<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Premark International, Inc.
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(Name of Registrant as Specified in Its Charter)
Premark International, Inc.
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Payment of filing fee (Check the appropriate box):
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<PAGE> 2
[PREMARK INTERNATIONAL LOGO]
Premark International, Inc., 1717 Deerfield Road, Deerfield, Illinois 60015
March 25, 1997
To Our Shareholders:
You are invited to attend the Company's annual meeting of shareholders to
be held on Wednesday, May 7, 1997, at The O'Hare Hilton hotel located at O'Hare
International Airport, Chicago, Illinois 60666. The meeting will begin at 11:00
a.m.
The attached notice of meeting and proxy statement describe the business to
be conducted. We will also report on the current activities of the Company, and
you will have an opportunity to ask questions.
William O. Bourke and Joseph E. Luecke will retire at the meeting. I would
like to take this opportunity to thank each of them for their valuable service
to the Company and its shareholders. Their dedication and insightful counsel
over the years are greatly appreciated.
Whether or not you plan to attend the meeting, we urge you to sign the
enclosed proxy card and return it as soon as possible so that your shares will
be represented.
Sincerely,
Warren L. Batts Signature
WARREN L. BATTS
Chairman of the Board
<PAGE> 3
[Premark Logo]
Premark International, Inc., 1717 Deerfield Road, Deerfield, Illinois 60015
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The 1997 annual meeting of shareholders of Premark International, Inc. will
be held at The O'Hare Hilton hotel located at O'Hare International Airport,
Chicago, Illinois 60666, on Wednesday, May 7, 1997, at 11:00 a.m., to consider
and vote upon:
1. The election of two directors for the term expiring at the 1999 annual
meeting of shareholders, and the election of three directors for the
term expiring at the 2000 annual meeting of shareholders;
2. The proposal to ratify the appointment of independent auditors for the
fiscal year ending December 27, 1997; and
3. Such other business as may properly come before the meeting and any
adjournment thereof.
The above matters are discussed in more detail in the attached proxy
statement.
Please complete and sign the enclosed proxy card and return it promptly in
the accompanying postpaid envelope. This will ensure that your vote is counted,
whether or not you attend the meeting.
If your shares are held in your name and you plan to attend the meeting,
please check your proxy card in the space provided. Your admission ticket will
be mailed. If your shares are not registered in your name, but are held by an
institution, such as a brokerage firm, bank or trust fund, please advise that
institution that you wish to attend, and they will provide you with information
needed for admission.
By order of the Board of Directors,
JOHN M. COSTIGAN
JOHN M. COSTIGAN
Secretary
March 25, 1997
i
<PAGE> 4
[Premark Logo]
Premark International, Inc., 1717 Deerfield Road, Deerfield, Illinois 60015
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation on
behalf of the Board of Directors of Premark International, Inc. (the "Company")
of proxies to be voted at the annual meeting of shareholders of the Company to
be held on May 7, 1997 and at any adjournment thereof. This proxy statement and
the enclosed proxy card are being mailed on or about March 25, 1997.
VOTING AT THE MEETING
The Board of Directors (the "Board") fixed the close of business on March
10, 1997 as the record date for determining shareholders entitled to vote at the
meeting. On that date there were 62,783,974 shares of the Company's common stock
outstanding, each of which will be entitled to one vote. A majority of the
shares entitled to vote at the meeting will constitute a quorum.
Shares will be voted in accordance with your instructions on a properly
signed proxy card. If no instructions are indicated, your shares will be voted
as recommended by the Board. A shareholder who has given a proxy may revoke it
by voting in person at the meeting, or by giving written notice of revocation or
a later-dated proxy to the Secretary of the Company. The Company has appointed
two officers of Norwest Bank Minnesota, N.A., transfer agent for the Company, as
independent inspectors to act at the meeting.
The Company's By-laws require the affirmative vote of a plurality of the
votes cast at the meeting for the election of directors, and the affirmative
vote of a majority of the votes cast at the meeting for the approval of the
independent auditors. Broker non-votes and abstentions will not be treated as
votes cast at the meeting.
1. ELECTION OF DIRECTORS
BOARD OF DIRECTORS
The Board is divided into three classes of directors. At each annual
meeting members of one class, on a rotating basis, are elected for a three-year
term; however, at this meeting directors have been nominated in two classes in
order to more equally balance the classes following the retirement of two
directors.
Messrs. Harry W. Bowman and W. James Farrell have been nominated for the
term expiring at the annual meeting in 1999.
There are three nominees for the term expiring at the 2000 annual meeting:
Messrs. Richard S. Friedland, David R. Parker and James M. Ringler.
On May 31, 1996 the Company completed the separation of Tupperware
Corporation ("Tupperware") into an independent public company (the "spin-off").
E.V. Goings, Clifford J. Grum, Bob Marbut and Robert M. Price resigned as
directors of the Company to become directors of Tupperware. The Board
temporarily reduced its size as a result of the resignations. Mr. Farrell was
elected to the Board in November 1996 to fill one of the vacancies, and Messrs.
Bowman and Friedland were elected to the Board in March 1997 to fill two
additional vacancies. Messrs. Bourke and Luecke will retire at the annual
meeting in keeping with the Company's Policy on Directors which provides that
non-employee directors shall retire at the annual meeting of shareholders
following attainment of age 70.
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Unless otherwise specified, proxy votes will be cast for the election of
all of the nominees. If any nominee should be unavailable for election, resign
or withdraw, the Board has authority to reduce the number of directors or
designate a substitute nominee. In the latter event, it is intended that proxy
votes will be cast for the election of such substitute nominee. Should other
vacancies occur, the Board has authority to elect acceptable candidates.
Shareholder nominations of persons for election as directors are subject to the
notice requirements described under the caption "Other Matters" appearing later
in this proxy statement.
Information concerning the nominees and continuing directors is as follows:
NOMINEES FOR ELECTION AS DIRECTORS
- - FOR THE TERM EXPIRING IN 1999:
HARRY W. BOWMAN, Chairman of the Board, President and Chief Executive
Officer of Outboard Marine Corporation which manufactures marine products and
accessories. Prior to his current position which he assumed in 1995, Mr. Bowman
served with Whirlpool Corporation as President, Whirlpool Europe from 1992 to
1994, and then its Executive Vice President. Directorship: Outboard Marine
Corporation. Age 54. First elected: 1997.
W. JAMES FARRELL, Chairman and Chief Executive Officer of Illinois Tool
Works Inc., a multi-national manufacturer of highly engineered fasteners,
components, assemblies and systems. Mr. Farrell served as Illinois Tool Works'
President and Chief Executive Officer in 1995 and 1996, and its Executive Vice
President prior to that time. Directorships: Illinois Tool Works Inc., Hon
Industries, Inc. and Morton International, Inc. Age 54. First elected: 1996.
- - FOR THE TERM EXPIRING IN 2000:
RICHARD S. FRIEDLAND has served since 1995 as Chairman of the Board and
Chief Executive Officer of General Instrument Corporation which provides
equipment to the cable and satellite television industries. Prior to that he
served as its President and Chief Operating Officer from 1993 until 1995, and
its Chief Financial Officer from 1992 to 1994. Directorships: General Instrument
Corporation and Department 56, Inc. Age 46. First elected: 1997.
DAVID R. PARKER has served as Chairman of ProSource, Inc., a leading
food-service distribution company, since 1992. Previously, Mr. Parker served in
various executive positions with Ryder System, Inc. Directorship: Tupperware
Corporation. Age 53. First elected: 1990.
JAMES M. RINGLER was elected President and Chief Executive Officer of the
Company in 1996, having served as its President and Chief Operating Officer
since 1992, and its Executive Vice President and President of its Food Equipment
Group from 1990 until 1992. Directorships: Reynolds Metals Company, Thiokol
Corporation and Union Carbide Corporation. Age 51. First elected: 1990.
DIRECTORS CONTINUING IN OFFICE:
WARREN L. BATTS is Chairman of the Board of the Company and Chairman of the
Board and Chief Executive Officer of Tupperware Corporation, positions he
assumed in 1996. Prior to the spin-off of Tupperware Mr. Batts also served as
the Company's Chief Executive Officer. Directorships: The Allstate Corporation,
Cooper Industries, Inc., Sears, Roebuck and Co., Sprint Corporation and
Tupperware Corporation. Term expires in 1998. Age 64. First elected: 1986.
RUTH M. DAVIS, PH.D., President and Chief Executive Officer of The
Pymatuning Group, Inc., a technology management services firm. Dr. Davis is
Chairman of the Board of Trustees of the Aerospace Corporation and a Trustee of
Consolidated Edison Company of New York. Directorships: Air Products and
Chemicals, Inc., BTG, Inc., Ceridian Corporation, Giddings and Lewis, Inc.,
Principal Mutual Life Insurance Company, Sprint Corporation, Tupperware
Corporation and Varian Associates. Term expires in 1998. Age 68. First elected:
1986.
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LLOYD C. ELAM, M.D. retired in 1995 as Distinguished Professor (after
serving as Chancellor and as President) of Meharry Medical College.
Directorships: First Union National Bank of Tennessee, Merck & Co., Inc. and
Tupperware Corporation. Term expires in 1998. Age 68. First elected: 1986.
JOHN B. MCKINNON, Dean of the Babcock Graduate School of Management, Wake
Forest University from 1989 to 1995. Directorships: Integon, Inc., MedCath,
Inc., Ruby Tuesdays, Inc. and Morrison Healthcare, Inc. Term expires in 1998.
Age 62. First elected: 1986.
JANICE D. STONEY retired in 1992 as Executive Vice President, Total Quality
System, US WEST Communications, Inc., a communications company and an affiliate
of US WEST, Inc. Directorships: Guarantee Life Insurance Co., Norwest Bank -
Nebraska and Whirlpool Corporation. Term expires in 1999. Age 56. First elected:
1989.
RETIRING DIRECTORS:
WILLIAM O. BOURKE retired in 1992 as Chairman and Chief Executive Officer
of Reynolds Metals Company, an aluminum, gold and consumer products company.
Directorships: Merrill Lynch & Co., Reynolds Metals Company, Sonat, Inc. and
Tupperware Corporation. Age 69. First elected: 1989.
JOSEPH E. LUECKE retired in 1992 as Chairman of the Board and Chief
Executive Officer of Kemper Corporation, an insurance and financial services
company, and as Chairman of Kemper National Insurance Companies. Directorship:
Tupperware Corporation. Age 70. First elected: 1989.
BOARD COMMITTEES
The AUDIT AND CORPORATE RESPONSIBILITY COMMITTEE, which held four meetings
in 1996, reviews the scope and results of the independent audit, recommends
independent auditors to the Board, approves services and fees of independent
auditors and reviews internal control systems and accounting policies. The
Committee also reviews the Company's adherence to both the spirit and letter of
the law, including the areas of employee safety and health and environmental
responsibility, and recommends corporate policies with respect to affirmative
action, equal employment opportunity and similar issues of social significance.
It appoints members of senior management responsible for employee benefit plan
funding and investment and it reviews employee benefit plan investment
performance and policies.
The Committee charter provides that its membership be composed solely of
directors who are not employees of the Company or any of its subsidiaries.
Members are Mr. Bourke (Chairperson), Dr. Davis, and Messrs. McKinnon and
Parker.
The COMPENSATION AND DIRECTORS COMMITTEE, which held four meetings in 1996,
identifies, reviews qualifications of, and recommends candidates to the Board
for election as directors and acts on other matters pertaining to Board
membership. The Committee will consider recommendations by shareholders of
candidates for Board membership. See page 15 for procedures for shareholder
nominations. The Committee also evaluates the performance of senior management,
including the Chief Executive Officer, and makes compensation recommendations.
It directs the administration of the management incentive plans and appoints
members of senior management responsible for the design and administration of
employee benefit plans.
The Committee charter provides that its membership be composed solely of
directors who are not employees of the Company or any of its subsidiaries.
Members are Mr. Luecke (Chairperson), Dr. Elam, and Mrs. Stoney.
The EXECUTIVE COMMITTEE, which did not meet in 1996, has most of the powers
of the Board and can act when the Board is not in session. Members of this
Committee are Mr. Batts (Chairperson), Dr. Davis and Messrs. Luecke, McKinnon
and Ringler.
BOARD MEETINGS AND DIRECTORS' ATTENDANCE
Six Board meetings and eight committee meetings were held in 1996. All of
the directors attended in excess of 75% of the total meetings of the Board and
committees on which he or she served.
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The Board appointed two special committees to handle matters related to the
spin-off. These committees held a total of three meetings. No additional fees
were paid to members of these committees.
COMPENSATION OF NON-EMPLOYEE DIRECTORS
Directors who are also employees of the Company receive no additional
compensation for service on the Board.
Each non-employee director receives an annual retainer of $26,000.
Additionally, the Chairperson of each Board Committee receives a $4,000 annual
retainer and each committee member receives a $2,000 annual retainer. A $1,500
fee is paid to non-employee directors for each Board and committee meeting
attended.
Non-employee directors may defer payment of all or part of the retainer and
attendance fees, in which event interest would be credited to the deferred
amount at the prime rate. No director has elected to defer fees. Under the
Company's Director Stock Plan, non-employee directors may elect to receive their
annual retainers in cash or in shares of Company common stock, or they may elect
to apply the retainer toward a reduced price on stock options. The Plan also
provides for the grant of 1,000 shares of Company common stock to each new
non-employee director after three months of service on the Board.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of December 31, 1996 beneficial owners known to own more than 5% of the
Company's common stock, its only class of outstanding voting securities, are as
follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------- -------------------- --------
<S> <C> <C>
Bankers Trust New York Corporation.......................... 11,187,732(1) 17.9%
280 Park Avenue
New York, New York 10017
FMR Corp. .................................................. 7,798,100(2) 12.4%
82 Devonshire Street
Boston, Massachusetts 02109-3614
Harris Associates L.P. ..................................... 5,699,160(3) 8.6%
2 North LaSalle Street, Suite 500
Chicago, Illinois 60602-3790
Loomis, Sayles & Company, L.P. ............................. 5,123,960(4) 8.2%
One Financial Center
Boston, Massachusetts 02111
</TABLE>
- ---------------
(1) Bankers Trust New York Corporation and its wholly-owned subsidiary, Bankers
Trust Company (the "Bank"), were the beneficial owners of 575,628 shares.
The Bank acts as trustee for various employee benefit plan trusts and as an
investment advisor. The Bank has sole voting power with respect to 255,150
shares, sole investment power with respect to 575,078 shares, shared voting
power with respect to 150 shares and shared investment power with respect to
550 shares. The Bank serves as the Trustee of the Premark International,
Inc. Master Defined Contribution Trust which holds 10,612,104 shares. These
shares are held for the individual accounts of approximately 5,200 employees
of the Company who participate in the Premark stock fund in
Company-sponsored plans. The Trustee must solicit and follow voting
instructions from the participants. For shares not instructed and shares not
yet allocated to participant accounts, the Trustee, in accordance with the
terms of the trust, will vote the shares in the same proportion as the
Trustee has been instructed to vote by the participants.
(2) Includes 7,305,900 shares beneficially owned by Fidelity Management &
Research Company, a subsidiary of FMR Corp., in its capacity as investment
adviser to various investment companies and to funds offered to limited
groups of investors, and 492,200 shares beneficially owned by Fidelity
Management Trust Company in its capacity as trustee or managing agent for
private investment
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<PAGE> 8
accounts, primarily employee benefit plans, and as investment adviser to
funds offered to limited groups of investors. FMR Corp has sole voting power
with respect to 224,300 shares and sole investment power with respect to
7,798,100 shares.
(3) Harris Associates L.P. has sole investment power with respect to 4,960,460
shares, shared investment power with respect to 738,700 shares (including
20,000 shares owned by a client for whom Harris serves as an investment
advisor) and shared voting power with respect to 5,699,160 shares. Harris is
an investment management firm which provides services to institutional and
individual clients.
(4) Loomis, Sayles & Company, L.P. is an investment management firm which
provides services to institutional and individual clients. Loomis has shared
voting power with respect to 98,000 shares, shared investment power with
respect to 5,123,960 shares and sole voting power with respect to 2,180,760
shares.
REPORT OF THE COMPENSATION AND DIRECTORS COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation and Directors Committee (the "Committee") is responsible
for the establishment, oversight and administration of executive compensation
and management incentive plans. It appoints members of senior management to have
authority over the design and administration of other employee benefit plans.
The Committee is composed entirely of outside directors. The Committee meets
four times per year.
EXECUTIVE COMPENSATION PHILOSOPHY
The executive compensation program is designed to achieve two principal
objectives: first, to be competitive so the Company can attract, motivate and
retain talented executives; second, to align the interests of the Company's
executives with shareholders by having a significant portion of executive
compensation vary with Company and/or business unit performance.
The Committee's philosophy is to pay competitive annual salaries, coupled
with a leveraged incentive system that pays more than competitive total
compensation for performance exceeding financial goals, and less than
competitive total compensation for performance below financial goals. The
leveraged incentive system consists of annual and long-term cash incentive
compensation, and stock compensation consisting primarily of stock options and
secondarily of restricted stock.
The Committee assesses the competitiveness of compensation by referring at
least annually to a variety of compensation survey data furnished by prominent
international consulting firms. The data include predicted market values
(medians and/or averages) for salaries, bonuses, total cash compensation, stock
options and various other long-term incentives provided by companies with whom
the Company may compete for executive talent. The companies whose data are
represented in these various surveys include companies of varying performance
levels, and are not the same companies that comprise the comparator group index
in the performance graph on page 9. The Committee believes that the Company's
competitors for executive talent are not confined to those companies that would
be included in a comparator group established for comparing shareholder returns.
Based on studies supplied by an independent consultant, the Committee
believes that the Company's compensation program for executives has the
following characteristics that serve to align executive interest with long-term
shareholder value creation:
-- Emphasizes "at risk" pay such as bonuses, options and long-term
incentives.
-- Emphasizes long-term compensation such as options and long-term
incentives.
-- Rewards financial results rather than individual performance against
individual objectives.
The Omnibus Reconciliation Act of 1993 (OBRA) established certain
requirements in order for annual compensation exceeding $1 million earned by
certain senior executives to be deductible. The Company's executive compensation
programs and the actions of the Committee have been structured to comply with
OBRA. However, the Committee reserves the right to forego deductibility if in
its discretion it believes a
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<PAGE> 9
particular compensation program or payment is consistent with the overall best
interests of the Company and its shareholders.
ANNUAL SALARIES
Salary ranges governing executives including the chief executive officer
(the CEO) and the other executives named in the Summary Compensation Table (the
"Named Officers") are established annually based on the competitive data
described earlier. Within those ranges, individual salaries vary based upon the
individual's work experience, performance, level of responsibility, impact on
the business, tenure and potential for advancement within the organization.
Annual salaries for newly-hired executives are determined at time of hire taking
into account the above factors other than tenure. The CEO receives salary
increase consideration at approximately 18 month intervals, while other senior
executives receive salary increase consideration at 12-15 month intervals.
Individual salary increases are based on the performance of the individual
executives and on the overall performance of the Company in the case of the CEO.
Salary adjustments for the CEO and the other Named Officers are subject to
approval by the full Board, based upon the recommendation of the Committee.
The salaries of the executive officers as a group are, on average, equal to
the predicted medians of the survey data referred to previously.
SHORT-TERM INCENTIVES
The Company's annual cash incentive program for executives is based on
financial performance, and is designed to promote the annual objectives of the
organization.
Participants include the CEO, the other Named Officers, and other
management employees whose contributions influence annual financial results. The
CEO's and the other Named Officers' target incentive opportunities are subject
to Committee review and approval annually and are established as a percentage of
salary based on job level, impact on results, and the competitive data referred
to previously. The CEO's and other Named Officers' targets range from 45% to 65%
of annual salary, and awards based on financial performance range from 0 to 200%
of target.
Financial objectives are subject to review and approval by the Committee at
the beginning of each year. For 1996, business units were required to meet a
prescribed working capital turnover threshold to qualify for any incentive
award. Adjusted net income was the financial measure for all executive level
business unit incentives (including those for Messrs. Deering and Reeb). Net
income was adjusted (credited or charged) to the extent average working capital
exceeded or fell below the working capital targets. Mr. Deering did not achieve
an award; however, he was granted a discretionary annual incentive award in
recognition of positive developments during the year which are expected to
result in improved financial performance in future years. Mr. Reeb achieved 200%
of his target award and was also granted a discretionary award equal to
one-times his annual incentive target in recognition of extraordinary business
unit performance for the year.
Economic value added or "EVA" (defined as net operating profit after taxes,
less a capital charge) was the measure for the corporate office staff, including
Messrs. Ringler, Skatoff and Costigan. Because the Company exceeded the maximum
level of its EVA goal, the awards to Messrs. Ringler, Skatoff and Costigan were
equal to 200% of those executives' targets. The average percentage award to the
Named Officers' was 167% of target, excluding the discretionary awards to
Messrs. Deering and Reeb.
LONG-TERM INCENTIVES
The Company's long-term cash incentive program is based on financial
performance, and is designed to promote the long-term objectives of the
organization, and to serve as a retention incentive. Participants include the
CEO and the other Named Officers as well as key employees who are in a position
to make substantial contributions to the accomplishment of the long-term
financial objectives. Each participant's target incentive opportunity is
established as a percentage of salary, and is based on job level, impact on
results, and the competitive data referred to previously. For the three-year
program that began January 1, 1994, the CEO's
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<PAGE> 10
and the other Named Officers' targets ranged from 45% to 65% of annual salary,
and awards based on financial performance were 300% of target because the
Company exceeded the maximum goals established by the Committee. The targets for
the 1994-1996 long-term program took into account the fact that awards were not
payable in 1995 or 1996 as a result of the Company's shift to overlapping
three-year cycles. For the three-year program that began January 1, 1996, the
CEO's and the other Named Officers' targets range from 22.5% to 32.5% of annual
salary, and potential awards based on financial performance range from 0 to 300%
of target.
Financial objectives are subject to review and approval by the Committee at
the beginning of each performance period. The financial objectives for the
1995-1997 and 1996-1998 long-term incentive programs were originally established
as a certain level of EVA. However, due to the difficulties and complexities of
adjusting EVA fairly in order to exclude the effects of the spin-off and Hartco
divestiture on capital, tax rates and corporate office expense, the financial
objectives have been restated by the Committee as segment profit. The segment
profit objectives used by the Committee were implicit in the calculation of the
original EVA objectives. This adjustment has no impact on the target or maximum
payouts under either program.
ADMINISTRATION OF SHORT AND LONG-TERM INCENTIVE PLANS
The Committee verifies the actual performance achieved as a precondition to
approving awards, and has reserved the right to interpret financial results, and
to determine the proper treatment of changes in accounting standards and
non-recurring unusual events, such as acquisitions, dispositions and capital
gains and losses, and to make adjustments which may be necessary. In the cases
of the CEO and the other Named Officers, awards are calculated so as to exclude
the effects of such items and the Committee's discretion is limited to reducing
or withholding awards.
STOCK OPTIONS
The grant of stock options to key employees encourages equity ownership and
closely aligns management interest with the interests of shareholders. Because
options are subject to forfeiture if the employee leaves the Company prior to
their becoming exercisable, options also provide an incentive to remain with the
Company long term. The Company has guidelines regarding the ownership of
designated levels of Company stock by senior officers.
Stock options are granted annually to the CEO and the other Named Officers,
and to other key employees having strategic impact on product, staffing,
technology, pricing, investment or policy matters. The aggregate number of
options granted and each individual grant to the CEO and the other Named
Officers are based on competitive norms derived from the survey data referred to
previously, and are subject to Committee approval. The competitive norms include
grant size data (number of shares times exercise price) for companies granting
options in conjunction with one or more additional long-term incentive programs.
The timing of the annual 1996 option grants coincided with the spin-off.
The size of the annual 1996 grants for the executive officers as a group
approximates the median of the competitive norms.
In addition to the 1996 annual option grant, a special grant was made to 32
key executives also coinciding with the spin-off. These special grants are
intended to encourage greater ownership in the Company as well as to further
align the interests of these executives with shareholders.
RESTRICTED STOCK
The Company no longer makes grants of restricted stock as part of its
regular long-term incentive program, but does so, subject to Committee approval,
in certain special circumstances as a retention or performance incentive, or as
compensation for the forfeited value of incentive or stock awards at a previous
employer, as in the case of Mr. Deering's 1992 grant. Upon the spin-off, the
Company awarded restricted stock to 13 key executives as a retention incentive.
Restrictions will lapse in 1999.
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<PAGE> 11
CORPORATE PERFORMANCE & CEO PAY
With the spin-off of Tupperware, Mr. Ringler was named President and Chief
Executive Officer and the Board increased his salary from $550,000 to $600,000.
As of December, 1996, Mr. Ringler's salary is between 5% and 11% below predicted
market medians.
In 1996, the Company had record net income from continuing operations
(before a net after-tax loss from the sale of Hartco) of $95.3 million, an
increase of 21% from 1995's $78.9 million. Based upon these financial results
which surpassed the goal for the maximum award, Mr. Ringler earned an annual
incentive award of $780,000 (200% of target), up 240% from $229,295 in 1995. Mr.
Ringler's 1996 total of base salary and annual incentive award increased 80% to
$1,359,359 from $754,295 in 1995. Additionally, the Company exceeded the goal
for the maximum award established for the 1994-1996 long-term incentive program
resulting in a long-term incentive award for Mr. Ringler of $1,170,000 (300% of
target). No long-term incentive was payable in 1995.
The Committee granted 120,000 option shares to Mr. Ringler, taking into
consideration the scope of his responsibility, competitive awards granted to
CEOs at like-sized organizations, the number of options previously granted to
Mr. Ringler, and Company performance. The Committee believes this option award
to be comparable to median-sized awards for CEOs of like-sized organizations.
The Committee also made a special grant of 120,000 option shares and awarded
40,000 restricted stock shares to Mr. Ringler as a retention incentive and to
further align his interests with shareholders.
Based upon a comparison of Mr. Ringler's annual compensation package with
the compensation packages of CEO's in the competitive data referred to
previously, Mr. Ringler's compensation opportunity at target is 4% less than the
predicted market median, not including the special spin-off grant of options and
restricted stock.
FORMER CEO'S COMPENSATION
The Board increased the annual rate of Mr. Batts' salary from $750,000 to
$785,000. On May 31, 1996 he completed his service as Chief Executive Officer of
the Company and became Chairman and Chief Executive Officer of Tupperware. Mr.
Batts continues to serve as Chairman of the Board of the Company. In
consideration for his continued service, the Company agreed to reimburse
Tupperware for one-third of Mr. Batts' salary (see footnote 2 to the Summary
Compensation Table on page 10).
In recognition of his leadership through the spin-off, Mr. Batts was
awarded a special annual incentive of $340,167 in lieu of his participation in
the annual incentive program. Mr. Batts also received an award of $510,250 under
the Company's 1994-1996 long-term incentive program. This amount is one-third of
the total amount earned which was 300% of target.
The Committee granted 52,000 option shares to Mr. Batts taking into
consideration the scope of his responsibility, his leadership during the
spin-off, competitive awards at like-sized organizations and company
performance.
COMPENSATION AND DIRECTORS COMMITTEE
Joseph E. Luecke -- Chairperson
Lloyd C. Elam
Janice D. Stoney
8
<PAGE> 12
CUMULATIVE TOTAL SHAREHOLDER RETURN(1)
DECEMBER 1991 THROUGH DECEMBER 1996
[LINE GRAPH]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) PREMARK DIVERSIFIEDS S&P 500
<S> <C> <C> <C>
DECEMBER 1991 100.00 100.00 100.00
DECEMBER 1992 102.46 115.03 107.61
DECEMBER 1993 206.07 147.27 118.41
DECEMBER 1994 234.09 141.42 120.01
DECEMBER 1995 270.26 194.24 164.95
DECEMBER 1996 419.80 252.65 202.73
</TABLE>
- ---------------
(1) The graph compares the performance of the Company's common stock to the
Standard & Poor's 500 Stock Index and to the Value Line Diversified Company
Industry Index. It assumes the value of the investment in the Company's common
stock and each index was $100 at December 31, 1991 and that all dividends were
reinvested, including the value of Tupperware stock distributed on May 31, 1996.
As a diversified manufacturer and seller of a broad line of consumer and
commercial products, the Company is not easily categorized with other more
specific industry indices. Further, many of the companies with which the Company
competes are private and peer group comparative data are not available. Past
performance is not necessarily an indication of future performance.
9
<PAGE> 13
SUMMARY COMPENSATION TABLE
The table sets forth the annual and long-term compensation, attributable to
all service in the fiscal years 1996, 1995 and 1994, paid to or deferred by (i)
those persons who served as chief executive officers during 1996, and (ii) the
other four most highly compensated executive officers of the Company at the end
of the year (the "Named Officers"):
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------------------- -------------------------- ----------
OTHER RESTRICTED
ANNUAL STOCK SECURITIES LTIP
NAME AND PRINCIPAL SALARY COMPENSATION AWARDS UNDERLYING PAYOUTS
POSITION YEAR ($)(1) BONUS($) ($) ($)(6) OPTIONS(#)(7) ($)
------------------ ---- ------ -------- ------------ ---------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
WARREN L. BATTS......... 1996 $398,404(2) $340,167(3) -- -- 52,000 510,250(3)
Chairman of the 1995 $750,000 $369,525 -- -- 56,884 --
Board 1994 $708,333 $975,000 $682,500(5) -- 48,041 --
JAMES M. RINGLER........ 1996 $579,359 $780,000 -- $610,000 240,000 1,170,000
President and Chief 1995 $525,000 $229,295 -- -- 108,460 --
Executive Officer 1994 $500,000 $550,000 $379,500(5) -- 87,229 --
JOHN M. COSTIGAN........ 1996 $270,000 $243,000 -- $152,500 40,000 364,500
Senior Vice President, 1995 $270,000 $92,097 -- -- 37,923 --
General Counsel 1994 $255,000 $229,500 $172,125(5) -- 34,891 --
& Secretary
JOSEPH W. DEERING....... 1996 $352,667 $75,000(4) -- $335,500 85,000 534,000
Group Vice President 1995 $336,000 $254,352 -- -- 46,266 --
and President, Food 1994 $321,333 $314,832 $182,400(5) -- 84,385 --
Equipment Group
WILLIAM R. REEB......... 1996 $242,514 $367,500(4) -- $244,000 60,000 367,500
Corporate Vice 1995 $215,000 $26,875 -- -- 29,200 --
President and 1994 $190,000 $215,000 $ 97,902(5) -- 40,770 --
President and COO,
Wilsonart
LAWRENCE B. SKATOFF..... 1996 $322,000 $322,000 -- $152,500 40,000 483,000
Senior Vice President 1995 $317,750 $122,038 -- -- 45,507 --
and Chief Financial 1994 $305,000 $305,000 $217,500(5) -- 43,614 --
Officer
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL COMPENSATION
POSITION ($)(8)
------------------ ------------
<S> <C>
WARREN L. BATTS......... $ 67,233
Chairman of the $153,415
Board $143,832
JAMES M. RINGLER........ $ 70,898
President and Chief $ 94,914
Executive Officer $ 88,722
JOHN M. COSTIGAN........ $ 30,708
Senior Vice President, $ 43,119
General Counsel $ 41,787
& Secretary
JOSEPH W. DEERING....... $ 18,211
Group Vice President $ 14,697
and President, Food $ 11,291
Equipment Group
WILLIAM R. REEB......... $ 21,477
Corporate Vice $ 30,381
President and $ 9,976
President and COO,
Wilsonart
LAWRENCE B. SKATOFF..... $ 38,082
Senior Vice President $ 54,212
and Chief Financial $ 51,732
Officer
</TABLE>
- ---------------
(1) Includes amounts held in the Retirement Savings Plan that were deferred
pursuant to Section 401(k) of the Internal Revenue Code (the "Code") and
amounts deferred under the Supplemental Plan (see footnote 8), as well as
Code Section 125 contributions to the Flexible Benefits Plan.
(2) Mr. Batts served as Chairman of the Board and Chief Executive Officer of the
Company until May 31, 1996 when he completed his service as Chief Executive
Officer and became Chairman of the Board and Chief Executive Officer of
Tupperware. Mr. Batts continues to serve as Chairman of the Board of the
Company. As consideration for his continued service as Chairman, the Company
reimbursed Tupperware $179,654, which is included in the table, representing
one-third of his salary from Tupperware.
(3) The annual amount represents a special bonus award in lieu of participation
in the Company's annual incentive program in recognition of Mr. Batts'
leadership through the spin-off. The long-term amount represents one-third
of the award at 300% of target under the Company's 1994-1996 long-term
incentive program.
(4) Represents a discretionary award to Mr. Deering in recognition of positive
developments during the year which are expected to result in improved
performance in future years. In the case of Mr. Reeb, the amount includes a
special award of $122,500 in recognition of extraordinary business unit
performance for the year.
(5) Represents a 1994 payout based on 1993 performance under the former
long-term incentive plan, but is included among the Annual Compensation data
in accordance with the incentive compensation reporting rules.
(6) Represents the market value of restricted shares on the date of grant. The
shares under the 1992 grant to Mr. Deering which had not been released prior
to the spin-off were adjusted in a manner that maintained the market value
of the shares immediately prior to the spin-off. The number, vesting
schedule and value of restricted stock held at the end of the 1996 fiscal
year are as follows:
<TABLE>
<CAPTION>
VESTING SCHEDULE
DATE OF NUMBER OF ------------------
NAME GRANT SHARES HELD VALUE SHARES DATE
---- ------- ----------- ----- ------ ----
<S> <C> <C> <C> <C> <C>
Mr. Batts............................................... -- 0 -- -- --
Mr. Ringler............................................. 05/20/96 40,000 $890,000 40,000 05/20/99
Mr. Costigan............................................ 05/20/96 10,000 $222,500 10,000 05/20/99
Mr. Deering............................................. 05/20/96 22,000 $489,500 22,000 05/20/99
06/15/92 12,643 $281,307 12,643 06/15/97
Mr. Reeb................................................ 05/20/96 16,000 $356,000 16,000 05/20/99
Mr. Skatoff............................................. 05/20/96 10,000 $222,500 10,000 05/20/99
</TABLE>
In the event of a Change of Control of the Company, all restricted stock
shares become free of all restrictions and become nonforfeitable. Holders of
restricted stock receive the same dividends as other common stockholders.
10
<PAGE> 14
(7) In keeping with the terms of the Company's incentive plans, the exercise
price and number of shares of all unexercised option grants outstanding on
the date of the spin-off (including the 1994 and 1995 grants in the Table)
were adjusted by the Compensation and Directors Committee in a manner to
maintain the aggregate excess of market value over exercise price
immediately prior to the spin-off.
(8) Consists of 1996 Company contributions to the Retirement Savings Plan and
amounts credited to the Supplemental Plan (which provides benefits to the
Named Officers to which they would have been entitled under the Retirement
Savings Plan but for benefit limits imposed by the Code) as follows: Mr.
Batts, $10,869 and $56,364; Mr. Costigan, $11,232 and $19,476; Mr. Deering,
$4,042 and $14,169; Mr. Ringler, $10,952 and $59,946; Mr. Reeb, $12,396 and
$9,081; and Mr. Skatoff, $11,332 and $26,750, respectively.
SECURITY OWNERSHIP OF MANAGEMENT
The table sets forth the number of shares of the Company's common stock
beneficially owned by each of the directors, each of the Named Officers and the
directors and all executive officers of the Company as a group on March 10,
1997. Each of the following persons and members of the group had sole voting and
investment power with respect to the shares shown unless otherwise indicated. No
director or officer owns more than 1% of the Company's common stock, except Mr.
Batts who owns 1.28%. Directors and officers as a group own 4.52%.
<TABLE>
<CAPTION>
SHARED SHARES THAT
OWNERSHIP MAY BE ACQUIRED TOTAL
OR HELD BY WITHIN 60 DAYS RETIREMENT SHARES
SOLE OR FOR FAMILY OF MARCH 10, RESTRICTED SAVINGS BENEFICIALLY
NAME OWNERSHIP MEMBERS 1997(1) STOCK PLAN 401(K) OWNED
---- --------- ------------- --------------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Warren L. Batts............ 569,432 -- 255,410 -- -- 824,842
William O. Bourke.......... 2,450 4,000 18,169 -- -- 24,619
Harry W. Bowman............ -- -- -- -- -- --
John M. Costigan........... 37,686 39,964(2) 344,019 10,000 30 431,699
Ruth M. Davis.............. 3,587 -- 3,793 -- -- 7,380
Joseph W. Deering.......... 43,200 -- -- 34,643 -- 77,843
Lloyd C. Elam.............. 7,171 -- 7,586 -- -- 14,757
W. James Farrell........... 1,000 -- -- -- -- 1,000
Richard S. Friedland....... -- -- -- -- -- --
Joseph E. Luecke........... 2,000 2,000 -- -- -- 4,000
John B. McKinnon........... 12,800 -- 18,170 -- -- 30,970
David R. Parker............ -- 7,000 48,510 -- -- 55,510
William R. Reeb............ 32,539 -- 48,167 16,000 47,143 143,849
James M. Ringler........... 75,000 -- 447,174 40,000 15,927 578,101
Lawrence B. Skatoff........ 28,396 -- 48,167 10,000 8,309 94,872
Janice D. Stoney........... -- 2,400 48,510 -- -- 50,910
All directors and executive
officers as a group (23
including the named
individuals above)....... 877,342 81,947 1,621,845 128,435 199,598 2,909,167
</TABLE>
- ---------------
(1) Includes stock options granted under the Company's management incentive
plans and the Director Stock Plan. Also includes estimated shares of common
stock that will be paid in lieu of fees under the Director Stock Plan. In
keeping with the terms of the Company's incentive plans, the exercise price
and number of shares under options outstanding on the date of the spin-off
were adjusted by the Compensation and Directors Committee in a manner to
maintain the aggregate excess of market value over exercise price
immediately prior to the spin-off.
(2) Includes 964 shares for which voting and investment power is disclaimed.
11
<PAGE> 15
STOCK OPTIONS
The following tables show grants, exercises and fiscal year-end values of
stock options for the Named Officers under the Company's 1994 Incentive Plan.
The Plan permits the grant of stock appreciation rights in connection with all
or any part of an option, but none has been granted.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------
NUMBER OF % OF TOTAL GRANT
SECURITIES OPTIONS DATE
UNDERLYING GRANTED TO EXERCISE OR PRESENT
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION VALUE
NAME GRANTED(#)(1) FISCAL YEAR ($/SH)(2) DATE ($)(3)
---- ------------- ------------ ----------- ---------- -------
<S> <C> <C> <C> <C> <C>
Warren L. Batts.................... 52,000 3.19% $15.25 5-19-06 $ 235,447
John M. Costigan................... 40,000 2.45% $15.25 5-19-06 $ 181,113
Joseph W. Deering.................. 85,000 5.21% $15.25 5-19-06 $ 384,866
William R. Reeb.................... 60,000 3.68% $15.25 5-19-06 $ 271,670
James M. Ringler................... 240,000 14.72% $15.25 5-19-06 $1,086,681
Lawrence B. Skatoff................ 40,000 2.45% $15.25 5-19-06 $ 181,113
</TABLE>
- ---------------
(1) Options become exercisable May 20, 1999. The term of each option is 10
years. In the event of a Change of Control of the Company, all options will
become immediately exercisable and the optionee will have the right to
receive the difference between the exercise price and the then fair market
value of common stock in cash.
(2) Stock options are granted at the average fair market value of the Company's
common stock on the date of grant rounded up to the nearest nickel.
(3) The Black-Scholes option pricing model was used assuming a dividend yield of
1.6%, a risk-free interest rate of 6.4%, an expected stock price volatility
based on historical experience of 25% and an expected option life based on
historical experience of 5 years. The attribution of values with the
Black-Scholes model to stock option grants requires adoption of certain
assumptions, as described above. While the assumptions are believed to be
reasonable, the reader is cautioned not to infer a forecast of earnings or
dividends either from the model's use or from the values adopted for the
model's assumptions. Any future values realized will ultimately depend upon
the excess of the stock price over the exercise price on the date the option
is exercised.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED VALUE OPTIONS AT FY-END(#)(3) FY-END($)(2)
ON EXERCISE REALIZED --------------------------- ---------------------------
NAME (#)(1) ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Warren L. Batts......... 0 $ 0 255,410 156,925 $4,331,512 $1,438,016
John M. Costigan........ 25,000 $1,014,638 344,019 112,814 $6,112,204 $1,026,025
Joseph W. Deering....... 78,167 $1,578,518 0 215,651 $ 0 $1,943,403
William R. Reeb......... 58,000 $2,234,517 48,167 129,970 $ 581,376 $1,140,146
James M. Ringler........ 0 $ 0 447,174 435,689 $8,275,029 $3,682,014
Lawrence B. Skatoff..... 0 $ 0 48,167 129,121 $ 581,376 $1,193,510
</TABLE>
- ---------------
(1) Upon the exercise of an option, the optionee must pay the exercise price in
cash or stock.
(2) Represents the difference between the fair market value of the common stock
underlying the option and the exercise price at exercise, or fiscal
year-end, respectively.
(3) In keeping with the terms of the Company's incentive plans, the exercise
price and number of shares under options outstanding on the date of the
spin-off were adjusted by the Compensation and Directors Committee in a
manner to maintain the aggregate excess of market value over exercise price
immediately prior to the spin-off.
12
<PAGE> 16
LONG-TERM INCENTIVE PLAN AWARDS
The following table shows 1996 long-term incentive awards under the
Company's 1994 Incentive Plan.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS
OR OTHER UNDER NON-STOCK
PERIOD UNTIL PRICE-BASED PLANS
MATURATION OR -------------------------------
NAME PAYOUT THRESHOLD TARGET MAXIMUM
---- ------------- --------- ------ -------
<S> <C> <C> <C> <C>
Warren L. Batts................................... 3 years $0 $ 49,608 $148,823
John M. Costigan.................................. 3 years $0 $ 60,750 $182,250
Joseph W. Deering................................. 3 years $0 $ 89,000 $267,000
William R. Reeb................................... 3 years $0 $ 61,250 $183,750
James M. Ringler.................................. 3 years $0 $195,000 $585,000
Lawrence B. Skatoff............................... 3 years $0 $ 80,500 $241,500
</TABLE>
The Named Officers participate in a three-year Long-Term Incentive Program
under the Company's 1994 Incentive Plan. The program provides for an incentive
opportunity based on meeting or exceeding financial measures established by the
Compensation and Directors Committee. Performance measurements are based on
segment profit. Awards may be subject to forfeiture if the participant's
employment is terminated. The above estimated future payouts are based on a
percentage of current salary, which may change between now and time of payout.
The above table sets forth the incentive opportunity for the three-year
cycle of 1996 through 1998. Payment of awards, if any, would occur in 1999 based
on actual performance for the three-year period.
PENSION PLANS
PREMARK INTERNATIONAL, INC. BASE RETIREMENT PLAN
Messrs. Costigan, Reeb, Ringler and Skatoff participate in the Premark
International, Inc. Base Retirement Plan (the "Base Plan") at 1% ( 3/4 of 1% in
the case of Mr. Reeb) of career pay. As the result of the spin-off of
Tupperware, Mr. Batts ceased participation in the Company's retirement plans and
became a participant under Tupperware plans. Compensation covered by the Base
Plan includes salary and annual bonus paid in the calendar year, but does not
include any long-term incentive or other cash payments. Credited years of
service for each of the Named Officers are: Mr. Costigan, 26.92; Mr. Reeb,
25.42; Mr. Ringler, 7.0; and Mr. Skatoff, 5.33. Benefits are computed on a
straight-life annuity basis and are not subject to any deductions for Social
Security or other offset amounts. The estimated annual benefits payable upon
retirement at normal retirement age for each of the Named Officers in the Base
Plan are: Mr. Ringler, $165,034; Mr. Costigan, $113,124; Mr. Reeb, $54,273; and
Mr. Skatoff, $59,042. The estimates take into account participation in the Base
Plan, any predecessor plan formula, and the Supplemental Plan (which provides
benefits from general assets that would otherwise be payable from the plans but
for benefit limits imposed by the Code).
13
<PAGE> 17
RETIREMENT PLAN FOR SALARIED EMPLOYEES OF PMI FOOD EQUIPMENT GROUP
<TABLE>
<CAPTION>
YEARS OF SERVICE
FINAL ----------------------------------------------------
AVERAGE PAY 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$300,000...................................... $ 65,250 $ 87,000 $108,750 $130,500 $152,250
400,000...................................... 87,000 116,000 145,000 174,000 203,000
450,000...................................... 97,875 130,500 163,125 195,750 228,375
500,000...................................... 108,750 145,000 181,250 217,500 253,750
600,000...................................... 130,500 174,000 217,500 261,000 304,500
700,000...................................... 152,250 203,000 253,750 304,500 355,250
800,000...................................... 174,000 232,000 290,000 348,000 406,000
</TABLE>
Mr. Deering participates in the Retirement Plan for Salaried Employees of
PMI Food Equipment Group. Compensation covered by the Plan includes salary and
annual bonus paid in the calendar year, but does not include any long-term
incentive or other cash payments. Mr. Deering was credited with 4.58 years of
service. Benefits are computed on a straight-life annuity basis and are subject
to a Social Security offset.
CHANGE-OF-CONTROL ARRANGEMENTS AND EMPLOYMENT CONTRACTS
The Company has entered into employment agreements with all of the Named
Officers, which would become effective for a period of three years following a
Change of Control.
If the Company terminates the employment of the person other than for cause
or if the person terminates employment within the 30-day period following the
one year anniversary of the Change of Control for any reason, or if there occurs
at any time one or more significantly unfavorable changes in the terms and
conditions of his employment, each person would receive a lump sum equal to (a)
three times the sum of (i) annual base salary and (ii) the greater of the most
recent awards or the average of the last three years' awards, under the Annual
and Long-Term Incentive Plans, plus (b) prorated maximum awards for the current
year under the Annual and Long-Term Incentive Plans. The amount of any other
severance payments would be subtracted from the amount payable under the
employment agreement.
A Change of Control shall mean (1) the acquisition by any individual,
entity or group (other than the Company or fiduciaries holding securities under
an employee benefit plan of the Company) of the beneficial ownership of 20% or
more of the then outstanding stock of the Company or the combined voting power
of the then outstanding voting securities of the Company; or (2) a hostile
change in the composition of the board of directors such that the incumbent
board ceases to constitute a majority of the board; or (3) the approval by the
shareholders of a complete liquidation or dissolution, or the sale or other
disposition of all or substantially all of the assets, of the Company, or
certain reorganizations, mergers or consolidations of the Company; or (4)
certain restructurings in response to a pending or threatened Change of Control.
If any payment would constitute an "excess parachute payment" within the
meaning of Section 280G(b) of the Code, the Company will make the person whole
with respect to any additional taxes due. In addition, each person will receive
lifetime medical benefits substantially similar to those provided at the time of
the Change of Control.
2. PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS
On March 6, 1997, upon the recommendation of its Audit and Corporate
Responsibility Committee, the Board appointed Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending December 27, 1997, which
appointment will be proposed for ratification at the meeting. Representatives of
Ernst & Young LLP will be present at the meeting to make statements if they so
desire and to respond to questions of shareholders.
Price Waterhouse LLP served as independent auditors of the Company for
fiscal year 1996. Services performed by it for the 1996 fiscal year included the
annual audit of the consolidated financial statements; audits or limited reviews
of financial and related information included in filings with governmental and
14
<PAGE> 18
regulatory agencies; audits of certain foreign subsidiaries in accordance with
local statutory requirements; audits of domestic employee benefit plans and
trusts; and consultations in connection with various financial reporting,
accounting, tax and other matters. Representatives of Price Waterhouse LLP will
be present at the meeting to make statements if they desire, and to respond to
questions of shareholders.
On March 6, 1997, the Company, upon the approval of the Audit and Corporate
Responsibility Committee of its Board of Directors, dismissed Price Waterhouse
LLP as its independent accountants.
For the Company's two most recently completed fiscal years ended December
28, 1996 and December 30, 1995 the reports of Price Waterhouse LLP on the
financial statements did not contain an adverse opinion or disclaimer of opinion
nor were the reports qualified or modified as to uncertainty, audit scope or
accounting principles.
During the two most recently completed fiscal years and through March 6,
1997, there were no disagreements with Price Waterhouse LLP on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements if not resolved to the satisfaction of
Price Waterhouse LLP would have caused them to make reference thereto in their
report on the financial statements for such years.
During the two most recent fiscal years and through March 6, 1997, the
Company has not consulted with Ernst & Young LLP on items which (1) were or
should have been subject to Statement on Accounting Standards 50 or (2)
concerned the subject matter of a disagreement or reportable event with the
former auditor (as described in Regulation S-K Item 304(a)(2)).
Approval of the proposal requires the affirmative vote of a majority of the
shares voted. In the event the proposal is not approved, the Board will consider
the negative vote as a mandate to appoint other independent auditors for the
1997 fiscal year.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
3. OTHER MATTERS
DISCRETIONARY AUTHORITY
At the time of mailing of this proxy statement, the Board was not aware of
any other matters which might be presented at the meeting. If any matter not
described in this proxy statement should properly be presented, the persons
named in the accompanying proxy form will vote such proxy in accordance with
their judgment.
NOTICE REQUIREMENTS
The Company's By-laws require written notice to the Company of a nomination
for election as a director (other than a nomination by the Board) and of the
submission of a proposal (other than a proposal by the Board) for consideration
at an annual meeting of shareholders. The notice must contain certain
information concerning the nominating or proposing shareholder, and the nominee
or the proposal, as the case may be, and be furnished to the Company generally
not less than 30 days prior to the annual meeting. A copy of the applicable
By-Law provisions may be obtained, without charge, upon written request to the
Secretary of the Company at its principal executive offices.
Any shareholder who desires to propose a candidate for election to the
Board should send a letter of recommendation to the attention of the Secretary
of the Company containing the name and address of the proposing shareholder and
the proposed candidate, a written consent of the proposed candidate and the
complete business, professional and educational background of the proposed
candidate.
In addition to the foregoing, any shareholder who desires to have a
proposal included in the Company's proxy solicitation material relating to the
Company's 1998 annual meeting of shareholders should send a signed notice of
intent to the Secretary of the Company. This notice, including the text of the
proposal, must be received no later than November 25, 1997.
15
<PAGE> 19
EXPENSES AND METHODS OF SOLICITATION
The expenses of soliciting proxies will be paid by the Company. In addition
to the use of the mails, proxies may be solicited personally, or by telephone or
other means of communication, by directors, officers and employees of the
Company and its subsidiaries, who will not receive additional compensation
therefor. Arrangements will also be made with brokerage firms and other
custodians, nominees and fiduciaries for the forwarding of proxy solicitation
material to certain beneficial owners of the Company's common stock, and the
Company will reimburse such forwarding parties for reasonable expenses incurred
by them.
Georgeson & Company Inc. has been retained by the Company to aid in the
solicitation of proxies and will be paid $10,000, plus expenses, for its
services.
By order of the Board of Directors,
JOHN M. COSTIGAN
JOHN M. COSTIGAN
Secretary
Dated: March 25, 1997
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE AND SIGN THE ENCLOSED PROXY.
RETURN IT PROMPTLY IN THE ACCOMPANYING POSTPAID ENVELOPE.
16
<PAGE> 20
PROXY
PREMARK INTERNATIONAL, INC.
1717 Deerfield Road, Deerfield IL 60015
PROXY FOR 1997 ANNUAL MEETING OF SHAREHOLDERS
May 7, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Warren L. Batts, Dr. Ruth M. Davis and Dr.
Lloyd C. Elam, and each of them, proxies for the undersigned, with full power
of substitution, to vote the shares that the undersigned is entitled to vote at
the Annual Meeting of Shareholders of Premark International, Inc., on May 7,
1997, and at any adjournment thereof, upon the matters set forth on the reverse
side and described in the accompanying Proxy Statement and upon such other
business as may properly be presented.
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<S><C>
Comments/Address Change: Please mark comment/address box on reverse side
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN AND DATE ON THE REVERSE SIDE AND RETURN PROMPTLY
IN THE POSTPAID ENVELOPE PROVIDED.
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[PREMARK INTERNATIONAL LOGO]
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<S><C>
/X/ Please mark votes as indicated in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN ITEM 1 AND "FOR" ITEM 2
ITEM 1. THE ELECTION OF DIRECTORS ITEM 2. THE PROPOSAL TO RATIFY THE APPOINTMENT OF
Nominees: Harry W. Bowman, W. James Farrell, INDEPENDENT AUDITORS
Richard S. Friedland, David R. Parker and James M.
/ / FOR all nominees / / WITHHOLD for all / / FOR / / AGAINST / / ABSTAIN
WITHHOLDING FOR (Write that nominee's name in the space below):
______________________________________________________________
This proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder(s). If no direction is
made, this proxy will be taken as authority to vote FOR the election of all of the nominees in Item 1, to vote FOR Item 2, and in
the discretion of the proxies, to vote upon any other matter which may properly come before the meeting and any adjournment thereof.
I PLAN TO ATTEND MEETING / /
If you check this box to the
right an admission ticket
will be sent to you.
COMMENTS/ADDRESS CHANGE / /
Please mark this box if you
have written comments/address
change on the reverse side.
Receipt is hereby acknowledged of the notice
of meeting and proxy statement dated March
25, 1997 and the 1996 annual report to
shareholders of Premark International, Inc.
____________________________________________
Signature
____________________________________________
Signature
Date:_________________________________, 1997
NOTE: Please sign as name appears hereon.
Joint owners should each sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full title.
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<PAGE> 21
VOTING INSTRUCTION CARD
PREMARK INTERNATIONAL, INC.
1717 Deerfield Road, Deerfield IL 60015
VOTING INSTRUCTIONS TO TRUSTEE FOR 1997 ANNUAL MEETING OF SHAREHOLDERS
May 7, 1997
As a participant in a benefit plan sponsored by Premark International, Inc.,
you have the right to give written instructions to the trustee of such plan as
to the voting of certain shares of the Corporation's common stock at the
Corporation's annual meeting of shareholders to be held on May 7, 1997 and at
any adjournment thereof. In this connection please indicate your voting
choices on the reverse side of this card, sign and date it, and return it
promptly in the postpaid envelope provided.
Regardless of the number of shares held in trust on your behalf, exercising
your voting instruction right is very important.
(Continued on Reverse)
[PREMARK INTERNATIONAL LOGO]
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<S><C>
/X/ Please mark votes as indicated in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN ITEM 1 AND "FOR" ITEM 2
ITEM 1. THE ELECTION OF DIRECTORS ITEM 2. THE PROPOSAL TO RATIFY THE APPOINTMENT OF
Nominees: Harry W. Bowman, W. James Farrell, INDEPENDENT AUDITORS
Richard S. Friedland, David R. Parker and James M.
/ / FOR all nominees / / WITHHOLD for all / / FOR / / AGAINST / / ABSTAIN
WITHHOLDING FOR (Write that nominee's name in the space below):
______________________________________________________________
This voting instruction card when properly executed will be voted in the manner directed herein. If no direction is made, this
voting instruction card will be taken as authority to vote FOR the election of all of the nominees in Item 1, to vote FOR Item 2,
and in the discretion of the proxies, to vote upon any other matter which may properly come before the meeting and any adjournment
thereof. If this card is not returned or is returned unsigned, the trustee will vote the shares in accordance with the terms of
the Master Defined Contribution Trust.
Receipt is hereby acknowledged of the notice
of meeting and proxy statement dated March
25, 1997 and the 1996 annual report to
shareholders of Premark International, Inc.
____________________________________________
Signature
Date:_________________________________, 1997
NOTE: Please mark, date and sign above and
return in the enclosed envelope.
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