc. and Mellon Bank N.A.
HAROLD A. MCINNES, Retired Chairman of the Board and Chief
Executive Officer, AMP Incorporated. Mr. McInnes, 69, has been
a Director of PPG since 1986. He was Chairman of the Board and
Photo Chief Executive Officer of AMP Incorporated, an electrical
products company, from 1990 until his retirement in 1993. He
is also a director and Chairman of the Executive Committee of
the Board of Directors of AMP Incorporated.
------------------
Continuing Directors-Term Expires in the Year 1999
------------------
MICHELE J. HOOPER, President, International Business Group,
Caremark International Inc. (a subsidiary of Medpartners,
Inc.). Ms. Hooper, 45, has been a Director of PPG since 1995.
She has been Corporate Vice President of Caremark
International Inc., an alternative-site health care provider,
Photo since 1993, and President, International Business Group, of
Caremark International Inc. since November, 1992 when Caremark
International Inc. was spun off from Baxter Healthcare
International. Prior to the spin-off, Ms. Hooper had been
President, International Business Group, of Baxter since
December, 1991. She is also a director of Dayton Hudson
Corporation and The Seagram Company Ltd.
RAYMOND W. LEBOEUF, President and Chief Operating Officer, PPG
Industries, Inc. Mr. LeBoeuf, 50, has been a Director of PPG
since 1995 when he also became President and Chief Operating
Photo Officer of the Company. He served as Executive Vice President
from April, 1994 to December, 1995, Group Vice President,
Coatings and Resins from March, 1994 to April, 1994, and Vice
President, Finance and Chief Financial Officer from 1988 until
March, 1994.
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<PAGE> 11
VINCENT A. SARNI, Retired Chairman of the Board and Chief
Executive Officer, PPG Industries, Inc. Mr. Sarni, 68, has
been a Director of PPG since 1984. He was Chairman of the
Board and Chief Executive Officer of PPG from 1984 until his
retirement in 1993. He is also a director of Hershey Foods
Corp., The LTV Corporation and PNC Bank Corp.
DAVID G. VICE, Retired Vice-Chairman, Products and Technology,
Northern Telecom Limited. Mr. Vice, 63, has been a Director of
PPG since 1988. He was Vice-Chairman, Products and Technology,
of Northern Telecom Limited, a telecommunications systems
company, from 1990 until his retirement in 1992. He is also a
director of Sun Life Assurance Company of Canada and Stackpole
Limited.
COMMITTEES OF THE BOARD
The Board of Directors has appointed several standing committees, including
an Audit Committee, a Nominating and Governance Committee and an
Officers-Directors Compensation Committee. During 1996, the Board held nine
meetings, while the Audit Committee held three meetings, the Nominating and
Governance Committee five meetings and the Officers-Directors Compensation
Committee six meetings. The average attendance at meetings of the Board and
Committees of the Board during 1996 was over 90%, and each Director, other than
Mr. Usher, attended at least 80% of the total number of meetings of the Board
and Committees of the Board on which such Director served. Mr. Usher, who was a
Director for just two meetings in 1996, was unable to attend one of them due to
commitments he had made prior to his election to the Board. Descriptions of the
Audit, Nominating and Governance and Officers-Directors Compensation Committees
are set forth below. None of the members of those Committees is a past or
present employee or officer of the Company.
Audit Committee--The functions of the Audit Committee are primarily to
review with the independent public accountants and the Company's internal
auditors their respective reports and recommendations concerning audit findings
and the scopes and plans for their respective future audit programs, and to
review audits, annual financial statements, accounting and financial controls
and compliance with appropriate codes of conduct. The Audit Committee also
recommends to the Board of Directors the independent public accountants to be
recommended for election annually
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<PAGE> 12
by the shareholders. The members of the Audit Committee are Erroll B. Davis,
Jr., Michele J. Hooper, Allen J. Krowe, Robert Mehrabian and David G. Vice.
Nominating and Governance Committee--The Nominating and Governance
Committee recommends to the Board of Directors the persons to be nominated by
the Board to stand for election as Directors at each Annual Meeting of
Shareholders, the person or persons to be elected by the Board to fill any
vacancy or vacancies in its number, the persons to be elected by the Board to be
Chairman of the Board, Vice Chairman of the Board, if any, President, and the
Executive Officers of the Company, actions to be taken regarding the structure,
organization and functioning of the Board, and the persons to serve as members
of the standing committees of, and certain committees appointed by, the Board.
The Nominating and Governance Committee also annually reports to the Board the
Committee's assessment of the performance of the Board as a whole. The members
of the Nominating and Governance Committee are Allen J. Krowe, Steven C. Mason,
Harold A. McInnes, Robert Mehrabian and David R. Whitwam.
The Company's bylaws provide that nominations for persons to stand for
election as Directors may be made by holders of record of Common Stock entitled
to vote in the election of the Directors to be elected provided that a
nomination may be made by a shareholder at a meeting of shareholders only if
written notice of such nomination is received by the Secretary of the Company
not later than (i) with respect to an election to be held at an Annual Meeting
of Shareholders held on the third Thursday in April, ninety days prior to such
Annual Meeting and (ii) with respect to an election to be held at an Annual
Meeting of Shareholders held on a date other than the third Thursday in April or
an election to be held at a special meeting of shareholders, the close of
business on the tenth day following the date on which notice of such meeting is
first given to shareholders. Each notice of nomination from a shareholder must
set forth: (a) the name and address of the shareholder who intends to make the
nomination and of the person or persons to be nominated; (b) a representation
that the shareholder is a holder of record of stock of the Company entitled to
vote at such meeting and intends to be present at the meeting in person or by
proxy to nominate the person or persons specified in the notice; (c) a
description of all arrangements or understandings between the shareholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder; (d) such other information regarding each nominee proposed by such
shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission had the
nominee been nominated by the Board of Directors; and (e) the written consent of
each nominee, signed by such nominee, to serve as a Director of the Company if
so elected.
Officers-Directors Compensation Committee--The Officers-Directors
Compensation Committee (in the Compensation Committee Report and in discussions
concerning the proposed
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<PAGE> 13
amendments to, and restatement of, the 1984 Stock Option Plan below sometimes
referred to as the "Compensation Committee" or the "Committee") approves,
adopts, administers, interprets, amends, suspends and terminates the
compensation plans of the Company applicable to, and fixes the compensation and
benefits of, all Officers of the Company serving as Directors of the Company
(currently only Messrs. Dempsey and LeBoeuf) and all Executive Officers of the
Company. The members of the Officers-Directors Compensation Committee are Erroll
B. Davis, Jr., Steven C. Mason, Harold A. McInnes, David G. Vice and David R.
Whitwam.
COMPENSATION OF DIRECTORS
Directors who are not also Officers of the Company receive a basic annual
retainer of $30,000 and a fee of $1,000 for each Board or Committee meeting they
attend. In addition, the members of the Audit Committee receive an annual
retainer of $4,000 while the members of the Nominating and Governance and
Officers-Directors Compensation Committees receive an annual retainer of $3,000
for each Committee on which they serve. The Chairman of each Committee receives
an additional $1,000 annually. Any Director who is also an Officer of the
Company receives no compensation as a Director.
Under the Company's Deferred Compensation Plan for Directors, each Director
must defer receipt of such compensation as the Board mandates. Currently, the
Board mandates deferral of one-third of each payment of the basic annual
retainer of each Director. Each Director may also elect to defer the receipt of
(i) an additional one-third of each payment of the basic annual retainer,
(ii) all of the basic annual retainer, or (iii) all compensation. All deferred
payments are held in the form of Common Stock Equivalents and earn dividend
equivalents until paid. Payments will be made in the Common Stock of the Company
(and cash as to any fractional Common Stock Equivalent). Common Stock
Equivalents are hypothetical shares of Common Stock having a value on any given
date equal to the value of a share of Common Stock. Common Stock Equivalents
carry no voting rights or other rights of a holder of Common Stock.
Under the Directors' Common Stock Plan, each Director who neither is nor
was an employee of the Company and who serves on the Board of Directors as of
the day following each Annual Meeting of Shareholders is credited with Common
Stock Equivalents worth one-half of the Director's basic annual retainer. No
more than ten annual credits may be made for the account of any Director.
Directors who were less than ten years from age 70 on the day following the 1988
Annual Meeting of Shareholders were credited with $10,000 worth of Common Stock
Equivalents for each prior year of service as a Director, but the number of such
years of prior service for which such credits were made, plus the number of
annual credits expected to be made on a Director's behalf through age 70, did
not exceed ten. The Common Stock Equivalents held in each Director's account
earn dividend equivalents until paid. Upon termination of service, the Common
Stock
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<PAGE> 14
Equivalents held in a Director's account will be paid in Common Stock (and cash
as to any fractional Common Stock Equivalent) in annual installments to the
Director or to the Director's spouse in the event of the Director's death.
Common Stock Equivalents under the Directors' Common Stock Plan are hypothetical
shares of Common Stock having a value on any given date equal to the value of a
share of Common Stock. Common Stock Equivalents carry no voting rights or other
rights of a holder of Common Stock.
As part of its overall program to promote charitable giving, the Company
has established a Directors' charitable award program funded by insurance
policies on the lives of Directors. Each of the Company's Directors participates
in the program. Upon the death of an individual Director, the Company will
donate an amount up to and including a total of $1 million to one or more
qualifying charitable organizations designated by such Director and approved by
the Company. The Company will subsequently be reimbursed from the proceeds of
the life insurance policies. Individual Directors derive no financial benefit
from this program since all charitable deductions accrue solely to the Company.
OTHER TRANSACTIONS
PPG and its subsidiaries purchase products and services from, and/or sell
products and services to, companies of which certain of the Directors of PPG are
executive officers or were executive officers during 1996. PPG does not consider
the amounts involved in such transactions material. Such purchases from, and
sales to, each company in 1996 involved less than 1% of the consolidated gross
revenues for 1996 of either party to such transactions and all such transactions
were in the ordinary course of business. Some of such transactions are
continuing and it is anticipated that similar transactions will recur from time
to time.
COMPENSATION OF EXECUTIVE OFFICERS
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Officers-Directors Compensation Committee of the Board of Directors is
responsible for determining and administering the policies which govern the
executive compensation programs of the Company. The Committee, which consists
entirely of independent outside Directors, met six times in 1996 to establish
Company performance goals, base salary pay levels and target annual bonus
awards, to approve annual bonus payments and to establish and approve long-term
incentives for the CEO and the other four executives named in the compensation
table below (collectively, the "Named Executives") and certain other Officers of
the Company.
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Philosophy
The philosophy of the Committee is that the interests of the Company and
its shareholders require attracting and retaining the best possible executive
talent, motivating executives to achieve goals which support business strategies
and linking executive and shareholder interests. The Committee believes this is
generally best accomplished by compensating the CEO and other Executive Officers
(referred to collectively in this Proxy Statement as the "Executives")
competitively while having a significant portion of their total compensation
variable and related to the performance of the Company against established goals
and to their overall personal performance in directing the enterprise. The
Committee also utilizes equity based plans for a portion of compensation to link
executive and shareholder interests.
Annual Compensation Programs
The levels of base salary and target annual bonuses for the Executives,
including Named Executives, are established annually under a program also
applicable to other professional associates. Total annual compensation is
targeted at the median of a group of large industrial companies for which
compensation data are available through an independent consulting firm. The
Committee believes that the most direct competitors for executive talent are not
necessarily the companies that are included in the Dow Jones Industrial
Diversified Index. Thus, the companies compared for annual compensation purposes
and the companies compared for long-term compensation purposes are not the same
as the companies included in the index used in the Comparison of Five-Year
Cumulative Total Shareholder Return graph on page 23.
The Executives' base salaries are maintained below the median of the salary
range midpoints of comparison data. Annual bonus awards under the Company's
Incentive Compensation Plan are then targeted at a level that, when combined
with base salaries, approximates the median base salary and annual bonus paid by
companies represented in the salary data. Competitive total compensation is
achieved when target performance is met but with a larger percent of pay at risk
than is the case in the comparison companies.
Total annual compensation should exceed the median of the comparison data
when Company financial performance meets or exceeds targets established by the
Committee and individual performance contributes to meeting strategic objectives
of the Company. Total annual compensation should be below the median of the
comparison data when Company financial performance does not meet targets and/or
individual performance does not have a positive effect on strategic objectives.
The financial performance targets established by the Committee are based on
sales growth, Return on Capital (ROC) and cash return on capital. Certain
one-time accounting adjustments are not included in determining ROC and cash
return on capital. Bonus awards are calculated
12
<PAGE> 16
using these financial targets and an assessment of personal performance related
to achievement of strategic objectives of the Company. The personal performance
rating of the CEO is determined by the Committee and the other Executives are
rated by the CEO.
Final awards are subject to the discretion of the Committee as permitted in
the Incentive Compensation Plan approved by the shareholders. If minimum
thresholds of sales growth, ROC, and cash return on capital are not achieved, no
awards are granted by the Committee. The Committee has traditionally determined
that 20% of the annual bonus award be paid in Common Stock of the Company to
build ownership levels and to align the interests of the Executives more closely
with those of the shareholders.
Long-Term Incentive Program
The Committee has established a long-term incentive program that motivates
key employees to invest in the stock of the Company and to cause the Company to
grow and profit, provides compensation levels competitive with opportunities
available elsewhere in industry and encourages key employees to continue in the
employ of the Company.
Long-term incentives are currently provided under the 1984 Stock Option
Plan which has been approved by shareholders and provides for the granting of
stock options to key management employees. Option grants are established each
year to be competitive with long-term incentive data for large companies
identified by an independent compensation consulting firm as potential
competitors for executive talent. The number of stock options granted to each
executive is determined so that an estimate of potential value of the options
when combined with annual compensation discussed above will approximate total
annual and long-term compensation paid to executives in the comparison
companies. The number of option shares granted is not determined by past Company
performance and is not dependent on the number granted in the past or the number
presently held. The options are performance related since the value of the
option is ultimately determined by the future performance of the Company as
reflected by stock price.
Also, as shown in the Option/SAR Grants in Last Fiscal Year table and
related footnotes on pages 18 and 19, the Named Executives exercised existing
options in a manner entitling them to receive Restored Options under the
Restored Option provisions of the Stock Option Plan approved by shareholders in
1992. The Restored Option provisions encourage Optionees to exercise options
earlier during the option term, thereby building stock ownership to better align
their interests with the interests of shareholders.
CEO Compensation
Mr. Dempsey's base salary for 1996 was raised 3.3% over his base salary for
1995. This salary change followed the competitive salary program described
above. His annual bonus for 1996 was
13
<PAGE> 17
determined 80% on Company financial goals and 20% on non-financial goals related
to his performance against strategic objectives of the Company. Financial goals
were weighted equally related to sales growth, ROC and cash return on capital.
The financial performance of the Company in 1996 exceeded ROC and cash return on
capital targets. The Committee also rated the CEO's 1996 performance toward
achieving strategic objectives related to succession planning, growth
initiatives, strategic planning, capital allocation, responsiveness to PPG's
shareholders and the general management of corporate issues as exceeding
requirements. Mr. Dempsey's 1996 annual bonus, therefore, exceeded the
established target.
Mr. Dempsey was granted 100,000 stock options at Fair Market Value on the
date of grant consistent with the Committee's philosophy that the estimated
value of the options combined with targeted annual compensation will be
competitive with total annual and long-term compensation provided by companies
that are potential competitors for executive talent.
Mr. Dempsey also received Restored Options for 46,798 shares in 1996 under
the Restored Option provisions of the 1984 Stock Option Plan.
Other Named Executives' Compensation
The accompanying compensation tables list four Executives other than the
CEO ("Other Named Executives"). The Other Named Executives' base salaries were
increased over 1995 base salaries consistent with our base pay practice
discussed above. Mr. R. W. LeBoeuf's increase in base salary over 1995 includes
his promotion to President and Chief Operating Officer and recognition of his
performance as Executive Vice President. Messrs. E. K. Pollock, F. A. Archinaco
and W. H. Hernandez received base salary increases in 1996 reflecting movement
to a more competitive level in line with our base salary philosophy. Current
levels of base salaries are below the median base salary position of the
comparison companies. The Other Named Executives' annual bonus awards were based
on Company and business unit financial performance measures and non-financial
measures directly related to their corporate or strategic business unit
objectives.
The number of options granted to Other Named Executives is related to the
level of responsibility determined by the Optionee's job grade level on the date
of grant. Job grade levels are established by an evaluation methodology
developed by an independent consultant. The 1996 option grants are consistent
with our philosophy cited above and represent a level of long-term incentives
that is competitive with the average provided by the comparison companies to
individuals holding positions with similar levels of responsibility. The Other
Named Executives also received Restored Options as stated in the Option/SAR
Grants in Last Fiscal Year table and related footnotes on pages 18 and 19.
14
<PAGE> 18
Deductibility of Compensation
Gains realized from exercising options under the long-term incentive 1984
Stock Option Plan are exempt from the deductibility limitations under Section
162(m) of the Internal Revenue Code. Compensation paid from the annual bonus
plan does not qualify for exemption from deductibility limits under Section
162(m). The Committee believes the annual bonus program must be sufficiently
flexible to allow the Committee to adjust awards appropriately for the effect of
unusual events such as acquisitions, divestitures and other major corporate,
accounting or legal changes impacting on sales growth, ROC and cash return on
capital. This ability to exercise discretion under the terms of the annual bonus
plan in the view of the Committee is in the best interests of the Company and
its shareholders and outweighs the need to qualify all plans so that income paid
through the plans is exempt from the deductibility limits of Section 162(m) of
the Internal Revenue Code. Nonetheless, all taxable income for 1996 of the CEO
and Other Named Executives qualified under Section 162(m) as deductible by the
Company.
Summary
Through the programs and actions of the Committee described above, a very
significant portion of the Company's executive compensation is linked directly
to Company performance and returns to shareholders. The Officers-Directors
Compensation Committee intends to continue this policy.
<TABLE>
<S> <C>
The Officers-Directors Compensation Committee:
Erroll B. Davis, Jr. David G. Vice
Steven C. Mason David R. Whitwam
Harold A. McInnes
</TABLE>
15
<PAGE> 19
SUMMARY OF NAMED EXECUTIVES' COMPENSATION
There is shown below information concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal years
ended December 31, 1996, 1995 and 1994, of those persons who (i) served as the
Chief Executive Officer of the Company at any time during 1996 and (ii) the
other four most highly compensated Executive Officers of the Company at December
31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------
Annual Compensation Awards
------------------------------------- -------------------------
Other Securities
Annual Underlying All Other
Name and Bonus($) Compensa- Options/SARs Compensa-
Principal Position Year Salary($) (1) tion($) (#) tion($)(2)
- --------------------- ---- --------- ----------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
J. E. Dempsey 1996 661,633 1,400,000 15,924 146,798 42,785
Chairman and Chief 1995 640,667 1,440,000 30,956 108,868 11,722
Executive Officer 1994 616,667 1,360,000 27,145 112,948 7,041
R. W. LeBoeuf 1996 450,000 675,000 7,250 127,758 37,359
President and Chief 1995 387,367 625,000 7,315 158,094 20,585
Operating Officer 1994 335,483 600,000 5,130 89,332 11,073
E. K. Pollock 1996 323,000 315,000 2,558 79,540 19,596
Sr. Vice President, 1995 272,117 235,000 1,835 64,161 9,768
Coatings and Resins 1994 225,783 269,500 2,017 45,139 8,607
F. A. Archinaco 1996 323,000 300,000 2,463 97,952 24,826
Sr. Vice President, 1995 291,567 325,000 2,286 82,757 14,081
Glass 1994 257,617 283,500 2,082 63,647 8,302
W. H. Hernandez 1996 276,667 295,000 850 30,106 17,130
Sr. Vice President, 1995 236,858 300,000 3,925 37,000 9,465
Finance 1994 178,833 175,000 212 16,000 8,249
</TABLE>
- ------------
(1) Cash and market value of Common Stock awarded.
(2) The following are included in the amounts shown under All Other Compensation
for 1996: Company contributions to each of the Named Executives were $9,000
under the Company's Employee Savings Plan and $300 under the Company's
Benefit Account Plan. The value of premiums paid with respect to term life
insurance for the benefit of Messrs. Dempsey, LeBoeuf, Pollock, Archinaco
and Hernandez, respectively, was $2,787, $528, $612, $486 and $230. The
amount shown for Mr. LeBoeuf includes $9,531, and the amount shown for
16
<PAGE> 20
Mr. Archinaco includes $4,660, which are the portions of interest earned on
certain deferred compensation above 120% of the applicable federal rate. The
amounts shown for Messrs. Dempsey, LeBoeuf, Pollock, Archinaco and Hernandez
include $30,698, $18,000, $9,684, $10,380 and $7,600, respectively, in
Company contributions under the PPG Industries, Inc. Deferred Compensation
Plan in lieu of contributions which could not be made under the Savings Plan
because of the Internal Revenue Code and Regulations.
OPTION GRANTS
Shown on page 18 is further information on grants of Options under the
Company's 1984 Stock Option Plan during fiscal year 1996 to the Named
Executives. All of the Options granted in 1996 were Nonqualified Options, as are
all outstanding Options. No Stock Appreciation Rights were granted in 1996 and
none are outstanding.
17
<PAGE> 21
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock Price
Individual Grants Appreciation for Option Term (2)
------------------------------------------------------ ---------------------------------------
Percent
Number of of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted(#)(1) Fiscal 1996 ($/Share) Date 0%($)(3) 5%($) 10%($)
- ---------------------- ------------ ------------ ----------- ---------- ------ ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
J. E. Dempsey 100,000 3.7 47.750 2/13/2006 0 3,003,000 7,610,000
1,253 0.1 52.000 8/12/2003 0 26,526 61,810
19,009 0.6 52.000 2/14/2005 0 544,988 1,342,225
26,536 1.0 60.750 2/14/2005 0 888,691 2,189,220
R. W. LeBoeuf 60,000 2.2 47.750 2/13/2006 0 1,801,800 4,566,000
9,907 0.4 51.000 2/11/2000 0 108,878 234,499
13,442 0.5 51.000 2/19/2001 0 189,398 418,584
44,409 1.6 51.000 2/18/2002 0 770,052 1,747,494
E. K. Pollock 25,500 0.9 47.750 2/13/2006 0 765,765 1,940,550
1,899 0.1 49.500 2/18/2002 0 31,960 72,523
20,343 0.7 49.500 2/16/2003 0 409,911 955,307
1,434 0.1 49.500 2/17/1997 (5) (5) (5)
677 0.1 49.500 2/14/2005 0 18,475 45,508
23,200 0.9 55.500 2/14/2005 0 709,920 1,748,584
2,444 0.1 55.500 2/19/2001 0 37,467 82,803
4,043 0.1 55.500 2/18/2002 0 76,332 173,121
F. A. Archinaco 28,000 1.0 47.750 2/13/2006 0 840,840 2,130,800
26,675 1.0 49.500 2/14/2005 0 727,961 1,793,094
4,848 0.2 49.500 2/16/2003 0 97,687 227,662
1,464 0.1 56.750 2/16/2003 0 33,818 78,822
3,724 0.1 56.750 2/15/1999 0 33,330 69,937
6,753 0.2 56.750 2/18/2002 0 130,333 295,714
6,571 0.2 56.750 2/16/2003 0 151,790 353,783
19,539 0.7 56.750 2/15/2004 0 529,507 1,268,081
378 0.1 56.750 2/19/2001 0 5,927 13,098
W. H. Hernandez 27,500 1.0 47.750 2/13/2006 0 825,825 2,092,750
2,606 0.1 55.500 2/18/2002 0 49,201 111,589
All Shareholders(4) 0 5,502,097,000 13,943,042,000
Named Executive
Officers' Gain as %
of All Shareholders'
Gain 0 .233 .227
</TABLE>
18
<PAGE> 22
- ------------
(1) All Options were granted at Fair Market Value (the closing price for the
Company's Common Stock as reported on the New York Stock Exchange-Composite
Transactions) on the date of grant. Five of the Options shown were granted
on February 14, 1996, at an Exercise Price of $47.75 and became exercisable
one year after the date of grant. The other Options shown on the table were
granted to the Named Executives under the Restored Option provisions of the
1984 Stock Option Plan that were approved by the shareholders in 1992. Under
the Restored Option provisions, which apply to all Nonqualified Options
outstanding on December 1, 1992, or granted thereafter, an Optionee who
surrenders (or certifies ownership of) shares of Common Stock in payment of
the Option Price of an Option is granted a new Nonqualified Option (a
"Restored Option") covering the number of shares equal to the number of
shares surrendered (or certified as to ownership) and surrendered or
withheld to satisfy tax obligations. Restored Options have the same
expiration date as the original Option, the exercise of which generated the
Restored Option, an Exercise Price equal to the Fair Market Value of the
Common Stock on the Date of Grant of the Restored Option and become
exercisable six months after the Date of Grant.
(2) The dollar amounts under these columns are the result of calculations at 0%,
and at the 5% and 10% rates set by the Securities and Exchange Commission
and, therefore, are not intended to forecast possible future appreciation,
if any, of PPG's Common Stock price.
(3) No gain to the Optionees is possible without an increase in stock price. A
0% gain in stock price will result in zero gain for the Optionee.
(4) Based on 183,220,000 issued shares (other than Treasury shares), these
amounts are the total increase in shareholder value using the 0%, 5% and 10%
assumed annual appreciation rates and the price and terms of the
February 14, 1996 grant.
(5) No future appreciation is shown since this grant was exercised on
February 5, 1997.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to exercises during 1996 of Options
granted under the 1984 Stock Option Plan and information with respect to
unexercised Options granted in 1996 and prior years under the 1984 Stock Option
Plan.
19
<PAGE> 23
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at In-the-Money Options/SARs
Shares December 31, 1996(#) at December 31, 1996($)(1)
Acquired on Value ---------------------------- ----------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. E. Dempsey 55,428 1,089,390 188,128 126,536 2,817,664 837,500
R. W. LeBoeuf 80,153 1,031,083 157,650 127,758 2,366,439 849,760
E. K. Pollock 63,399 1,080,472 94,991 55,187 1,243,210 232,117
F. A. Archinaco 84,296 1,302,893 83,848 66,249 867,721 234,500
W. H. Hernandez 10,320 242,485 88,280 30,106 1,849,590 231,941
</TABLE>
- ------------
(1) Based on the closing price on the New York Stock Exchange-Composite
Transactions of the Company's Common Stock on December 31, 1996 (last
trading day of fiscal year), which was $56.125 per share.
RETIREMENT PLANS
The Company's qualified retirement plan for salaried employees and
nonqualified retirement plan provide benefits after retirement. The annual
benefits payable upon retirement under those plans to persons in hypothetical
five-year average annual covered compensation and credited years-of-service
classifications (assuming retirement as of January 1, 1997 and date of birth in
1931) are estimated in the following table.
20
<PAGE> 24
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Base and
Incentive
5-Year Avg. Credited Years-of-Service
Total ------------------------------------------------------------
Compensation 15 20 25 30 35
- ----------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 300,000 $ 66,622 $ 88,830 $111,037 $133,245 $155,452
400,000 90,622 120,830 151,037 181,245 211,452
500,000 114,622 152,830 191,037 229,245 267,452
600,000 138,622 184,830 231,037 277,245 323,452
750,000 174,622 232,830 291,037 349,245 407,452
850,000 198,622 264,830 331,037 397,245 463,452
1,000,000 234,622 312,830 391,037 469,245 547,452
1,150,000 270,622 360,830 451,037 541,245 631,452
1,300,000 306,622 408,830 511,037 613,245 715,452
1,450,000 342,622 456,830 571,037 685,245 799,452
1,600,000 378,622 504,830 631,037 757,245 883,452
</TABLE>
The compensation covered by the Company's qualified retirement plan for
salaried employees, which is compulsory and noncontributory, is the salary of a
participant as limited by applicable Internal Revenue Service ("IRS")
regulations. The compensation covered by the Company's nonqualified retirement
plan, which is available only to those employees who participate in the
qualified retirement plan for salaried employees and in the Company's Incentive
Compensation Plan or Management Award Plan, is the compensation paid under the
latter two plans, which for the Named Executives in the Summary Compensation
Table on page 16 is shown in the "Bonus" column under "Annual Compensation."
Additional benefits may be paid to certain participants under the Company's
nonqualified retirement plan equal to any benefit which cannot be paid under the
Company's qualified retirement plan for salaried employees because of the
restrictions of any applicable IRS regulations. The benefit payable under the
Company's qualified retirement plan for salaried employees is a function of a
participant's highest consecutive five-year average annual covered compensation
during the ten years immediately prior to retirement and credited years-of-
service while a plan participant. The benefit payable under the Company's
nonqualified retirement plan is a function of the participant's five-year
average annual covered compensation for the highest five years out of the final
ten years immediately prior to retirement and credited years-of-service. The
highest five-year average annual covered compensation under both plans through
1996 for Messrs. Dempsey, LeBoeuf, Pollock, Archinaco and Hernandez is
$1,257,219, $722,361, $435,805, $487,506 and $341,778, respectively. The annual
benefits payable under the plans as shown in the table above are estimated on
the basis of a straight life annuity notwithstanding the availability of a joint
and survivor annuity or lump sum benefit and are not subject to reduction for
21
<PAGE> 25
social security benefits. For purposes of the plans, Mr. Dempsey has three and
one-half years, Mr. LeBoeuf sixteen years, Mr. Pollock thirty and one-half
years, Mr. Archinaco thirty-one and one-half years and Mr. Hernandez six years.
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
The Company has entered into employment agreements with certain key
executives, including the Named Executives, which agreements provide for the
continued employment of such executives for a period of up to three years
following a change in control of the Company. The employment agreements
contemplate that during such three-year period, such executives would continue
to be employed in capacities, and compensated on a basis, commensurate with
their capacities and compensation before the change in control occurred. The
employment agreements contemplate, further, that in the event the executive's
employment is terminated (a) for any reason by the executive during a thirty-day
window period beginning one year after a change in control, (b) at any time
during the three years following a change in control by the executive because
either he has not been employed in a commensurate capacity or he has not been
commensurately compensated or (c) by the Company at any time during the three
years following a change in control other than for cause, the executive would be
entitled to receive, subject to certain conditions, a payment. This payment
would basically be the salary and the awards under the Incentive Compensation
Plan that the executive would have received for (i) the next two years (or until
the executive's retirement date if earlier) if the termination was under
situation (a) above or (ii) for three years (or until the executive's retirement
date if earlier) if the termination was under situations (b) or (c) above.
22
<PAGE> 26
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly change in the
cumulative total shareholder return on the Company's Common Stock with the
cumulative total return of the Standard & Poor's Composite--500 Stock Index
("S&P 500 Index") and the Dow Jones Industrial Diversified Index for the
five-year period beginning December 31, 1991 and ending December 31, 1996. The
S&P 500 Index and the Dow Jones Industrial Diversified Index data presented in
the graph are based on the companies that comprised those indexes at the time
the graph was prepared on January 20, 1997. The information presented in the
graph assumes that the investment in the Company's Common Stock and each Index
was $100 on December 31, 1991 and that all dividends were reinvested.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
PPG INDUSTRIES, INC., DOW JONES INDUSTRIAL DIVERSIFIED INDEX AND S&P 500 INDEX
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
'91 '92 '93 '94 '95 '96
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
PPG $100 $134 $160 $161 $204 $256
DJID $100 $116 $142 $130 $171 $221
S&P 500 $100 $108 $118 $120 $165 $203
</TABLE>
23
<PAGE> 27
ELECTION OF AUDITORS
It is proposed that action be taken at the Meeting with respect to the
election of Deloitte & Touche LLP, Certified Public Accountants, as Auditors for
the Company for the year 1997. Deloitte & Touche LLP have been regularly engaged
by the Company for many years for the examination of accounts and other
purposes. Representatives of Deloitte & Touche LLP are expected to be present at
the Meeting and, while they do not plan to make a statement (although they will
have the opportunity if they desire to do so), they will be available to respond
to appropriate questions from shareholders.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION OF DELOITTE & TOUCHE LLP AS AUDITORS FOR
THE COMPANY FOR THE YEAR 1997.
------------------------
PROPOSAL TO APPROVE AMENDMENTS TO, AND THE RESTATEMENT OF, THE
PPG INDUSTRIES, INC. 1984 STOCK OPTION PLAN
BACKGROUND AND BRIEF DESCRIPTION OF AMENDMENTS
The PPG Industries, Inc. 1984 Stock Option Plan (sometimes referred to in
this Proxy Statement as the "1984 Stock Option Plan" or the "Plan") was adopted
by the Board of Directors on February 16, 1984 and approved by the shareholders
on April 19, 1984. The Plan was amended by the Board of Directors on
February 18, 1988 and February 20, 1992, and those amendments were approved
by the shareholders on April 21, 1988 and April 16, 1992, respectively.
The Plan is designed to promote the growth and profitability of the Company
and its subsidiaries by giving Plan participants an opportunity to invest in and
hold the Common Stock and thereby (1) provide them with additional incentive to
cause the Company and its subsidiaries to grow and profit, (2) make their
compensation competitive with opportunities available in competing industries,
and (3) encourage them to continue in the employ of the Company or a subsidiary.
The Board continues to consider the Plan an important tool for promoting
the interests of the Company and its shareholders. Although the Plan is now over
twelve years old and by its terms is scheduled to terminate on December 31,
1998, the Board believes that the goals served by the Plan are as important
today as ever and that the Plan should continue. At the same time, certain
modifications in the design of the Plan have been identified which the Board
believes would enable
24
<PAGE> 28
the Plan to better meet those goals by adding flexibility. Other changes are
necessary in order to support the deductibility of Plan awards by the Company
for federal income tax purposes under Section 162(m) of the Internal Revenue
Code and the regulations thereunder.
Accordingly, on December 12, 1996, the Board adopted certain amendments and
restated the Plan, subject to the approval of the shareholders. A detailed
description of the Plan as it would be amended and restated if approved by the
shareholders appears below under the heading Summary of Material Features of the
PPG Industries, Inc. Stock Plan. In general, the amendments, if approved, will:
(i) rename the Plan the "PPG Industries, Inc. Stock Plan" (the Plan as
amended and restated is hereinafter sometimes referred to as the
"Stock Plan" or the "Amended and Restated Plan");
(ii) extend the termination date of the Plan to December 31, 2002;
(iii) allow for the grant of up to 250,000 shares of Restricted Stock
(as later defined);
(iv) allow for the award of Options, Stock Appreciation Rights and
Restricted Stock to Directors who are not also Employees at the
discretion of the Board or the Officers-Directors Compensation
Committee;
(v) allow for the transferability of Nonqualified Stock Options at the
discretion of the Board or the Officers-Directors Compensation
Committee;
(vi) increase the maximum number of shares of Common Stock that may be
issued and as to which Options and Restricted Stock may be granted
under the Plan and provide that shares tendered by participants in
exercising Options or paying withholding taxes are restored to such
Plan maximums;
(vii) allow the Board or the Committee to delegate authority to others to
grant Awards to individuals other than the Directors and officers
of the Company who are subject to Section 16 of the Securities
Exchange Act of 1934 ("Insiders"); and
(viii) establish a limit of two million shares as the number of shares
subject to Options and Restricted Stock granted to any individual
after April 17, 1997.
Certain additional minor changes to the Plan would be included in the
Amended and Restated Plan. A copy of the Amended and Restated Plan is attached
as Exhibit A to this Proxy Statement. The following description of the Amended
and Restated Plan does not purport to be complete and is qualified in its
entirety by reference to Exhibit A. If not otherwise defined herein, capitalized
terms in this Proxy Statement used in describing the Amended and Restated Plan
shall have the same meanings as provided in the Amended and Restated Plan.
25
<PAGE> 29
SUMMARY OF MATERIAL FEATURES OF THE PPG INDUSTRIES, INC. STOCK PLAN
The Amended and Restated Plan would authorize the Committee or the Board
(or others by delegation in certain instances described later) to grant (i)
Stock Options which are either incentive stock options under the Internal
Revenue Code of 1986 ("Incentive Options") or stock options not qualified under
the Internal Revenue Code of 1986 ("Nonqualified Options") (Incentive Options
and Nonqualified Options are referred to individually or collectively herein as
"Options"), (ii) Stock Appreciation Rights, and (iii) shares of Restricted
Stock. The terms of the Amended and Restated Plan will apply to all future
awards of Options, Stock Appreciation Rights and Restricted Stock (herein
individually or collectively "Awards") as well as to all Option grants
outstanding under the Plan.
Eligible Recipients
Eligible recipients of Awards would include the Company's Directors and
such Employees of the Company and the Company's Subsidiaries who are determined
to have the ability to make a substantial contribution to the growth and
profitability of the Company or any of its subsidiaries. Awards and the terms of
Awards to Outside Directors and to other persons who are subject to Section 16
of the Securities Exchange Act of 1934 will be determined by the Board or the
Committee. Other Employees selected to receive Awards as well as the terms of
such Awards will be determined by the Board or the Committee or by others
designated by the Board or the Committee. (The granting entities are hereinafter
referred to individually or collectively as the "Award Grantor.") The number of
participants who may be granted Options, Stock Appreciation Rights and
Restricted Stock in the future is not presently known because in each instance
it is in the discretion of the Award Grantor. However, it is presently
contemplated that the number will be less than 3% of the number of Employees of
PPG and its Subsidiaries. Neither the existence of the Amended and Restated Plan
nor the grant of Options, Stock Appreciation Rights or Restricted Stock pursuant
to the Plan shall create in any recipient the right to continue to be employed
by the Company or a Subsidiary.
Authorization of Shares
The Amended and Restated Plan authorizes the grant of Restricted Stock and
Options with respect to a maximum of 10,000,000 shares of Common Stock (of which
no more than 250,000 shares may be Restricted Stock) from and after April 17,
1997 (the "Grant Authorization"). The issuance of 18,000,000 shares of Common
Stock is authorized (the "Issuance Authorization"). Common Stock will be
registered as required by the Securities and Exchange Commission regulations
prior to issuance. As of February 28, 1997 there were outstanding 8,008,199
unexercised Options under the Plan. The Issuance Authorization would cover all
exercises of Options after April 17, 1997, including exercise of outstanding
unexercised Options, and all Restricted
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Stock awarded after that date. The Amended and Restated Plan also provides that
the shares of Common Stock subject to Options plus the number of shares of
Restricted Stock granted to any one person over the remaining life of the Plan
will not exceed 2,000,000 shares. The Grant Authorization and the Issuance
Authorization and the individual limit on Awards would be subject to adjustment
in certain events including stock dividends and stock splits as more fully
described later. The Amended and Restated Plan also provides that shares of
Common Stock tendered to the Company by participants in exercising Options or
paying withholding taxes would be restored to both Authorizations but not to the
individual limit on Awards. Any shares of Common Stock subject to unexercised
Options, and remaining unexercised at the expiration or termination thereof,
would be restored to the Grant Authorization but not to the individual limit on
Awards. Restricted Stock issued under the Amended and Restated Plan and later
forfeited to the Company would be restored to both the Grant Authorization and
the Issuance Authorization but not to the individual limit on Awards. No
Options, Stock Appreciation Rights or Restricted Stock may be granted under the
Amended and Restated Plan after December 31, 2002 although Common Stock may be
issued after that date with respect to Options outstanding on that date.
Stock Options
Stock Options are contractual rights entitling a recipient to purchase a
stated number of shares of Common Stock at a price established at the time the
Stock Option is granted. Options granted under the Plan may be either Incentive
Options or Nonqualified Options. Incentive Options are Options which qualify as
"incentive stock options" as defined in Section 422 of the Internal Revenue
Code, including regulations promulgated thereunder. Nonqualified Options are
Options that do not qualify as Incentive Options. At the time of grant, each
Option is designated as an Incentive Option or a Nonqualified Option.
The Board or the Committee may specify at the time of grant of an Incentive
Option, and at or after the time of grant of Nonqualified Options (including
currently outstanding Nonqualified Options), that if the Optionee surrenders (or
certifies ownership of) shares of Common Stock in full or partial payment of the
Option Price of an Option and/or if the Optionee surrenders shares of Common
Stock or causes shares of Common Stock to be withheld to pay taxes, the
Optionee, subject to availability of shares of Common Stock under the Amended
and Restated Plan, shall be granted a new Nonqualified Option (a "Restored
Option") covering a number of shares not greater than the number so surrendered
(or certified as to ownership) and/or surrendered or withheld to pay taxes. A
Restored Option may be granted in connection with the exercise of an Option
which is itself a Restored Option.
At the time of grant, the Board or the Committee determines the price per
share to be paid for the purchase of shares subject to an Option upon exercise
of the Option. The specified price at which shares of Common Stock may be
purchased upon the exercise of an Option may be not less
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than the Fair Market Value of a share of Common Stock on the Date of Grant of
the Option. The Fair Market Value of a share of Common Stock will be the closing
sale price for any applicable date as reported on the New York Stock
Exchange-Composite Tape. The Board or the Committee may also specify the form of
payment of the Option Price, which may be cash, shares of Common Stock or a
combination of both. The Board or the Committee is also authorized to specify
the term during which an Option may be exercised, which may be not longer than
ten (10) years from the Date of Grant of the Option (or in the case of a
Restored Option the remaining term of the Option, the exercise of which
generated the Restored Option).
The grant of an Option will be evidenced by an Award Agreement executed by
PPG and the Optionee, specifying the number of shares of Common Stock subject to
the Option, whether the Option is an Incentive Option or a Nonqualified Option,
the Option Price and the Option Expiration Date and containing such other
provisions, not inconsistent with the Amended and Restated Plan, as may be
prescribed by the Board or the Committee.
Stock Appreciation Rights
Stock Appreciation Rights may be granted with respect to all or any of the
shares of Common Stock subject to an Option. Stock Appreciation Rights relating
to an Incentive Option must be granted on the Date of Grant of the related
Option, while those relating to a Nonqualified Option may be granted either on
the Date of Grant of the related Option or thereafter at any time during the
term of the Option. Stock Appreciation Rights will entitle an Optionee to
receive, upon exercise, a payment equal to the amount by which the value of a
share of Common Stock exceeds the Option Price, multiplied by the number of
shares with respect to which Stock Appreciation Rights are exercised. Such value
will be the Fair Market Value of a share of Common Stock on the date of exercise
or, in the discretion of the Board or the Committee, the average of the Fair
Market Values of a share of Common Stock over such period and in such form as
the Board or the Committee may specify. Stock Appreciation Rights will be
exercisable only to the extent the related Option is exercisable and, to the
extent Stock Appreciation Rights are exercised the related Option will be deemed
to have been exercised. Stock Appreciation Rights have been granted by the
Company under the Plan in the past; however, at present, there are no Stock
Appreciation Rights outstanding.
Restricted Stock Awards
Shares of Restricted Stock may be awarded by the Award Grantor to any
Eligible Person. The Award may set forth such terms and conditions including,
but not limited to, forfeiture and vesting provisions and restrictions against
sale, assignment, transfer or other disposition as the Board or the Committee
may determine. Recipients of Restricted Stock shall be entitled to all dividends
paid with respect to Restricted Stock during the period of restriction and shall
not be
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required to return such dividends in the event of forfeiture of the Restricted
Stock. The recipient shall be entitled to vote the Restricted Stock during the
period of restriction.
Adjustment Provisions
If the Company shall at any time change the number of issued shares of
Common Stock by reason of any stock dividends, stock splits or similar change, a
corresponding change will be made in the total number of shares reserved for
grant and for issuance under the Amended and Restated Plan, the maximum number
of shares available to any individual through the Plan, and the number of shares
covered by each outstanding Award. In the event of any change in the outstanding
shares of Common Stock, or in the number thereof, by reason of any merger,
consolidation, combination, sale of assets, exchange of shares,
recapitalization, reorganization, spin-off or similar change, the Board or the
Committee may make such changes in the shares or in the numbers or Option Prices
of shares, subject to outstanding Awards, and in the maximum number of shares
which may be issued under the Amended and Restated Plan, and in the number of
shares of Restricted Stock which may have been issued, as the Board or Committee
may deem to be equitable.
Federal Income Tax Consequences
The following is a brief summary of the consequences under the Internal
Revenue Code in effect on the date hereof of the receipt or exercise of Options,
Stock Appreciation Rights and Awards of Restricted Stock under the Amended and
Restated Plan. This summary is not intended to be exhaustive.
Incentive Options. Generally, neither the Company nor an Optionee has any tax
consequences upon issuance or exercise of an Incentive Option (except possibly
for alternative minimum tax consequences for an Optionee at exercise). An
Optionee will recognize income when he or she sells or exchanges the shares
acquired upon exercise of an Incentive Option. This income will be taxed at the
applicable capital gains rate if the sale or exchange occurs after the
expiration of the requisite holding periods. Generally, the requisite holding
periods expire two years after the date of grant of the Incentive Option and one
year after the date of acquisition of the Common Stock pursuant to the exercise
of the Incentive Option. If the holding period requirements are satisfied, the
Company is not entitled to a federal income tax deduction with respect to an
Incentive Option.
If an Optionee disposes of the Common Stock acquired pursuant to exercise
of an Incentive Option before the expiration of the requisite holding periods,
the Optionee will recognize compensation income in an amount equal to the
difference between the Option Price and the lesser of (i) the Fair Market Value
of the shares on the date of transfer of the shares to the Optionee and (ii) the
price at which the shares are sold. This amount will be taxed at ordinary income
rates. The Company is entitled to a corresponding federal income tax deduction
equal to
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the amount of ordinary income recognized by the Optionee. If the sale price of
the shares is greater than the Fair Market Value on the date of transfer, the
difference will be recognized as gain by the Optionee and taxed at the
applicable capital gains rate. If the sale price of the shares is less than the
Option Price, the Optionee will recognize a capital loss equal to the excess of
the Option Price over the sale price.
Nonqualified Options. No income is recognized by an Optionee, nor is the Company
entitled to a federal income tax deduction, upon the grant of a Nonqualified
Option. Upon exercise of a Nonqualified Option, an Optionee recognizes ordinary
income on the date of transfer of the shares acquired pursuant to such exercise
equal to the amount by which the Fair Market Value of such shares on the date of
transfer exceeds the Option Price for such shares. The Company is entitled to a
corresponding federal income tax deduction equal to the amount of ordinary
income recognized by the Optionee. Upon subsequent disposition by sale of any of
the shares acquired, the Optionee recognizes a long-term or short-term capital
gain or loss.
Stock Appreciation Rights. At the time a Stock Appreciation Right is granted, an
Optionee will recognize no taxable income, and there are no tax consequences to
the Company. The Optionee will recognize taxable income at the time the Stock
Appreciation Right is exercised in an amount equal to the amount of cash and the
Fair Market Value of the shares of the Common Stock received upon such exercise.
The income recognized on exercise of a Stock Appreciation Right will be taxable
at ordinary income tax rates. The Company generally will be entitled to a
deduction with respect to the exercise of a Stock Appreciation Right in an
amount equal to the amount of ordinary income recognized by the Optionee upon
such exercise.
Restricted Stock. A holder of Restricted Stock will recognize income when the
stock becomes substantially vested. Restricted Stock becomes substantially
vested when it is either transferable or is not subject to a substantial risk of
forfeiture. If the Restricted Stock is subject to restrictions that lapse in
increments over a period of time so that the holder becomes substantially vested
in a portion of the shares as the restrictions lapse, the holder will recognize
income in any tax year only with respect to the shares that become substantially
vested during that year. The income recognized will be equal to the Fair Market
Value of those shares, determined as of the time that the restrictions on those
shares lapse. That income will be taxable at ordinary income tax rates. The
Company will be entitled to a deduction in an amount equal to the amount of
ordinary income recognized by the holder of the Restricted Stock.
A holder of Restricted Stock may elect instead to recognize ordinary income
for the taxable year in which he receives an Award of Restricted Stock in an
amount equal to the Fair Market Value of the Restricted Stock awarded to him
(even though the shares are subject to forfeiture). That income will be taxable
at ordinary income tax rates. At the time of disposition of the shares, a holder
who has made such an election will recognize gain in an amount equal to the
difference
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between the sales price and the Fair Market Value of the shares at the time of
the Award. Such gain will be taxable at the applicable capital gains rate. Any
such election must be made within thirty days after the transfer of the
Restricted Stock to the holder. The Company will be entitled to a deduction in
an amount equal to the amount of ordinary income recognized by the holder at the
time of election.
Limitation on Company Deductions. Under the Internal Revenue Code and
regulations, no federal income tax deduction is allowed for compensation paid to
a "covered employee" in any taxable year of the Company beginning on or after
January 1, 1994, to the extent that such compensation exceeds $1,000,000. For
this purpose, "covered employees" are generally the chief executive officer of
the Company and the four highest compensated officers of the Company (presently
the "Named Executives"). This deduction limitation does not apply to
compensation that is performance-based compensation.
Regulations provide that compensation attributable to a Stock Option or a
Stock Appreciation Right will generally be performance-based compensation if the
grant or Award is made by a "compensation committee" (a committee composed of
"outside" directors), the Plan under which the Option or right is granted states
the maximum number of shares with respect to which Options or rights may be
granted during a specified period to any Employee, and, under the terms of the
Option or right, the amount of compensation the Employee could receive is based
solely on an increase in the value of the stock after the date of the grant or
Award. It is intended that Stock Options and Stock Appreciation Rights granted
under the Plan satisfy these requirements.
Estimated Benefits
No Awards have been made under the Amended and Restated Plan and it is
impossible to determine the amount of Awards that will be received in the future
by any of the persons eligible to receive an Award under the Amended and
Restated Plan since the persons who will participate in the future and the
amount of each Award, is within the discretion of the Award Grantor.
Information regarding Stock Option Awards to the Company's Chief Executive
Officer and the other four most highly compensated Executive Officers in 1996
pursuant to the 1984 Stock Option Plan is provided on page 18 of this Proxy
Statement. In addition, 604,375 Options were granted in 1996 under the 1984
Stock Option Plan to all current Executive Officers as a group and 2,112,698
Options were granted to all employees, including all current officers who are
not Executive Officers. No Stock Appreciation Rights or Incentive Options were
granted in 1996, Restricted Stock was not authorized by the 1984 Stock Option
Plan and Directors who were not Executive Officers were not eligible
Participants in the 1984 Stock Option Plan. All Options granted in 1996 were
granted at Fair Market Value on the date of grant.
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Amendment and Termination
The Board of Directors may amend, suspend or terminate the Plan, in whole
or in part, at any time, but no amendment may, without shareholder approval, (1)
increase the maximum number of shares for which Options may be granted (either
in the aggregate or to any one Employee), (2) change the manner of determining
the minimum Option Price (other than to make any such change as may be necessary
to conform to any then-applicable provision of the Internal Revenue Code or any
regulations thereunder), (3) extend the date upon which the Plan will terminate,
or (4) increase the maximum period during which Options may be exercised. The
Plan will terminate on December 31, 2002, unless earlier terminated by the
Board. No amendment, suspension or termination may affect adversely, without the
Optionee's consent, the rights of such Optionee with respect to an Option
previously granted.
THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE PROPOSAL TO APPROVE
AMENDMENTS TO, AND THE RESTATEMENT OF, THE
PPG INDUSTRIES, INC. 1984 STOCK OPTION PLAN
------------------------
MISCELLANEOUS
VOTE REQUIRED
The Annual Meeting of Shareholders will not be organized for the
transaction of business unless a quorum is present. The presence in person or by
proxy of shareholders entitled to cast at least a majority of the votes that all
shareholders are entitled to cast shall constitute a quorum. Votes withheld and
abstentions will be counted, but broker non-votes will not be counted in
determining the presence of a quorum.
In the election of Directors, the number of nominees to be elected who
receive the greatest number of votes cast at the Annual Meeting by the holders
of the Common Stock present in person or by proxy and entitled to vote, assuming
the presence of a quorum, will be elected as Directors for a term of three years
or their earlier resignation or retirement. Since no written notice was received
by the Company from a shareholder that a nomination would be made by the
shareholder at the Meeting pursuant to the nomination procedure provided for in
the Company's bylaws, votes may only be cast for, or withheld from, the
Company's nominees.
Approval of the proposal to elect Deloitte & Touche LLP as Auditors for the
Company for the year 1997 and the approval of the proposal to amend and restate
the PPG Industries, Inc. 1984
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Stock Option Plan require the affirmative vote of a majority of the votes cast
on the proposal, assuming the presence of a quorum.
Pennsylvania law provides that abstentions, votes withheld and broker
non-votes are not votes cast. Therefore, with respect to the election of
Directors, the election of Deloitte & Touche LLP as Auditors for the Company and
the approval of the proposal to amend and restate the PPG Industries, Inc. 1984
Stock Option Plan, abstentions, votes withheld and broker non-votes do not count
either for or against such election or adoption.
SOLICITATION COSTS
The costs of the solicitation of proxies will be borne by the Company.
Arrangements may be made by the Company with brokerage houses and other
custodians, nominees and fiduciaries for them to forward solicitation materials
to the beneficial owners of the shares such brokerage houses and other
custodians, nominees and fiduciaries hold of record, and the Company may
reimburse them for the reasonable expenses they incur in so doing. To assist in
the solicitation of proxies, the Company has engaged D. F. King & Co., Inc., for
a fee of $12,000, plus out-of-pocket expenses. Directors, Officers or regular
employees of the Company may, without additional compensation therefor, also
make solicitations.
SHAREHOLDER PROPOSALS
Shareholders intending to present business for consideration at the 1998
Annual Meeting of Shareholders must give notice to the Secretary of the Company
within the same time limits as set forth on page 9 for nomination of Directors
and such business must otherwise be a proper matter for shareholder action. If,
as expected, the 1998 Annual Meeting of Shareholders is held on April 16, 1998
(the third Thursday of April, 1998), then, to be timely, the notice must be
received by the Secretary of the Company not later than January 16, 1998, in
order to be brought before the Meeting. To be eligible for inclusion in the
Proxy Statement and Proxy Card relating to such Annual Meeting, the notice must
be received by the Secretary of the Company not later than November 7, 1997.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Directors and Executive Officers of the Company are required to file
reports of initial ownership and changes of ownership of PPG securities with the
Securities and Exchange Commission and with the New York Stock Exchange. To the
Company's knowledge, based solely on review of copies of such reports furnished
to the Company and written representations that no other reports were required,
the required filings of all such Directors and Executive Officers were filed
timely.
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OTHER MATTERS
So far as is known, no matters other than those described herein are
expected to come before the Meeting. It is intended, however, that the proxies
solicited hereby will be voted on any other matters which may properly come
before the Meeting, or any adjournment thereof, in the discretion of the person
or persons voting such proxies unless the shareholder has indicated on the Proxy
Card that the shares represented thereby are not to be voted on such other
matters.
Pittsburgh, Pennsylvania
March 7, 1997
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EXHIBIT A
PPG INDUSTRIES, INC. 1984 STOCK OPTION PLAN,
AMENDED AND RESTATED AS THE
PPG INDUSTRIES, INC.
STOCK PLAN
1. PURPOSE
The purpose of the Plan is to promote the growth and profitability of the
Company and its Subsidiaries by giving Directors and selected Employees an
opportunity to own and to benefit from the growth of the value of the Common
Stock of the Company, thereby (1) providing them with additional incentive to
cause the Company and its Subsidiaries to grow and profit, (2) making their
compensation competitive with opportunities available in competing industries,
and (3) encouraging them to continue in the employ or service of the Company or
a Subsidiary.
2. DEFINITIONS
(a) "Award" means any Option, Stock Appreciation Right or Restricted Stock
granted under the Plan.
(b) "Award Agreement" means the written agreement evidencing an Award,
which shall be executed by the Company and the Participant.
(c) "Award Date" means the date as of which an Award is granted, unless
another date is specified by the Board, the Committee or other person granting
such Award.
(d) "Award Grantor" means the Board, the Committee or the person or persons
to whom the Board or the Committee has delegated authority to grant Awards under
the Plan.
(e) "Board" means the Board of Directors of the Company.
(f) "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated thereunder.
(g) "Committee" means the Officers-Directors Compensation Committee (or any
successor) of the Board.
(h) "Common Stock" means the Common Stock of the Company.
(i) "Company" means PPG Industries, Inc.
(j) "Director" means any director of the Company or any of its
Subsidiaries.
(k) "Eligible Person" means any Director or any Employee.
(l) "Employee" means any person (including any officer) employed by the
Company or any of its Subsidiaries.
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(m) "Fair Market Value" of a share of Common Stock means the closing sale
price reported for any applicable date on the New York Stock Exchange-Composite
Tape or, if there is no sale on such date, for the nearest preceding date upon
which such a sale took place.
(n) "Incentive Option" means an Option which qualifies as an "incentive
stock option" as defined in Section 422 of the Code.
(o) "Nonqualified Option" means an Option which does not qualify as an
Incentive Option.
(p) "Option" means an option granted hereunder to purchase a specified
number of shares of Common Stock.
(q) "Optionee" means a Participant who is granted an Option and the
Participant's Successor.
(r) "Option Price" means the price per share to be paid upon exercise of an
Option for the purchase of shares subject to the Option.
(s) "Option Expiration Date" means the date set forth in the Award
Agreement on which the right to exercise an Option will expire due to lapse of
time.
(t) "Option Term" means the period during which an Option may be exercised.
(u) "Restricted Stock" means Common Stock granted pursuant to Section 7 of
the Plan, but any shares of Common Stock shall cease to be Restricted Stock when
the conditions specified in the Award of such Restricted Stock have been
satisfied.
(v) "Participant" means any Eligible Person who has received an Award under
the Plan.
(w) "Plan" means the PPG Industries, Inc. Stock Plan, as set forth herein
and as amended from time to time.
(x) "Stock Appreciation Right" means the right to receive cash or shares
of Common Stock in lieu of exercising an Option, as more fully described in
Section 6.
(y) "Subsidiary" means any corporation fifty percent (50%) or more of the
outstanding voting stock or voting power of which is owned, directly or
indirectly, by the Company and any partnership or other entity in which the
Company has a fifty percent (50%) or more ownership interest.
(z) "Successor" means the executor or administrator of a Participant's
estate, or that person or persons to whom is transferred, by will or the laws of
descent and distribution, or as otherwise permitted by the Board or Committee
within the terms of the Plan, the right to exercise an Option or Stock
Appreciation Right or the ownership of Restricted Stock.
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3. ADMINISTRATION
The Board and the Committee shall both have full power and authority
pursuant and subject to the provisions of the Plan: (1) to determine from time
to time the number and type of Awards; (2) to determine from time to time which
Eligible Persons shall be granted Awards; (3) to determine, with respect to
Options, the number of shares of Common Stock subject to each Option, the Option
Price, the form of payment of the Option Price, the Option Term, whether an
Option shall be an Incentive Option or a Nonqualified Option, whether an Option
shall be accompanied by Stock Appreciation Rights, whether an Option may be
transferred and under what conditions, the form in which Stock Appreciation
Rights may be paid and the terms and conditions upon which Options or Stock
Appreciation Rights may be exercised; (4) to prescribe the provisions to be
contained in Award Agreements (which need not be identical); (5) to construe and
interpret the Plan, to establish, amend and revoke rules and regulations
relating to the Plan, and to determine all questions or controversies arising in
the administration or operation of the Plan; and (6) generally, to exercise such
powers and take such actions as the Board or the Committee may deem necessary or
advisable to administer or implement the Plan. Any determination or decision
made or action taken by the Board or the Committee in connection with the Plan
shall be final, conclusive and binding on all persons, including the Company,
its shareholders and Participants. The Board or the Committee may delegate to
another person or persons the right to grant Awards, including the right to
determine whether an Option shall be an Incentive Option or a Nonqualified
Option, to Eligible Persons who are not Directors of the Company or officers of
the Company subject to Section 16 of the Securities Exchange Act of 1934.
4. AWARDS
Awards under the Plan may be made in any of the following forms (or any
combination thereof): (a) Restricted Stock; (b) Incentive Options; (c)
Nonqualified Options; and (d) Stock Appreciation Rights.
5. OPTIONS
(a) Options to purchase a specified number of shares of Common Stock at a
specified price may be granted from time to time to those Eligible Persons who
have the ability to make a contribution to the growth and profitability of the
Company or any of its Subsidiaries. Options granted hereunder may be Incentive
Options or Nonqualified Options.
(b) The aggregate Fair Market Value (determined as of the time an Incentive
Option is granted) of the Common Stock for which an Eligible Person may be
granted Incentive Options in the calendar year of such grant (under all plans of
the Company or its parent or subsidiary corporations, or a predecessor
corporation of any such corporation, all within the meaning of Section 422 of
the Code) shall not exceed $100,000 plus any unused limit carryover to such
year or
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such other maximum as may be specified in the Code. No Incentive Option will be
transferable except by will or by the operation of the laws of descent and
distribution.
(c) The grant of an Option shall be evidenced by a written Award Agreement
executed by the Company and the Optionee, specifying the number of shares of
Common Stock subject to the Option, the Option Price and the Option Expiration
Date and may contain other provisions, not inconsistent herewith.
(d) The Option Price of each Option shall be as determined by the Board or
the Committee but in no event shall be less than the Fair Market Value of a
share of Common Stock on the Date of Grant. The Option Price may be paid in full
in the form of cash, shares of Common Stock or a combination of both, as the
Board or the Committee may specify.
(e) Options may be exercised at such times and in such manner as shall be
prescribed by the Board or the Committee, except that no Option shall be
exercisable under any circumstances more than ten (10) years from the Date of
Grant.
(f) The Board or the Committee may specify, at the time of grant or, with
respect to Nonqualified Options, at or after the time of grant, that an Optionee
shall be granted a Nonqualified Option (a "Restored Option") in the event that
(i) such Optionee exercises all or part of an Option (an "Original Option") by
surrendering (or certifying ownership of) already owned shares of Common Stock
in full or partial payment of the Option Price under such Original Option and/or
(ii) such Optionee surrenders shares of Common Stock or causes shares of Common
Stock to be withheld to pay withholding taxes in connection with the exercise of
such Original Option. All Restored Options are subject to the availability of
shares of Common Stock under the Plan at the time of such exercise. A Restored
Option shall cover a number of shares of Common Stock not greater than the
number of shares of Common Stock surrendered (or to which ownership has been
certified) in payment of the Option Price under such Original Option and/or used
to pay withholding taxes in connection with the exercise of such Original
Option. Each Restored Option shall have an Option Price equal to the Fair Market
Value of the Common Stock on the Date of Grant of the Restored Option and shall
expire on the Option Expiration Date of the Original Option or such earlier
specific date as the Original Option will expire provided such earlier date has
been established on the Date of Grant of the Restored Option. The Date of Grant
of a Restored Option shall be the date of exercise of the Original Option. A
Restored Option shall be exercisable at any time and from time to time from or
after the Date of Grant of the Restored Option (or, as the Board or the
Committee in its sole discretion shall specify in the Award Agreement for the
Restored Option). An Award Agreement for a Restored Option shall contain such
other terms and conditions, which may include a restriction on the
transferability of the Common Stock received upon the exercise of the Original
Option, as the Board or the Committee in its sole discretion shall deem
desirable and which may be set forth in rules or regulations
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adopted by the Board or the Committee or in the Award Agreement evidencing the
Restored Option. Successive Restored Options may be granted to the extent and
upon such terms and conditions consistent with this Section 5(f) as the Board or
the Committee in its sole discretion shall specify.
6. STOCK APPRECIATION RIGHTS
(a) The Board or the Committee may grant Stock Appreciation Rights with
respect to all or any of the shares of Common Stock subject to an Option. Stock
Appreciation Rights with respect to an Incentive Option may be granted only on
the Date of Grant of the related Option. Stock Appreciation Rights with respect
to a Nonqualified Option may be granted either on the Date of Grant of the
related Option or at any time thereafter during the Option Term.
(b) Stock Appreciation Rights shall entitle the Optionee, upon exercise, to
receive a payment equal to the amount by which the value of a share of Common
Stock exceeds the Option Price, multiplied by the number of shares with respect
to which Stock Appreciation Rights are exercised. Such value shall be the Fair
Market Value of a share of Common Stock on the date of exercise or, in the
discretion of the Board or the Committee, the average of the Fair Market Values
of a share of Common Stock over such period as the Board or the Committee may
specify. Such payment may be made in the form of cash, shares of Common Stock or
a combination of both, as the Board or the Committee may specify.
(c) Stock Appreciation Rights may be exercised in such manner and at such
times as may be prescribed by the Board or the Committee, but only to the extent
the related Option is exercisable. To the extent Stock Appreciation Rights are
exercised, the related Option shall be deemed to have been exercised.
7. RESTRICTED STOCK
Restricted Stock may be awarded to any Eligible Person. An Award of
Restricted Stock may set forth such terms and conditions, including, but not
limited to, forfeiture and vesting provisions and restrictions against sale,
assignment, transfer or other disposition as the Board or the Committee may
determine. Restricted Stock shall be duly issued and transferred by the Company
on such dates as the Award Grantor may determine, and a certificate for such
Restricted Stock shall be issued to each Participant to whom an award is made.
The Participant shall thereupon become a stockholder of the Company with respect
to such Restricted Stock, and shall be entitled to vote and to receive the
dividends on such stock; provided, however, that: (1) stock certificates for
Restricted Stock shall be imprinted with a legend to the effect that the stock
represented thereby may not be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of except in accordance with the terms of the
Plan, and each transfer agent for the Common Stock shall be instructed to such
effect; and (2) upon the date specified in the grant as the "Award
39
<PAGE> 43
Maturity Date", unless cancelled earlier by the Board or the Committee, the
restrictions imposed upon the Restricted Stock shall lapse, and the Participant
shall be fully vested in the award.
8. NUMBER OF SHARES AVAILABLE FOR ISSUANCE AND SUBJECT TO AWARDS
(a) From and after April 17, 1997, the maximum number of shares of Common
Stock which may be issued under the Plan shall be 18 Million and the maximum
number of shares of Common Stock as to which Awards may be granted shall be 10
Million. Any shares of Common Stock subject to Awards that are forfeited or
unexercised, to the extent Options remain unexercised at the expiration or
termination thereof or Restricted Stock is forfeited prior to the Award Maturity
Date, may be subject to the grant of further Awards under the Plan. In addition,
shares of Common Stock that are surrendered (or to which ownership has been
certified) by Participants as full or partial payment to the Company of the
purchase price of shares being acquired through the exercise of an option
granted under this Plan and any shares surrendered by the Participant or
withheld by the Company to pay withholding taxes in connection with the exercise
of an Option shall also be available for issuance and for the grant of Awards
under the Plan. The number of shares which may be issued under the Plan and as
to which Options may be granted shall be further subject to adjustment in
accordance with Section 12.
(b) In no event, except as subject to adjustment as provided in Section 12,
shall more than two hundred fifty thousand (250,000) shares of Common Stock be
cumulatively available for issuance as Restricted Stock under the Plan.
(c) The Common Stock to be issued under the Plan may be either authorized
but unissued shares or issued shares acquired by the Company and held in its
treasury.
9. GOVERNMENT AND OTHER REGULATIONS
The obligation of the Company to issue or transfer and deliver shares for
Options exercised under the Plan shall be subject to (1) the effectiveness of a
registration statement under the Securities Act of 1933, as amended, with
respect to such issue or transfer, if deemed necessary or appropriate by counsel
for the Company; (2) the condition that the shares of Common Stock authorized to
be issued hereunder shall have been listed (or authorized for listing upon
official notice of issuance) upon each stock exchange on which outstanding
shares of Common Stock may then be listed; and (3) all other applicable laws,
regulations, rules and orders which shall then be in effect.
10. LIMIT ON AWARDS
More than one Award may be granted to a Participant, but except as subject
to adjustment as provided in Section 12 the aggregate number of shares of Common
Stock subject to Awards granted to any Participant after April 17, 1997 may not
exceed two million (2,000,000) shares.
40
<PAGE> 44
11. NO RIGHT TO EMPLOYMENT
Neither the existence of the Plan nor the grant of any Award pursuant to
the Plan shall create in any Participant or Eligible Person the right to
continue to be employed by or to continue as a Director of the Company or a
Subsidiary.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of any change in the number of outstanding shares of Common
Stock by reason of any stock dividend, stock split or similar change, a
corresponding change shall be made in the numbers, and Option Prices, of shares
subject to outstanding Awards, and in the maximum number of shares which then
remain available for issuance, and in the number of shares of Restricted Stock
which then remain available for issuance under the Plan and the limits as to
Awards to individual Eligible Persons. In the event of any change in the
outstanding shares of Common Stock, or in the number thereof, by reason of any
merger, consolidation, combination, sale of assets, exchange of shares,
recapitalization, reorganization, spin-off or similar change, the Board or the
Committee may make such changes in the shares, and in the numbers or Option
Prices of shares, subject to outstanding Awards, and in the maximum number of
shares which may be issued under the Plan, and in the number of shares of
Restricted Stock which may have been issued, as the Board or the Committee may
deem to be equitable. No such change, without the consent of a Participant may
adversely affect the rights of such Participant with respect to an Award
previously granted, and any such change shall be final, conclusive and binding
on all persons, including the Company, its shareholders and Participants.
13. AMENDMENT AND TERMINATION
The Board may amend, suspend or terminate the Plan, in whole or in part, at
any time, but no amendment may, without shareholder approval, (1) increase the
maximum number of shares which may be issued and for which Awards may be granted
under the Plan, either in the aggregate or to any individual Participant; (2)
change the manner of determining the minimum Option Price, other than to change
the manner of determining the Fair Market Value of the Common Stock to conform
to any then-applicable provision of the Code; (3) extend the date upon which the
Plan shall terminate; or (4) increase the maximum period during which Options
may be exercised hereunder. The Plan shall terminate on, and no Award may be
granted after, December 31, 2002, or on such earlier date as may be determined
by the Board. No amendment, suspension or termination of the Plan may affect
adversely, without the consent of the Participant, the rights of such
Participant with respect to an Award previously granted.
14. EFFECTIVE DATE
Subject to its approval by the shareholders of the Company, the Plan shall
be effective as of April 17, 1997.
41
<PAGE> 45
<TABLE>
<CAPTION>
Please mark your
PROXY AND VOTING INSTRUCTION CARD votes as indicated [ X ]
in this example
PPG INDUSTRIES, INC.
LOGO One PPG Place TO OBTAIN AN ADMISSION CARD TO THE ANNUAL MEETING,
Pittsburgh, PA 15272 PLACE AN "X" IN THE BOX TO THE RIGHT [ ]
- --------------------------------------------------------------------------------
PPG'S DIRECTORS RECOMMEND A VOTE "FOR" ITEMS 1, 2 AND 3
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. ELECTION OF FOUR DIRECTORS FOR WITHHELD 2. ELECTION OF
(See Reverse) [ ] [ ] DELOITTE & FOR AGAINST ABSTAIN
TOUCHE LLP [ ] [ ] [ ]
FOR, EXCEPT VOTE WITHHELD FROM THE AS AUDITORS
FOLLOWING NOMINEE(S): FOR 1997.
____________________________________________
3. PROPOSAL TO <C> <C> <C>
APPROVE AMENDMENTS
TO, AND THE FOR AGAINST ABSTAIN
RESTATEMENTS OF, [ ] [ ] [ ]
THE PPG INDUSTRIES,
INC. 1984 STOCK OPTION
PLAN.
Signature(s) ____________________________________________________________________________ Date ____________________________
NOTE: PLEASE SIGN AS NAME(S) APPEAR HEREON. GIVE FULL TITLE IF SIGNING FOR A CORPORATION
OR PARTNERSHIP OR AS ATTORNEY, AGENT OR IN ANOTHER REPRESENTATIVE CAPACITY.
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
PPG INDUSTRIES, INC.
LOGO One PPG Place
Pittsburgh, PA 15272
ANNUAL MEETING OF SHAREHOLDERS -- APRIL 17, 1997
The Annual Meeting of Shareholders of PPG Industries, Inc. will be held on
Thursday, April 17, 1997 at The Westin William Penn Hotel, William Penn Place,
Pittsburgh, Pennsylvania, at 2:00 p.m.
The top (blue shaded) portion of this form is your PROXY AND VOTING
INSTRUCTION CARD. Please COMPLETE, SIGN and DATE the CARD and then DETACH and
RETURN the completed CARD promptly in the enclosed reply envelope. You should
do so even if you plan to attend the Annual Meeting. If you do attend, you
may override your proxy and vote in person if you wish.
If you plan to attend the Annual Meeting, please mark an "X" in the box
provided on the CARD. An admission card will be mailed to you at the address
printed on the card. If your shares are held in joint names, you will each
receive an admission card. If you intend to bring a guest, please print their
name on the line next to the admission card request box. If your admission
card should be sent to an address other than the address imprinted on the
card, please print that address on the line next to the admission card request
box.
PLEASE COMPLETE, SIGN AND DATE YOUR PROXY AND VOTING INSTRUCTION CARD,
DETACH IT AND RETURN IT PROMPTLY IN THE ENCLOSED REPLY ENVELOPE.
<PAGE> 46
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PPG INDUSTRIES, INC. FOR
THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 17, 1997.
The undersigned, having received the Notice of Annual Meeting of Shareholders
and Proxy Statement, each dated March 7, 1997, hereby appoints J.E. DEMPSEY,
H.K. LINGE and G.A. ZOGHBY, or any of them, with full power of substitution
to each, proxies to represent the undersigned and to vote all of the shares of
the Common Stock of PPG Industries, Inc., (the "Company") that the undersigned
would be entitled to vote if personally present at the 1997 Annual Meeting of
Shareholders of the Company, or any adjournment thereof, as directed on the
reverse side hereof and in their discretion on such other matters as may
properly come before the meeting or any adjournment thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED ON THE REVERSE
SIDE HEREOF. IF NO DIRECTION IS GIVEN, HOWEVER, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR PROPOSED BY
THE BOARD OF DIRECTORS (THOSE NOMINEES ARE JERRY E. DEMPSEY, STEVEN C. MASON,
THOMAS J. USHER AND DAVID R. WHITWAM) FOR THE ELECTION OF DELOITTE & TOUCHE LLP
AS AUDITORS FOR 1997 AND FOR THE PROPOSAL TO APPROVE AMENDMENTS TO, AND THE
RESTATEMENT OF, THE PPG INDUSTRIES, INC. 1984 STOCK OPTION PLAN. Shares to be
voted FOR the election of the nominees proposed by the Board of Directors will
be voted cumulatively in the discretion of the proxies, for any nominees other
than nominees with respect to whom authority to vote FOR has been withheld. This
card votes all of the shares of the Common Stock of the Company held under the
same registration in any one or more of the following manners: as a shareholder
of record; in the PPG Industries, Inc. Dividend Reinvestment and Stock Purchase
Plan; and in the PPG Canada Inc. Employee Savings Plan. With respect to shares
held in the PPG Industries Employee Savings Plan (the "Plan"), this card
constitutes a direction to the Trustee for the Plan to vote the shares of Common
Stock of the Company allocated to the undersigned's account in the Plan as
indicated on the reverse side hereof.
PLEASE COMPLETE, SIGN AND DATE THIS CARD ON THE REVERSE SIDE AND RETURN IT
PROMPTLY IN THE ENCLOSED REPLY ENVELOPE.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
