<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. )
Filed by the registrant [ ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
PREMARK INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, schedule or registration statement no.:
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(4) Date filed:
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<PAGE> 2
PREMARK INTERNATIONAL LOGO
Premark International, Inc., 1717 Deerfield Road, Deerfield, Illinois 60015
March 23, 1999
To Our Shareholders:
You are invited to attend the Company's annual meeting of shareholders to
be held on Wednesday, May 5, 1999, at the Hilton Chicago O'Hare Airport 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.
Ruth M. Davis, Ph.D. and Lloyd C. Elam, M.D. will retire at the meeting.
They have been directors since Premark's inception in 1986, and I would like to
take this opportunity to thank them for their guidance over the years. Their
dedication and valuable service have greatly benefitted the Company and its
shareholders.
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,
James M. Ringler
JAMES M. RINGLER
Chairman of the Board,
Chief Executive Officer and President
<PAGE> 3
[Premark Logo]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The 1999 annual meeting of shareholders of Premark International, Inc. will
be held at the Hilton Chicago O'Hare Airport hotel located at O'Hare
International Airport, Chicago, Illinois 60666, on Wednesday, May 5, 1999, at
11:00 a.m., to consider and vote upon:
1. the election of one director for the term expiring at the 2001 annual
meeting, and three directors for the term expiring at the 2002 annual
meeting;
2. the proposal to ratify the appointment of independent auditors for the
fiscal year ending December 25, 1999;
3. the proposal to approve an amendment of the 1994 Incentive Plan and
reapprove performance goals under the Plan; and
4. 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 23, 1999
i
<PAGE> 4
LOGO
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 5, 1999, and at any adjournment thereof. This proxy statement and
the enclosed proxy card are being mailed on or about March 23, 1999.
VOTING AT THE MEETING
The Board of Directors (the "Board") fixed the close of business on March
8, 1999, as the record date for determining shareholders entitled to vote at the
meeting. On that date there were 61,580,532 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
an officer of Norwest Bank Minnesota, N.A., transfer agent for the Company, to
act as tabulator of the votes, and Gregory J. Mancuso, Assistant General Counsel
and Assistant Secretary of the Company, to act as inspector of the vote 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 for the approval of the independent auditors.
For the approval of the amendment to the 1994 Incentive Plan and of performance
goals under the Plan (Proposal 3), an affirmative vote is required of a majority
of the shares of the Company's common stock present, or represented, and
entitled to vote at the meeting. Broker non-votes are not treated as votes cast
for purposes of any of the matters to be voted upon at the meeting. Abstentions
are not treated as votes cast for purposes of the election of directors and the
approval of independent auditors. They are counted as present and, in effect, as
votes against Proposal 3.
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 in two classes have been nominated.
Gary P. Coughlan has been nominated for the term expiring at the 2001
annual meeting. The abbreviated term is to balance the classes following the
retirement of two directors.
Harry W. Bowman, W. James Farrell and Janice D. Stoney have been nominated
for the term expiring at the 2002 annual meeting.
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 other
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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 as of March 8, 1999 concerning the nominees and continuing
directors is as follows:
NOMINEES FOR ELECTION AS DIRECTORS
- - FOR THE TERM EXPIRING IN 2001:
GARY P. COUGHLAN, Senior Vice President, Finance and Chief Financial
Officer of Abbott Laboratories, Inc., a provider of health care products and
services. Directorship: Fort James Corporation. Age: 55. First Elected: March
1999.
- - FOR THE TERM EXPIRING IN 2002:
HARRY W. BOWMAN, President and Chief Executive Officer of The Stiffel
Company, a manufacturer and distributor of lighting, since January 1999. Mr.
Bowman served as Chairman of the Board, President and Chief Executive Officer of
Outboard Marine Corporation, a manufacturer of marine products and accessories,
from 1995 to 1997; as Executive Vice President of Whirlpool Corporation in 1994
and 1995; and previously as President, Whirlpool Europe. Age 55. First elected:
1997.
W. JAMES FARRELL, Chairman and Chief Executive Officer of Illinois Tool
Works Inc., a multinational manufacturer of highly engineered fasteners,
components, assemblies and systems. Previously, Mr. Farrell served as Illinois
Tool Works' President and Chief Executive Officer in 1995 and 1996 and its
Executive Vice President. Directorships: Illinois Tool Works Inc., Morton
International, Inc. and The Quaker Oats Co. Age 56. First elected: 1996.
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. and Whirlpool
Corporation. Age 58. First elected: 1989.
DIRECTORS CONTINUING IN OFFICE:
RICHARD S. FRIEDLAND, former Chairman of the Board and Chief Executive
Officer of NextLevel Systems, Inc., a worldwide supplier of communication
networks, from July to October 1997. He previously served as Chairman of the
Board and Chief Executive Officer of General Instrument Corporation from 1995 to
1997, and as its President and Chief Operating Officer prior thereto.
Directorship: Tech-Sym Corporation. Term expires in 2000. Age 48. First elected:
1997.
JOHN B. MCKINNON, retired Dean of the Babcock Graduate School of
Management, Wake Forest University. Directorships: Ruby Tuesday, Inc. and
Morrison Healthcare, Inc. Term expires 2001. Age 64. First elected: 1986.
DAVID R. PARKER, Vice Chairman of AmeriServe Food Distribution, Inc., a
leading food-service distribution company, since May 1998. Previously, Mr.
Parker served as Chairman of ProSource, Inc. Directorships: Tupperware
Corporation and Applied Graphics Technologies, Inc. Term expires in 2000. Age
55. First elected: 1990.
JAMES M. RINGLER, Chairman of the Board of the Company since 1997, and
President and Chief Executive Officer since 1996. Prior to that he served as the
Company's President and Chief Operating Officer. Directorships: Reynolds Metals
Company and Union Carbide Corporation. Term expires in 2000. Age 53. First
elected: 1990.
RETIRING DIRECTORS:
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
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Chemicals, Inc.; BTG, Inc.; Ceridian Corporation; Principal Mutual Life
Insurance Company; Tupperware Corporation; and Varian Associates. Age 70. First
elected: 1986.
LLOYD C. ELAM, M.D., retired Distinguished Professor of Meharry Medical
College, having also served as its Chancellor and President. Directorships:
Merck & Co., Inc. and Tupperware Corporation. Age 70. First elected: 1986.
BOARD COMMITTEES
The AUDIT AND CORPORATE RESPONSIBILITY COMMITTEE held four meetings in
1998. It 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 also reviews employee benefit plan investment performance and policies.
The Committee charter provides that membership be composed solely of
directors who are not employees of the Company or any of its subsidiaries.
Members are Mr. Parker (Chairperson), Dr. Davis, and Messrs. Farrell and
McKinnon.
The COMPENSATION AND DIRECTORS COMMITTEE held six meetings in 1998. It
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 "Other Matters" appearing later in this proxy statement
for procedures for shareholder nominations. The Committee also evaluates the
performance of senior management, including the Chief Executive Officer, and
makes compensation recommendations to the Board. It directs the administration
of the management incentive plans and appoints members of senior management
responsible for the design, funding and administration of employee benefit
plans.
The Committee charter provides that membership be composed solely of
directors who are not employees of the Company or any of its subsidiaries.
Members are Mrs. Stoney (Chairperson), Mr. Bowman, Dr. Elam and Mr. Friedland.
THE EXECUTIVE COMMITTEE did not meet in 1998. It has most of the powers of
the Board and can act when the Board is not in session. Members of this
Committee are Mr. Ringler (Chairperson), Dr. Davis and Messrs. Farrell and
McKinnon.
BOARD MEETINGS AND DIRECTORS' ATTENDANCE
Five Board meetings and 10 committee meetings were held in 1998. All
directors attended 100% of the meetings of the Board and committees on which he
or she served, except for one director who attended 81.8% of such meetings and
another who attended 77.8% of such meetings.
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 the other committee members receive $2,000 annual retainers. A
$1,500 fee is also paid for each Board and regular 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
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<PAGE> 7
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, 1998, 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.......................... 9,349,673(1) 15.1%
One Bankers Trust Plaza
New York, New York 10006
Harris Associates L.P. ..................................... 6,908,091(2) 11.2%
Two North LaSalle Street, Suite 500
Chicago, Illinois 60602-3790
</TABLE>
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(1) Bankers Trust New York Corporation and its wholly-owned subsidiaries,
Bankers Trust Company and BT Alex. Brown Incorporated (the "Bank"), act as
trustees for various employee benefit plan trusts and as investment
advisors. The Bank has sole voting power with respect to 194,541 shares,
sole investment power with respect to 504,819 shares and shared investment
power with respect to 250 shares. The Bank serves as the Trustee of the
Premark International, Inc. Master Defined Contribution Trust, which holds
8,844,604 shares. These shares are held for the individual accounts of
approximately 7,290 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) Harris Associates L.P. has sole investment power with respect to 5,326,791
shares, shared investment power with respect to 1,581,300 shares and shared
voting power with respect to 6,908,091 shares. Harris is an investment
management firm that provides services to institutional and individual
clients.
REPORT OF THE COMPENSATION AND DIRECTORS COMMITTEE ON EXECUTIVE COMPENSATION
In 1998, the Committee met six times to review, evaluate and approve
compensation and benefit matters for senior executives of the Company. The
Committee recommends to the Board compensation for the Chief Executive Officer
("CEO") and five other executives and determines compensation for other
executive officers.
EXECUTIVE COMPENSATION PHILOSOPHY AND OBJECTIVES
The Committee's executive compensation 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 an annual cash plan,
a long-term cash and stock incentive compensation plan, and a stock compensation
plan consisting primarily of stock options.
Executive compensation programs are designed to attract, motivate and
retain talented executives and to align the interests of the Company's
executives with shareholders by having a significant portion of compensation
vary with Company and/or business unit performance.
The Committee determines compensation competitiveness by periodically
reviewing compensation survey data furnished by independent compensation
consulting firms. The data include predicted market values for salaries,
bonuses, total cash compensation, stock options and various other long-term
incentives provided by companies with whom the Company competes for executive
talent. The companies whose data
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<PAGE> 8
are represented in these surveys include companies of varying sizes and
performance levels, and are not the same companies that comprise the comparator
group index in the Performance Graph included in this proxy statement. 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.
The Committee believes that the Company's compensation program for senior
executives aligns executive interest with long-term shareholder value creation
by:
-- emphasizing "at risk" pay such as bonuses, stock options and long-term
incentives;
-- emphasizing long-term compensation such as stock options and long-term
incentives; and
-- rewarding financial results rather than individual performance against
individual objectives.
Section 162(m) of the Internal Revenue Code places limits on the tax
deductibility of compensation paid to certain senior officers unless certain
requirements are met. The Company's executive compensation programs and the
actions of the Committee have been structured to comply with Section 162(m). The
Committee reserves the right to forego deductibility, however, if in its
discretion it believes a particular compensation program or payment is
consistent with the overall best interests of the Company and its shareholders.
KEY ELEMENTS OF EXECUTIVE COMPENSATION
The Company's executive compensation program consists of two key elements:
1) annual components, i.e., base salary and short-term (annual) incentive, and
2) long-term components, i.e., long-term incentive and stock options. The
policies with respect to each of these elements, as well as the basis for
determining the compensation of the CEO, are described below.
BASE SALARIES
In establishing the salary ranges of the CEO and the other executives named
in the Summary Compensation Table (the "Named Officers"), the Committee
considers the competitive data described earlier. Range midpoints are set at
approximately the 50th percentile (median) of the market. Within those ranges,
individual salaries vary based upon an individual's work experience, past
performance and future potential, level of responsibility, impact on the
business and tenure with the Company. Base salaries for newly-hired executives
are determined at the 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 to 15 month intervals.
Individual salary increases are based on the performance of the individual
executives and on the 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, 99% of
the predicted medians of the survey data referred to previously.
SHORT-TERM INCENTIVES
The Company's annual cash incentive program for executives is based
entirely on financial performance and is designed to promote the annual
financial objectives of the organization. Financial objectives are subject to
review and approval by the Committee at the beginning of each year.
Participants include the CEO, the other Named Officers and other management
employees whose contributions directly influence annual financial results. The
CEO's and the other Named Officers' target incentive opportunities, which are
subject to Committee review and approval annually, 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 ranged
from 45% to 65% of base salary, and potential awards calculated on financial
performance ranged from 0% to 200% of target.
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<PAGE> 9
For 1998, business units were required to meet a prescribed working capital
turnover threshold to qualify for any incentive award. Net income, adjusted to
the extent average working capital exceeded or fell below the working capital
targets, was the financial measure for all executive-level business unit
incentives, including those for Messrs. Deering and Reeb. Messrs. Deering and
Reeb achieved 200% of their targets.
Net income was the measure for the corporate office staff, including
Messrs. Ringler, Skatoff and Costigan. Because the Company exceeded its net
income maximum, the awards to Messrs. Ringler, Skatoff and Costigan were equal
to 200% of their targets. The average percentage award to the Named Officers was
200% of target.
LONG-TERM INCENTIVES
The Company's long-term incentive program is based entirely on financial
performance and is designed to promote the long-term objectives of the
organization, as well as 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 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 1996 to 1998 long-term incentive plan, the CEO's and the other
Named Officers' targets ranged from 22.5% to 32.5% of base salary, and potential
awards ranged from 0% to 300% of target.
Segment profit was the measure for the 1996 to 1998 long-term incentive
plan for the corporate office and business units. Messrs. Ringler, Costigan and
Skatoff achieved 280.9% of their targets, and Messrs. Deering and Reeb achieved
6.9% and 300% of their segment profit targets, respectively. The average
percentage award to the Named Officers was 229.9% of target.
Financial objectives are subject to review and approval by the Committee at
the beginning of each performance period. For the three-year plan for years 1998
to 2000, segment profit is the financial measure for all business units, and net
income and total shareholder return relative to the Standard & Poor's MidCap
Industrials Index are the financial measures for the corporate office. The CEO's
and the other Named Officers' targets range from 25% to 50% of annual salary.
Awards can range from 0% to 300% of target for the corporate office and all
business units except the Food Equipment Group, where the range for the 1998 to
2000 period is 0% to 500%. Any awards earned are paid out in stock and cash.
ADMINISTRATION OF SHORT AND LONG-TERM INCENTIVE PLANS
The Committee verifies the actual performance achieved as a precondition to
approving award payouts. It reserves the right to interpret financial results
and to determine the proper treatment of changes in accounting standards,
non-recurring unusual events, and capital gains and losses. In the cases of the
CEO and the other Named Officers, awards are calculated so as to exclude the
effects of such items. 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
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 management.
Stock options are granted annually to the CEO and the other Named Officers,
and to other key employees who have strategic impact on resource allocation,
operations, product, technology, investment or policy matters. The aggregate
number of options granted, as well as 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
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<PAGE> 10
times exercise price) for companies granting options in conjunction with one or
more additional long-term incentive programs. The size of the annual 1998 grants
for the executive officers as a group approximates the median of the competitive
norms.
In addition to the 1998 annual option grant, 47 key executives received a
special grant of options. The grants were conditioned on extending the vesting
date on any option grants received in 1996 in connection with the Company's
spin-off of Tupperware Corporation. These special grants are intended to further
align the interests of these executives with shareholders and to provide added
incentives for outstanding performance and retention.
RESTRICTED STOCK
The Company no longer makes grants of restricted stock as part of its
regular long-term incentive program, but may do so, subject to Committee
approval, in certain special circumstances such as a retention or performance
incentive, or as compensation for the forfeited value of incentive or stock
awards at a previous employer. The Company awarded restricted stock to 13 key
executives in 1996 as a retention incentive after the spin-off of Tupperware
Corporation. In 1998, the Company awarded restricted stock to 20 executives in
recognition of outstanding business unit performance. Additionally, 22 key
executives received restricted stock that was awarded in exchange for extending
the vesting date of any restricted stock they received in 1996 in connection
with the Tupperware spin-off. These special awards are intended to provide
enhanced performance and retention incentives.
CORPORATE PERFORMANCE & CEO PAY
The Board increased Mr. Ringler's salary from $675,000 to $750,000. As of
December 1998, Mr. Ringler's salary approximates the predicted median of the
survey data referred to previously.
Based upon a comparison of Mr. Ringler's annual compensation package
(salary plus annual bonus) with the compensation packages of the CEO's in the
competitive data referred to previously, Mr. Ringler's compensation opportunity
at target approximates the predicted market median.
In 1998, the Company's net income rose 16.1% to a record $136.1 million
from 1997's $117.3 million, excluding the fourth quarter 1997 restructuring
charge. Based on these financial results, Mr. Ringler earned an annual incentive
award of $975,000 (200% of target), up 35.5% from $719,550 in 1998.
Additionally, Mr. Ringler received an award of $684,694 (280.9% of target) under
the Company's 1996 to 1998 Long-Term Incentive plan. No long-term incentive was
paid in 1997.
The Committee granted 100,000 option shares to Mr. Ringler, taking into
consideration Company performance, the scope of Mr. Ringler's responsibility,
competitive awards granted to CEO's at like-sized organizations, and the number
of options previously granted to him. The Committee believes this option award
to be 9.6% above average for CEO's of like-sized organizations. The Committee
also made a special grant of 60,000 option shares and awarded 12,000 restricted
stock shares to Mr. Ringler, in exchange for extending the vesting date on
option and restricted stock grants received in 1996 in connection with the
Tupperware spin-off. The special grant was made as a retention incentive and to
further align his interests with shareholders.
Under the Company's executive compensation program, the total compensation
ultimately attainable by executive officers depends to a significant degree on
consistent achievement of financial objectives established by the Committee. The
Committee believes that the CEO and other executive officers are being
appropriately compensated in a manner that relates to financial performance and
is in the shareholders' long-term interests.
COMPENSATION AND DIRECTORS COMMITTEE
Janice D. Stoney -- Chairperson
Harry W. Bowman
Lloyd C. Elam
Richard S. Friedland
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<PAGE> 11
CUMULATIVE TOTAL SHAREHOLDER RETURN(1)
DECEMBER 1993 THROUGH DECEMBER 1998
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Premark $100.00 $113.59 $131.15 $203.71 $269.06 $325.21
- ------------------------------------------------------------------------------------------------------------------------
Value Line Diversifieds $100.00 $105.71 $150.85 $185.72 $236.86 $302.18
- ------------------------------------------------------------------------------------------------------------------------
S&P 500 $100.00 $101.36 $139.32 $171.23 $228.27 $293.04
- ------------------------------------------------------------------------------------------------------------------------
S&P MidCap 400 $100.00 $ 96.46 $126.23 $150.41 $198.87 $236.58
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) The graph compares the performance of the Company's common stock to the
Standard & Poor's 500 Stock Index, the Standards & Poor's MidCap 400 Index,
within which the Company is included, and the Value Line Diversified Company
Industry Index at December 31st of each year. This graph assumes that the
value of the investment in the Company's common stock and each index was
$100 at December 31, 1993, and that all dividends were reinvested, including
the value of Tupperware Corporation stock distributed on May 31, 1996. The
Board believes that the Standard and Poor's MidCap 400 Index more fairly
reflects the size and financial characteristics of the Company than the
Standard & Poor's 500 Stock Index. As a diversified manufacturer and seller
of a broad line of consumer and commercial products, the Company is not
easily categorized with other more specific industry indices. Further, many
of the companies with which the Company competes are private, and peer group
comparative data are not available. Past performance is not necessarily an
indication of future performance.
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<PAGE> 12
SUMMARY COMPENSATION TABLE
The table sets forth the annual and long-term compensation, attributable to
all service in the fiscal years 1998, 1997 and 1996, paid to or deferred by (i)
the chief executive officer, and (ii) the other four most highly compensated
executive officers of the Company at the end of the year (the "Named Officers"):
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------------- ----------------------- ----------
OTHER RESTRICTED
ANNUAL STOCK SECURITIES LTIP ALL OTHER
NAME AND PRINCIPAL SALARY COMPENSATION AWARDS UNDERLYING PAYOUTS COMPENSATION
POSITION YEAR ($)(1) BONUS($) ($) $ (3) OPTIONS(#) ($) ($)(4)
------------------ ---- ------ -------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JAMES M. RINGLER............. 1998 $681,250 $975,000 $405,000 160,000 $ 684,694 $124,020
Chairman of the Board, 1997 631,250 719,550 -- -- 100,000 -- 125,051
Chief Executive Officer 1996 579,359 780,000 -- 610,000 240,000 1,170,000 70,898
and President
JOHN M. COSTIGAN............. 1998 280,000 252,000 67,500 23,000 176,967 41,746
Senior Vice President, 1997 275,000 206,640 -- -- 18,000 -- 44,658
General Counsel 1996 270,000 243,000 -- 152,500 40,000 364,500 30,708
& Secretary
JOSEPH W. DEERING............ 1998 366,000 371,000 -- 32,000 6,400 19,429
Group Vice President 1997 356,000 286,580 -- -- 30,000 -- 12,930
and President, Food 1996 352,667 75,000(2) -- 335,500 85,000 534,000 18,211
Equipment Group
WILLIAM R. REEB.............. 1998 320,000 335,000 335,719 50,000 251,250 46,099
Group Vice President 1997 286,250 290,000 -- -- 30,000 45,820 17,978
and President, 1996 242,514 367,500(2) -- 244,000 60,000 367,500 21,477
Wilsonart International
LAWRENCE B. SKATOFF.......... 1998 331,500 334,000 67,500 23,000 234,552 51,547
Senior Vice President 1997 322,000 264,040 -- -- 18,000 -- 55,998
and Chief Financial 1996 322,000 322,000 -- 152,500 40,000 483,000 38,082
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 4), as well as
Code Section 125 contributions to the Flexible Benefits Plan.
(2) Represents a discretionary award to Mr. Deering in recognition of positive
developments during the year, which were 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.
(3) Represents the market value of restricted shares on the date of grant. The
number, vesting schedule and value of restricted stock held at the end of
the 1998 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. Ringler........................................... 05/20/96 40,000 $1,301,252 40,000 01/15/01
12/10/98 12,000 390,376 12,000 12/10/02
Mr. Costigan.......................................... 05/20/96 10,000 325,313 10,000 01/15/01
12/10/98 2,000 65,063 2,000 12/10/02
Mr. Deering........................................... 05/20/96 22,000 715,689 22,000 05/20/99
Mr. Reeb.............................................. 05/20/96 16,000 520,501 16,000 01/15/01
03/04/98 4,350 141,511 4,350 03/04/01
12/10/98 6,000 195,188 6,000 12/10/02
Mr. Skatoff........................................... 05/20/96 10,000 325,313 10,000 01/15/01
12/10/98 2,000 65,063 2,000 12/10/02
</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.
The grants of December 10, 1998, were made in return for extending the
vesting date on certain stock options and restricted stock granted in 1996.
The March 4, 1998, grant to Mr. Reeb was in recognition of continuing
outstanding business unit performance.
(4) Consists of 1998 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.
Costigan, $12,082 and $29,644; Mr. Deering, $4,258 and $15,171; Mr. Reeb,
$11,280 and $34,819; Mr. Ringler $11,423 and $112,597; and Mr. Skatoff,
$12,012 and $39,535, respectively.
9
<PAGE> 13
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 8,
1999. 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.
Ringler who owns 1.28%. Directors and officers as a group own 4.00%.
<TABLE>
<CAPTION>
SHARED SHARES THAT
OWNERSHIP MAY BE ACQUIRED TOTAL
OR HELD BY WITHIN 60 DAYS RETIREMENT SHARES
SOLE OR FOR FAMILY OF MARCH , RESTRICTED SAVINGS BENEFICIALLY
NAME OWNERSHIP MEMBERS 1999(1) STOCK PLAN 401(K) OWNED
---- --------- ------------- --------------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Harry W. Bowman............ 1,000 -- 3,000 -- -- 4,000
John M.Costigan............ 37,686 36,278(2) 323,726 12,000 820 410,510(2)
Gary P. Coughlan........... 2,000 -- -- -- -- 2,000
Ruth M. Davis.............. 4,483 -- 3,793 -- -- 8,276
Joseph W. Deering.......... 86,802 -- -- 22,000 262 109,064
Lloyd C. Elam.............. 7,171 -- 13,586 -- -- 20,757
W. James Farrell........... 1,446 -- -- -- -- 1,446
Richard S. Friedland....... 1,000 -- 1,500 -- -- 2,500
John B. McKinnon........... 12,800 -- 24,170 -- -- 36,970
David R. Parker............ 7,000 -- 54,510 -- -- 61,510
William R. Reeb............ 32,539 -- 118,137 26,350 48,035 225,061
James M. Ringler........... 75,000 -- 642,863 52,000 16,676 786,539
Lawrence B. Skatoff........ 49,263 -- 45,507 12,000 9,164 115,934
Janice D. Stoney........... -- 2,400 54,510 -- -- 56,910
All directors and executive
officers as a group (20
including the named
individuals above)....... 360,980 57,515(2) 1,715,091 138,350 185,897 2,457,833(2)
</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 Tupperware
Corporation spin-off in 1996 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 278 shares for which voting and investment power is disclaimed.
10
<PAGE> 14
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)(5) DATE ($)(6)
---- ------------- ------------ ----------- ---------- -------
<S> <C> <C> <C> <C> <C>
John M. Costigan..................... 18,000(2) 1.68% $29.95 08-04-08 $159,332
5,000(3) 0.47% 33.75 12-09-08 49,875
Joseph W. Deering.................... 32,000(2) 2.98% 29.95 08-04-08 283,258
William R. Reeb...................... 32,000(2) 2.98% 29.95 08-04-08 283,258
18,000(3) 1.68% 33.75 12-09-08 179,548
James M. Ringler..................... 100,000(2) 9.31% 29.95 08-04-08 885,180
60,000(4) 5.59% 33.75 12-09-08 598,494
Lawrence B. Skatoff.................. 18,000(2) 1.68% 29.95 08-04-08 159,332
5,000(3) 0.47% 33.75 12-09-08 49,875
</TABLE>
- ---------------
(1) The term of each option is 10 years. The options exercisable in 2002
(footnotes 3 and 4) were granted in return for extending the vesting date on
certain options and restricted stock granted in 1996. 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) Options become exercisable August 5, 2001.
(3) Options become exercisable December 10, 2002.
(4) Options become exercisable December 10, 2002. This grant is subject to
shareholder ratification through approval of proposal number 3 to amend the
1994 Incentive Plan and reapprove performance goals.
(5) 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.
(6) The Black-Scholes option pricing model was used. The attribution of values
with the Black-Scholes model to stock option grants requires adoption of
certain assumptions: a dividend yield of 1.3%; a risk-free interest rate of
5.1%; an expected stock price volatility based on historical experience of
27%; and an expected option life based on historical experience of 5.1
years. 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.
11
<PAGE> 15
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>
John M. Costigan....... 93,107 $2,755,156 323,726 76,000 $ 8,405,710 $ 742,779
Joseph W. Deering...... 46,266 995,964 0 147,000 0 1,559,951
William R. Reeb........ 0 0 118,137 122,000 2,516,123 1,127,919
James M. Ringler....... 0 0 642,863 440,000 16,886,510 4,433,772
Lawrence B. Skatoff.... 91,781 2,190,223 45,507 76,000 924,306 742,779
</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 the options outstanding on the date of the
Tupperware Corporation spin-off in 1996 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.
LONG-TERM INCENTIVE PLAN AWARDS
The following table shows 1998 long-term incentive awards under the
Company's 1994 Incentive Plan.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE
OR OTHER ESTIMATED FUTURE PAYOUTS
NUMBER OF PERIOD UNDER NON-STOCK
SHARES, UNITS OR UNTIL PRICE-BASED PLANS(1)
OTHER RIGHTS MATURATION ---------------------------------------
NAME (#)(1) OR PAYOUT THRESHOLD(#) TARGET(#) MAXIMUM(#)
---- ---------------- ----------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
John M. Costigan..................... 2,525 3 years 0 2,525 7,576
Joseph W. Deering.................... 5,137 3 years 0 5,137 25,687
William R. Reeb...................... 4,185 3 years 0 4,185 12,555
James M. Ringler..................... 12,176 3 years 0 12,176 36,528
Lawrence B. Skatoff.................. 4,066 3 years 0 4,066 12,198
</TABLE>
- ---------------
(1) Performance units denominated in shares, to be paid one-half in shares and
one-half in cash at the share price prevailing at the time of payment.
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. Business unit performance measurements are
based on segment profit. Corporate performance measurements are based on net
income and total shareholder return relative to the Standard & Poor's MidCap 400
Index. Awards may be subject to forfeiture if the participant's employment is
terminated.
The above table sets forth the incentive opportunity for the three-year
period of 1998 through 2000. Awards for this period are denominated in Company
shares to increase alignment of interest between management and shareholders.
For the 1998 to 2000 period, Mr. Deering and certain other executives of the
Food Equipment Group have the opportunity to earn 500% of target. Payment of
awards, if any, would occur in 2001 based on actual performance for the
three-year period.
12
<PAGE> 16
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"), which provides an
annual benefit of 1% (3/4 of 1% in the case of Mr. Reeb) of career pay.
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, 28.92; Mr. Reeb, 27.42; Mr. Ringler, 9.0; and Mr. Skatoff, 7.33.
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, $226,307; Mr. Costigan, $140,346;
Mr. Reeb, $89,332; and Mr. Skatoff, $66,635. 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.
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
- ----------- -------- -------- -------- -------- --------
<C> <S> <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
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 Base Plan with an annual benefit based on
final average pay. 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 is credited with 6.58 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 means: (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.
13
<PAGE> 17
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 3, 1999, 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 25, 1999. The
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.
Ernst & Young LLP served as independent auditors of the Company for fiscal
year 1998. Services performed by Ernst & Young LLP for the 1998 fiscal year
included the annual audit of the consolidated financial statements and
consultations in connection with various financial reporting, accounting, tax
and other matters.
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
1999 fiscal year.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
3. PROPOSAL TO AMEND THE COMPANY'S 1994 INCENTIVE PLAN AND REAPPROVE PERFORMANCE
GOALS
In May 1994 shareholders approved the Company's 1994 Incentive Plan (the
"Plan") and performance goals under the Plan, upon which incentive compensation
for the Company's senior officers is based. To maintain deductibility of this
compensation, material terms of performance goals must be disclosed to and re-
approved by shareholders by the fifth year following shareholder approval. This
proposal seeks shareholder approval of the material terms of performance goals
under the Plan and approval of an amendment to the Plan necessitated by changes
in the Company structure.
The material terms of performance goals consist of the following: (a)
business criteria on which performance goals are based; (b) the maximum amount
of compensation payable to any individual; and (c) the individuals eligible to
receive compensation.
BUSINESS CRITERIA
Performance awards under the Plan are used to create annual and long-term
incentives, which are a major component of the Company's management incentive
program. The Compensation and Directors Committee ("Committee") has the
discretion to establish the nature of the performance measures, the individual
targets applicable to such measures, as well as the right to make adjustments
that may be necessary. Performance measures are based on objective,
preestablished financial formulas which take into account one or more of the
following: net income, total shareholder return, economic value added, working
capital turns, segment profit, cash flow, share price, market share, sales,
earnings per share, or return on assets, capital or investment.
Goals may be established that focus on specific performance by individuals
or units within the Company, as well as overall Company performance. The
Committee establishes target levels for each performance measure, with different
levels of awards to be paid for each level. The Committee may establish
different measures for different management groups. Awards may be payable either
in cash, shares, or a combination of cash and shares, and may require the
payment of a purchase price.
14
<PAGE> 18
The financial measurements used in performance goals shall exclude the
effects of changes in accounting standards and non-recurring unusual events,
such as write-offs, capital gains and losses, and acquisitions and dispositions
of businesses. The Committee, however, retains the discretion to interpret the
Plan and to reduce performance-based incentive awards.
MAXIMUM COMPENSATION
The Short-Term Incentive annual award to any individual will not exceed
$1.5 million. The Long-Term Incentive annual award to any individual will not
exceed $2 million for performance periods beginning before 1998, or the
prevailing value of 100,000 Company shares at the time of payment for
performance periods beginning in 1998 and later.
ELIGIBLE INDIVIDUALS
The annual performance-based award and long-term performance-based awards,
the business criteria for such awards and the individuals eligible for such
awards, are described in this proxy statement in the report of the Committee
under the headings Short-Term Incentives and Long-Term Incentives, respectively.
Eligible individuals include the Chief Executive Officer and such other elected
officers whose compensation may in any year be reportable in the Company's proxy
statement.
AMENDMENT
Fundamental changes in the Company structure have occurred since adoption
of the Plan in 1994. On May 31, 1996, the Company established its Tupperware
business as an independent company through a pro-rata distribution of all
Tupperware stock as a dividend to shareholders. A natural result of the
distribution was that the stock market adjusted the price of Company stock
downward by the value of the Tupperware stock distributed to Company
shareholders. Consequently, a larger number of shares of Company stock became
required to provide target incentives under the Plan. Those increased numbers of
shares represent a larger percentage of the total number of shares available for
stock options under the Plan.
The Internal Revenue Code requires that qualifying plans state the maximum
number of shares available for options to be granted to any employee. The Plan
specifies that no more than 10% of the number of shares available for stock
options under the Plan may be awarded to any individual over the duration of the
Plan. This maximum currently is insufficient to provide target incentives
consistent with the purposes of the Plan, which are to link management interests
with those of the Company's shareholders and provide incentives for outstanding
performance and retention of superior management.
The Board proposes that the 10% limitation be increased to 20%. The Board
believes that a 20% limitation will permit the Board to accomplish the purposes
of the Plan to the ultimate benefit of shareholders. This amendment will also
serve to ratify the grant to Mr. James M. Ringler of options on 60,000 shares
exercisable on December 10, 2002. The grant was made on December 10, 1998,
subject to shareholder approval because it would exceed the Plan's 10%
limitation.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO AMEND THE COMPANY'S
1994 INCENTIVE PLAN AND REAPPROVE PERFORMANCE GOALS.
4. OTHER MATTERS
DISCRETIONARY AUTHORITY
At the time of mailing of this proxy statement, the Board was not aware of
any other matters that 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.
15
<PAGE> 19
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. Such notice must be received by the Company
at least 90 days but no more than 120 days prior to the anniversary date of the
previous year's annual meeting. Matters to be raised by a shareholder at the
2000 annual meeting must be received by the Company on or after January 6, 2000,
but no later than February 5, 2000. 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. The letter should contain 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 2000 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, 1999.
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, 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 23, 1999
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE AND SIGN THE ENCLOSED PROXY.
RETURN IT PROMPTLY IN THE ACCOMPANYING POSTPAID ENVELOPE.
16
<PAGE> 20
<TABLE>
<S> <C> <C>
PREMARK INTERNATIONAL
[LOGO] 1717 DEERFIELD ROAD, DEERFIELD, ILLINOIS 60015-3978 VOTING INSTRUCTION CARD
- ---------------------------------------------------------------------------------------
</TABLE>
THIS VOTING INSTRUCTION CARD IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT
THE ANNUAL MEETING ON MAY 5, 1999.
As a participant in a benefit plan sponsored by Premark International, Inc., you
have the right to give written instructions to the trustee of the plan as to the
voting of the shares of the Corporation's common stock held for your benefit by
the plan.
This voting instruction card when properly signed will be voted in the manner
you direct. 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" ITEMS 2 AND 3, AND 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.
Your vote is important. Please indicate your vote, sign, date and return the
card promptly in the enclosed postpaid envelope.
<PAGE> 21
[LETTERHEAD OF PREMARK INTERNATIONAL] PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON MAY 5, 1999.
The shares of stock you hold in your account will be voted as you specify below.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEMS 1, 2 AND 3.
By signing the proxy, you revoke all prior proxies and appoint John B. McKinnon,
David R. Parker, and James M. Ringler, and each of them, with full power of
substitution, to vote your shares on the matters shown on the reverse side and
any other matters which may come before the Annual Meeting and all adjournments.
See reverse for voting instructions.
<PAGE> 22
Please detach here
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
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<S> <C> <C> <C> <C> <C>
1. Election of directors: 01 Harry W. Bowman 02 Gary P. Coughlan [ ] Vote FOR [ ] Vote WITHHELD
03 W. James Farrell 04 Janice D. Stoney all nominees from all nominees
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, ----------------------------------------------------
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) | |
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2. Ratification of auditors.
[ ] For [ ] Against [ ] Abstain
3. Proposal to amend the 1994 Incentive Plan and reapprove performance goals. [ ] For [ ] Against [ ] Abstain
4. In their discretion, to vote upon other matters properly coming before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box [ ] I plan to attend the meeting [ ]
Indicate changes below: Date
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Signature(s) in Box
Please sign exactly as your name(s) appear on Proxy.
If held in joint tenancy, all persons must sign.
Trustees, administrators, etc., should include title
and authority. Corporations should provide full name
or corporation and title of authorized officer
signing the proxy. Receipt of the Notice of
Meeting, Proxy Statement dated March 23, 1999, and
1998 Annual Report to Shareholders is acknowledged.
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