Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
[Amendment No. ]
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c)
or
Section 240.14a12
THE PROCTER & GAMBLE COMPANY
(Name of Registrant as Specified in Its Charter)
TERRY L. OVERBEY
(Name of Person(s) Filing Proxy Statement
Payment of Filing Fee (Check the appropriate box):
/ /$125 per Exchange Act Rules 0-11)(c)(1)(ii), 14a-6(j)(2).
/ /$500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ /Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11. 1) Title of each class of securities
to which transaction applies:
..........................................................
2) Aggregate number of securities to which transaction
applies:
..........................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:*
..........................................................
4) Proposed maximum aggregate value of transaction:
..........................................................
*Set forth the amount on which the filing fee is calculated
and state how it was determined.
/ /Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:________________________________
2) Form Schedule or Registration Statement No.:___________
3) Filing Party:__________________________________________
4) Date Filed:____________________________________________
P&G
THE PROCTER & GAMBLE COMPANY
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
ANNUAL MEETING OF
SHAREHOLDERS
OCTOBER 14, 1997
P&G
THE PROCTER & GAMBLE COMPANY
PO Box 599
Cincinnati, Ohio 45201-0599
August 29, 1997
Fellow P&G Shareholders:
It is my pleasure to invite you to this year's Annual Meeting of
Shareholders, which will be held at Procter & Gamble's General Offices in
Cincinnati. The meeting this year will convene at 12:00 p.m., Eastern
Daylight Time, on October 14.
We've just completed fiscal year 1996/97 and we can look back on a
year of solid progress toward the Company's growth objectives. At the
meeting, I'll review this progress as well as our strategies and plans for
achieving our leadership goals for the future. I hope you'll plan to join
us for the meeting.
We appreciate your continued confidence in the Company, and look forward to
seeing you at our Annual Meeting.
Sincerely,
/S/ John E. Pepper
John E. Pepper
Chairman of the Board and Chief Executive
P&G
THE PROCTER & GAMBLE COMPANY
PO Box 599
Cincinnati, Ohio 45201-0599
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
August 29, 1997
The annual meeting of shareholders of The Procter & Gamble Company will
be held at the General Offices of the Company, Two Procter & Gamble Plaza,
Cincinnati, Ohio 45202-3314 on Tuesday, October 14, 1997 at 12 o'clock
noon, Eastern Daylight Time. Attendance at the annual meeting will be
limited to shareholders, those holding proxies from shareholders and
representatives of the press and financial community.
IF YOU WISH TO ATTEND THE MEETING BUT YOUR SHARES ARE HELD IN THE NAME
OF A BROKER, TRUST, BANK OR OTHER NOMINEE, YOU SHOULD BRING WITH YOU A
PROXY OR LETTER FROM THE BROKER, TRUSTEE, BANK OR NOMINEE CONFIRMING YOUR
BENEFICIAL OWNERSHIP OF THE SHARES.
The purposes of this meeting are:
A. To hear the reading of the minutes of the annual meeting of
shareholders held October 8, 1996 and to act thereon if they are
incorrectly recorded;
B. To receive reports of officers;
C. To elect six members of the Board of Directors with terms expiring
at the annual meeting in 2000, as described at pages _ _ in the
proxy statement;
D. To consider and act upon a proposal described at page __ in the
proxy statement to ratify the appointment of independent auditors;
E. To consider and act upon a proposal described at page __ in the
proxy statement to amend the Company's Amended Articles of
Incorporation to increase the number of authorized shares of Common
Stock;
F. To consider and act upon a proposal described at page __ in the
proxy statement to amend the Company's Amended Articles of
Incorporation to revise the terms of our Series A and Series B
Preferred Stock;
G. To consider and act upon, if presented at the meeting, proposals
submitted by certain shareholders as described at pages __-__ in
the proxy statement; and
H. To consider such other matters as may properly come before the
meeting.
Shareholders of record at the close of business on Friday, August 8,
1997 will receive notice of and be entitled to vote at the meeting.
Shareholder attendees who are hearing-impaired should identify
themselves on registration at the meeting so they can be directed to a
special section where an interpreter will be available.
A copy of the annual report of the Company for the fiscal year ended
June 30, 1997 has been mailed to each shareholder of record as of August 8,
1997.
SHAREHOLDERS ARE URGED TO EXECUTE THE ENCLOSED PROXY AND RETURN IT
PROMPTLY, WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING. ANY PROXY NOT
DELIVERED AT THE MEETING SHOULD BE MAILED TO REACH THE COMPANY'S PROXY
TABULATOR, BANKBOSTON, P. O. BOX 9375, BOSTON, MA 02205-9375 BY 9:00 A.M.
ON TUESDAY, OCTOBER 14, 1997 (USE THE ENCLOSED SPECIAL POSTAGE-PAID
ENVELOPE FOR MAILING IN THE UNITED STATES).
By order of the Board of Directors,
TERRY L. OVERBEY
Secretary
PROXY STATEMENT
THE PROCTER & GAMBLE COMPANY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD OCTOBER 14, 1997
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is being solicited by the Board of Directors of the
Company. In addition to the solicitation by mail, proxies may be solicited
in person or by telephone or telegraph; such solicitation on behalf of the
Proxy Committee of the Board may be made by Directors, officers and regular
employees of the Company and by representatives of Georgeson & Company
Inc., a proxy solicitation firm. The Company has agreed to pay Georgeson &
Company Inc. a fee of $16,000, plus reasonable expenses, for its services
in this regard. Any proxy given pursuant to this solicitation may be
revoked by notice from the person giving the proxy at any time before it is
exercised. Any such notice of revocation should be provided in writing
signed by the shareholder in the same manner as the proxy being revoked and
delivered to the Company's proxy tabulator, The First National Bank of
Boston.
The expense of making the solicitation will consist of preparing and
mailing the proxies and proxy statements; any expenses incurred by Company
representatives in making the contacts referred to above; charges of
brokerage houses and other custodians, nominees or fiduciaries for
forwarding documents to security owners; costs of returning the proxies;
and fees of The First National Bank of Boston for tabulating the responses.
These are the only contemplated expenses of solicitation, and they will be
paid by the Company.
VOTING RIGHTS
The holders of record of the Company's Common Stock and Series A and B
ESOP Convertible Class A Preferred Stock at the close of business on
Friday, August 8, 1997 are entitled to vote on matters to come before the
meeting. On that date, ___________ shares of Common Stock, __________
shares of Series A ESOP Convertible Class A Preferred Stock and __________
shares of Series B ESOP Convertible Class A Preferred Stock were issued and
outstanding. As provided in the Amended Articles of Incorporation, each
share of Common and Series A and B ESOP Convertible Class A Preferred Stock
is entitled to one vote.
Participants in The Procter & Gamble Shareholder Investment Program are
entitled to vote shares of the Company's Common Stock held for their
account under that Program pursuant to an omnibus proxy executed in their
favor by the Custodian of such Program.
Participants in The Procter & Gamble Profit Sharing Trust and Employee
Stock Ownership Plan and The Procter & Gamble/Noxell Transitional Plan have
the right to instruct the Trustees of any Trust under such Plans in which
they are participating as to how to vote shares of stock allocated to their
accounts. The Plans also provide that the Trustees of each Trust shall
vote any shares allocated to accounts of participants as to which such
instructions have not been received in direct proportion to the voting of
allocated shares as to which voting instructions have been received. In
addition, the Plans provide that the Trustees shall vote unallocated shares
of stock held in such Trust in direct proportion to the voting of allocated
shares in such Trust as to which voting instructions have been received.
The vote required for the election of Directors and approval of the
other proposals is set forth in the discussion of each item to be voted
upon.
ELECTION OF DIRECTORS
The Regulations of the Company provide that the Board of Directors shall
consist of three classes of Directors with overlapping three-year terms.
One class of Directors is to be elected each year with terms extending to
the third succeeding annual meeting after such election. The Regulations
provide that the Board shall maintain the three classes so as to be as
nearly equal in number as the then total number of Directors permits.
Pursuant to the provisions of the Regulations described above, there are
six Directors of the Company whose terms expire at the annual meeting in
1997. The six Directors whose terms are expiring in 1997 are described in
the section immediately below. It is the Board's intention that these six
persons will be nominated for new terms extending to the annual meeting in
2000 and until their successors are duly elected. Proxies received in
response to this solicitation will be voted, unless such authority is
withheld, in favor of the election of these six nominees. In the election
of members of the Board of Directors, the six candidates receiving the most
votes will be elected. While there is no reason to believe that any of the
nominees will, prior to the date of the meeting, refuse or be unable to
accept the nomination, should any nominee or nominees so refuse or become
unable to accept, it is the intention of the persons named in the proxy to
vote for such other person or persons as the Directors may recommend.
Directors whose terms expire at the annual meetings in 1998 and 1999 are
described in separate sections below.
NOMINEES FOR ELECTION AS DIRECTORS WITH TERMS EXPIRING IN 2000
[insert picture] Edwin L. Artzt - Retired Chairman of the Board and
Chief Executive. Director of American Express Company,
Barilla G.eR.F.11i S.p.A.-Italy, Delta Air Lines, Inc.,
and GTE Corporation; Director of the Company from 1972
to 1975 and since 1980; Chairman of the Executive
Committee and member of the Finance and Public Policy
Committees; age 67.
[insert picture] Norman R. Augustine - Chairman of the Board, Lockheed
Martin Corporation (aerospace, electronics, information
management, materials and energy systems and products).
Director of Lockheed Martin Corporation, The Black and
Decker Corporation and Phillips Petroleum Company;
Director of the Company since 1989; Chairman of the
Compensation Committee and member of the Executive and
Finance Committees; age 62.
[insert picture] Richard J. Ferris - Co-Chairman, Doubletree
Corporation. Director of Doubletree Corporation, Amoco
Corporation and Candlewood Hotel Company, Inc.;
Director of the Company since 1979; Chairman of the
Finance Committee and member of the Executive, and
Board Organization and Nominating Committees; age 60.
[insert picture] John C. Sawhill, Ph.D. - President and Chief Executive
Officer, The Nature Conservancy (an international
conservation organization). Director of Pacific Gas &
Electric Company, NAACO Industries, and Vanguard Group
of Mutual Funds; Director of the Company since 1996;
member of the Audit, Board Organization and Nominating,
and Public Policy Committees; age 61.
[insert picture] John F. Smith, Jr. - Chairman, Chief Executive Officer
and President, General Motors Corporation (automobile
and related businesses). Director of General Motors
Corporation; Director of the Company since 1995; member
of the Audit, Board Organization and Nominating, and
Public Policy Committees; age 59.
[insert picture] Marina v.N. Whitman, Ph.D. - Professor of Business
Administration and Public Policy, University of
Michigan. Director of Aluminum Company of America,
Browning-Ferris Industries, Inc., Chase Manhattan
Corporation and its subsidiary Chase Manhattan Bank,
and Unocal Corporation; Director of the Company since
1976; Chairman of the Board Organization and Nominating
Committee, and member of the Compensation and Finance
Committees; age 62.
All of the Directors with terms expiring in 1997, except Mr. Ferris and
Dr. Whitman, have been, or were prior to retirement, executive officers of
their respective employers for more than the past five years. Prior to his
association with Doubletree Corporation (formerly Guest Quarters Hotels LP)
in October, 1992, Mr. Ferris was a private investor for more than five
years following his resignation as Chairman and Chief Executive Officer of
UAL Corporation (formerly Allegis Corporation - travel related services) in
June, 1987. Prior to her appointment at the University of Michigan
effective September 1, 1992, Dr. Whitman was Vice President and Group
Executive, General Motors Corporation, for more than five years.
Each of the Directors with terms expiring in 1997 was elected a Director
by the shareholders at the annual meeting in 1994 except Mr. Smith and Dr.
Sawhill. Mr. Smith was elected a Director on June 13, 1995 and Dr. Sawhill
was elected a Director on May 14, 1996.
DIRECTORS WITH TERMS EXPIRING IN 1998
[insert picture] Joseph T. Gorman - Chairman and Chief Executive
Officer, TRW Inc. (electronic, automotive, industrial
and aerospace equipment). Director of TRW Inc. and
Aluminum Company of America; Director of the Company
since 1993; member of the Compensation, Executive and
Finance Committees; age 59.
[insert picture] Lynn M. Martin - Professor, Davee Chair, J. L. Kellogg
Graduate School of Management, Northwestern University.
Director of Ameritech Corporation, Ryder Systems, Inc.,
TRW Inc., and Harcourt General Inc.; Director of the
Company since 1994; member of the Finance, Board
Organization and Nominating, and Public Policy
Committees; age 57.
[insert picture] John E. Pepper - Chairman of the Board and Chief
Executive. Director of Motorola, Inc. and Xerox
Corporation; Director of the Company since 1984; member
of the Executive Committee; age 59.
[insert picture] Ralph Snyderman, M.D. - Chancellor for Health Affairs,
Dean, School of Medicine at Duke University, and Chief
Executive Officer of Duke University Health System.
Director of Somatogen Inc.; Director of the Company
since 1995; member of the Audit, Board Organization and
Nominating, and Public Policy Committees; age 57.
[insert picture] Robert D. Storey - Partner in the law firm of Thompson,
Hine & Flory, P.L.L., Cleveland, Ohio. Director of
GTE Corporation and The May Department Stores Company;
Director of the Company since 1988; Chairman of the
Public Policy Committee and member of the Audit and
Board Organization and Nominating Committees; age 61.
All of the nominees for election as Directors with terms expiring in
1998, except Ms. Martin and Mr. Storey, have been executive officers of
their respective employers for more than the past five years. Ms. Martin
has been a Professor at Northwestern University since 1993. Prior to that,
Ms. Martin served as Secretary of Labor of the United States from January,
1991 to January, 1993, following service as a member of the U.S. House of
Representatives. Mr. Storey was a partner in the law firm of Burke, Haber
& Berick Co., L.P.A. and its successor firm, McDonald, Hopkins, Burke &
Haber Co., L.P.A., Cleveland, Ohio, for more than five years prior to
joining Thompson, Hine & Flory on January 1, 1993.
Each of the nominees for election as Directors with terms expiring in
1998 was elected a Director by the shareholders at the annual meeting in
1995.
DIRECTORS WITH TERMS EXPIRING IN 1999
[insert picture] Donald R. Beall - Chairman and Chief Executive Officer,
Rockwell International Corporation (automation,
avionics and communications, semiconductor systems and
automotive component systems). Director of Rockwell
International Corporation, Amoco Corporation and Times-
Mirror Company; Director of the Company since 1992;
Chairman of the Audit Committee and member of the
Compensation and Executive Committees; age 58.
[insert picture] Gordon F. Brunner - Senior Vice President. Director of
the Company since 1991; age 58.
[insert picture] Richard B. Cheney - Chairman of the Board and Chief
Executive Officer, Halliburton Company (energy
services, engineering and construction). Director of
Halliburton Company, Electronic Data Systems
Corporation, and Union Pacific Corporation; Director of
the Company since 1993; member of the Audit,
Compensation and Public Policy Committees; age 56.
[insert picture] Harald Einsmann - Executive Vice President. Director
of Thorn EMI plc; Director of the Company since 1991;
age 63.
[insert picture] Durk I. Jager - President and Chief Operating Officer.
Director of the Company since 1989; age 54.
[insert picture] Charles R. Lee - Chairman and Chief Executive Officer,
GTE Corporation (telecommunication services). Director
of GTE Corporation, United Technologies Corporation and
USX Corporation. Director of the Company since 1994;
member of the Audit, Board Organization and Nominating,
and Public Policy Committees; age 57.
All of the Directors with terms expiring in 1999, except Mr. Cheney,
have been executive officers of their respective employers for more than
the past five years. Mr. Cheney has been an executive officer of
Halliburton Company since October 1, 1995. He was a Senior Fellow at the
American Enterprise Institute for Public Policy Research, Washington, DC,
from January, 1993 until September 30, 1995. Prior to that, Mr. Cheney was
Secretary of Defense of the United States from March 17, 1989 to January
20, 1993.
Each of the Directors with terms expiring in 1999 was elected a Director
by the shareholders at the annual meeting in 1996.
COMMITTEES OF THE BOARD
The EXECUTIVE COMMITTEE (established in 1905). As prescribed by the
Regulations of the Company, the Committee has the authority of the Board of
Directors for the management of the business and affairs of the Company
between meetings of the Board.
The AUDIT COMMITTEE (established in 1940) met three times during the
fiscal year ended June 30, 1997 with representatives of Deloitte & Touche
LLP and financial management to review accounting, control, auditing and
financial reporting matters. The Committee is responsible, among other
things, for recommending to the Board the firm of independent auditors to
be retained, approving professional services rendered and reviewing the
scope of the annual audit and reports and recommendations submitted by the
independent audit firm, which regularly meets privately with the Committee.
The BOARD ORGANIZATION AND NOMINATING COMMITTEE (established in 1972)
met twice during the fiscal year ended June 30, 1997. The Board
Organization and Nominating Committee is responsible for establishing the
criteria for and reviewing the qualifications of individuals for election
as members of the Board. When a vacancy on the Board occurs or is
anticipated, the Committee presents its recommendation of a replacement
Director to the Board. The Committee makes recommendations as to exercise
of the Board's authority to determine the number of its members, within the
limits provided by the Regulations of the Company. The Committee also has
responsibility for reviewing issues of corporate governance and making
recommendations thereon to the Board. Shareholders wishing to communicate
with the Board Organization and Nominating Committee concerning potential
Director candidates may do so by corresponding with the Secretary of the
Company and including the name and biographical data of the individual
being suggested.
The COMPENSATION COMMITTEE met four times during the fiscal year ended
June 30, 1997. The Compensation Committee (or its predecessor Committees,
which served the same function under different names and which were
established commencing in 1960) is responsible for fixing or agreeing to
the salary and other compensation of all principal officers of the Company
elected by the Board, and advising the Chief Executive on policy matters
concerning officers' compensation. The Compensation Committee is also
responsible for administration of The Procter & Gamble 1992 Stock Plan as
approved at the annual meeting of shareholders on October 13, 1992. The
authority of the Committee under the Plan includes selection of key
employees for participation in the Plan and determination of numbers of
stock options and stock appreciation rights and amounts of restricted and
unrestricted stock to be awarded to such employees pursuant to the Plan.
The Committee is also charged with on-going administration and
interpretation of the Plan and of its predecessor plans, The Procter &
Gamble 1983 Stock Plan and the Plan for Use of Shares in Payment of
Remuneration, both of which have been superseded as to new grants by The
Procter & Gamble 1992 Stock Plan.
The FINANCE COMMITTEE (established in 1994) met three times during the
fiscal year ended June 30, 1997. The Finance Committee is responsible for
reviewing and making recommendations to the Board on the following matters:
the Company's annual financing plans; the Company's global financing
objectives and principles, financial strategies and capital structure;
funding and oversight of pension and benefit plans; the Company's insurance
program; and, after separately being cleared in principle with the full
Board, the financial implications of major investments, restructurings,
joint ventures, acquisitions and divestitures.
The PUBLIC POLICY COMMITTEE (established in 1994) met three times during
the fiscal year ended June 30, 1997. The Public Policy Committee is
responsible for reviewing activities of importance to the Company and its
stakeholders, including employees, consumers, customers, suppliers,
shareholders, governments and local communities. The Public Policy
Committee reviews equal employment opportunity and advancement,
environmental quality, employee safety and health, product safety,
contributions and community relations.
CERTAIN ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS
During the fiscal year ended June 30, 1997 a total of nine meetings of
the Board and 15 meetings of Committees of the Board were held. Average
attendance at these meetings by nominees and incumbents serving as
Directors during the past year was in excess of 95%.
The Board elected to increase its alignment with the interests of the
Company's shareholders as well as to simplify the elements of the
compensation program for non-employee Directors and to do so without
increasing the total compensation received by a typical Director. As a
result, all Committee membership fees as well as all Board and Committee
attendance fees were eliminated. In their place, the Board increased the
retainer and the amount of stock-related compensation.
Effective January 1, 1997, Directors who are not employees receive a
retainer of $55,000 per year, paid quarterly. The last quarterly retainer
payment is contingent upon the Director having attended at least 75% of the
Board meetings held during the fiscal year. The attendance requirement may
be waived by the Compensation Committee for reasons of health or other
urgent personal circumstances. Directors may also elect to convert a
portion or all of their fees for services as a Director into Common Stock
of the Company pursuant to The Procter & Gamble 1993 Non-Employee
Directors' Stock Plan.
Non-employee Directors also receive an annual grant of restricted stock
on the first business day in the calendar year with a value of
approximately $20,000 on the date of grant. Non-employee Directors were
also granted a stock option on February 28, 1997 with a term of ten years
to purchase 1,000 shares of the Company's Common Stock at an exercise price
of $120.4375, the fair market value of the Common Stock on the date of
grant. The Company does not pay directors' fees to Directors who are
employees of the Company. Directors who are not employees of the Company
are also provided insurance coverage in the amount of $750,000 payable in
the event of accidental death or disability occurring while traveling on
Company business. Such Directors also receive reimbursement for expenses
of such travel.
For the period June 30, 1996 through December 31, 1996, Directors who
were not employees of the Company were paid retainers at the rate of
$30,000 per year, plus a fee of $1,000 for each Board or Board Committee
meeting attended. In addition, non-employee Directors who served on Board
Committees were paid retainers at the rate of $5,000 (for Committee
Chairmen) or $3,000 (for Committee members) per year.
Fees otherwise payable to a non-employee Director who has elected to
come under The Procter & Gamble Deferred Compensation Plan for Directors
are credited to such Director's account but not funded. Interest is
credited to such an account at the end of each month at the prime rate then
in effect at Morgan Guaranty Trust Company of New York. Such a deferred
compensation account is payable either upon the retirement of the Director
or after a term of years specified by the electing Director, at the
Director's option, elected in advance of being earned.
The Board also elected to terminate the Board of Directors retirement
plan, effective January 1, 1997. Until that time, Directors who were not
employees of the Company were covered by a retirement plan pursuant to
which retirement benefits were payable to any Director who had served at
least five years since original election to the Board. The annual
retirement benefit under this plan was specified as the amount of the
annual retainer for Board service in effect at the time of retirement,
payable quarterly for as many calendar quarters following retirement as the
retired Director served prior to retirement, or until death, whichever
occurred first. There were no survivor benefits payable under the plan.
On January 2, 1997, an amount equal to the discounted present value of the
projected benefit for each then-current Director was converted into Procter
& Gamble Common Stock at a price of $105.625, the fair market value on
January 2, 1997. These shares will be restricted until retirement or
completion of service as a Director.
As part of its overall program of support for charitable institutions
and as an aid in attracting and retaining qualified Directors, the Board of
Directors has in place a Charitable Gifts Program funded by life insurance
on the lives of the non-employee members of the Board of Directors and the
Chairman of the Board and Chief Executive. Directors derive no financial
benefit from the Program since all insurance proceeds and charitable
deductions accrue solely to the Company. Under this Program the Company
intends to make charitable contributions of up to a total of $1 million
following the death of any such participant with such contribution to be
allocated in accordance with each participant's recommendations among up to
five charitable organizations. The following current and retired Directors
of the Company are participants in this Program: David M. Abshire, Edwin
L. Artzt, Norman R. Augustine, Donald R. Beall, Theodore F. Brophy, Richard
B. Cheney, Richard J. Ferris, Joseph T. Gorman, Robert A. Hanson, Joshua
Lederberg, Charles R. Lee, Lynn M. Martin, John E. Pepper, David M.
Roderick, John C. Sawhill, John G. Smale, John F. Smith, Jr., Ralph
Snyderman, Robert D. Storey and Marina v.N. Whitman. Beneficiary
organizations designated under this Program must be tax-exempt under
Section 501(c)(3) of the Internal Revenue Code, and donations ultimately
paid by the Company will be deductible against federal and other income
taxes payable by the corporation in accordance with the tax laws applicable
at the time. Because of such deductions and use of insurance, the Program
should result in little or no long-term cost to the Company under present
law.
REPORT OF THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
OVERVIEW
The Compensation Committee of the Board of Directors (the "Committee")
consists entirely of outside, non-employee Directors. The Committee
establishes and regularly reviews executive compensation levels and
policies, and authorizes short- and long-term awards in the form of cash or
stock. All awards are made within the authority of the Additional
Remuneration Plan, which dates back to 1949, and The Procter & Gamble 1992
Stock Plan.
Compensation for executives is based on the principles that compensation
must (a) be competitive with other quality companies in order to help
attract, motivate and retain the talent needed to lead and grow Procter &
Gamble's business; (b) provide a strong incentive for key managers to
achieve the Company's goals; and (c) make prudent use of the Company's
resources.
Procter & Gamble has an enviable record of recruiting, training and
developing its executive talent from within -- an achievement few other
corporations have matched. In addition, the Company's long-term
performance, as measured by sales and earnings growth and other relevant
measures, has been very positive. This record suggests the principles that
drive our compensation program have, over time, delivered the desired
results.
Executive compensation is based on performance against a combination of
financial and non-financial measures including business results and
developing organization capacity. In addition, employees are expected to
uphold the fundamental principles embodied in the Company's Statement of
Purpose and Environmental Quality Policy. These include a commitment to
integrity, doing the right thing, maximizing the development of each
individual, developing a diverse organization, and continually improving
the environmental quality of our products and operations. In upholding
these financial and non-financial objectives, executives not only
contribute to their own success, but also help ensure our business,
employees, shareholders and the communities in which we live and work will
prosper.
ELEMENTS OF EXECUTIVE COMPENSATION
It is the Company's long-standing policy that variable, at-risk
compensation, both annual and long-term, should make up a significant
portion of executive compensation. Depending upon the level of the
executive, the Company targets between 40% and 80% of executive
compensation (other than retirement credits) to be variable, at-risk
elements. When the Company achieves solid earnings growth and stock price
appreciation, executive compensation levels will be expected to equal or
exceed the middle compensation range for a comparative group of companies.
This group includes a combination of leading consumer products companies
and other corporations of size and reputation comparable to Procter &
Gamble (and with which Procter & Gamble must compete in hiring and
retaining the employees it needs). The composition of this group is
updated periodically in order to assure its continued relevance.
The Committee believes the compensation levels of the Company's
executive officers are competitive and in line with those of comparable
companies. This conclusion is derived in part from consultations with
independent outside compensation consultants.
Annual compensation elements include base salary and two forms of
incentives, the Performance Bonus Award and the Profit Incentive Award.
Long-term incentive compensation includes stock options and a Long-Term
Incentive Plan award based on Total Shareholder Return relative to a peer
group of companies.
In addition, executives participating in The Procter & Gamble Profit
Sharing Trust and Employee Stock Ownership Plan receive retirement awards
in the form of stock restricted (non-transferable and subject to
forfeiture) until retirement. These awards make up the difference between
the Internal Revenue Code limit on contributions that can be made to that
Plan and what would otherwise be contributed by the Company to the
executive's account. The Procter & Gamble Profit Sharing Trust and
Employee Stock Ownership Plan is a qualified plan providing retirement
benefits for U.S.-based employees.
ANNUAL COMPENSATION
Annual compensation consists of base salary and two forms of annual
incentives.
Executive pay ranges are established based on a careful examination of
survey data from a comparative group of companies gathered by a leading
consulting firm specializing in executive compensation. A number, but not
all, of these companies are included in the line of business index shown on
the performance graph. Executive compensation ranges are targeted to be in
the middle of this group of companies. Within the established range
structure, the Committee approves changes in amounts of executive
compensation based on individual performance evaluations and time in
position.
One annual incentive award, the Performance Bonus Award, is based on an
evaluation of each executive's individual performance. A separate annual
award, the Profit Incentive Award, is tied to the net profit achievement of
the Company and/or certain business units as compared to preset goals. If
these profits, after any adjustments approved by the Compensation Committee
for unusual items, are not delivered, no awards are made.
Senior management and the Committee believe that differences in
performance should result in significantly different levels of annual cash
compensation.
LONG-TERM INCENTIVES
Long-term incentives consist of stock options and Long-Term Incentive
Plan (LTIP) awards. Both types of awards serve to focus executive
attention on the long-term performance of the business.
The Company makes stock option grants annually at no less than 100% of
the market price on the date of grant. Stock appreciation rights (SARs)
are granted instead of options in countries where the holding of foreign
stock is restricted. These grants and rights are fully exercisable after
one year and have a ten-year life. The number of shares normally awarded
is based on the individual's total short-term compensation and competitive
grant values for that level of compensation. Grants are performance-based
in that they are tied to individual compensation levels which are already
performance-based. These awards are designed to be competitive with awards
made by companies in the survey group. The number of option shares
currently held by each executive is not considered in determining awards.
Grants are only made to employees who have demonstrated a capacity for
contributing in a substantial way to the success of the Company. Stock
options encourage these managers to become owners of the business, which
helps to further align their interests with the shareholders' interests.
Options have no value unless the price of the Company's stock increases,
and they are exercisable only by the employee and cannot be transferred
except in case of death.
The goal of the LTIP is to consistently deliver a Total Shareholder
Return (TSR) at least in the top half of a peer group of companies over the
most recent three-year period. When this occurs, awards ranging from 50% to
150% of the Performance Bonus Award can be earned. No awards are paid for
ranking in the bottom one-third of the peer group. Awards are generally
made in the form of stock, stock restricted until retirement, or as stock
options in accordance with the terms of the 1992 Stock Plan.
The Company firmly believes the interests of the Company and its
employees are inseparable. One of the ways this is demonstrated is through
share ownership and ownership behavior. Globally, we estimate that our
employees and retirees currently own about 26% of Procter & Gamble's
outstanding shares. We believe this is significantly higher than most
other major corporations and serves to create a strong focus on the long-
term growth of the Company and its stock.
To support the Company's desire to increase management's stock
ownership, the Committee approved a share retention program for managers
participating in LTIP. Specific guidelines require participants to achieve
and then retain a multiple of their base salary in shares of Procter &
Gamble stock. Higher level managers are required to retain a larger
multiple. The Chief Executive's multiple is three times base salary.
The Committee is continuing its review of the new federal tax legislation
limiting the deduction available for compensation paid to the Company's
named executives under Internal Revenue Code Section 162(m). Stock option
and SAR grants under the 1992 Stock Plan meet the requirements for
deductible compensation. The Committee granted some or all of the named
executives' Performance Bonus, Profit Incentive and Long-Term Incentive Plan
awards in the form of stock options or retirement restricted stock in order
to avoid the loss of deductibility related to such compensation. The
Executive Compensation Tables provide further details. With these
adjustments, the potential tax liability from any loss of deductibility is
nominal.
COMPENSATION OF THE CHIEF EXECUTIVE
The compensation of John E. Pepper, Chairman of the Board and Chief
Executive during fiscal year 1996-97, consists of the same elements as for
other senior executives, namely base salary, annual incentives, stock
options, and LTIP awards.
In determining Mr. Pepper's compensation package, the Committee reviewed
the Company's financial and business performance for 1996-97. This review
was based on a number of qualitative and quantitative factors including
sales, earnings, unit volume, market share, profit margins, return on
equity, growth in earnings, total shareholder return, innovation and human
resource development. The Committee does not assign relative weights or
rankings to each of these factors, but instead makes a subjective
determination based on consideration of all such factors. In its review,
the Committee noted significant progress against the Company's long-term
objectives. Fiscal year 1996-97 was a record year for unit volume, sales,
earnings and cash flow. The Company achieved its 1996-97 earnings target
and profit margins reached their highest level in 47 years. The Company's
underlying strategy of offering consumers products providing better value
continues to build the business. TSR has been strong. Since the beginning
of the 1994-95 fiscal year, the Company's TSR has averaged ___% on an
annualized basis. This ranks P&G well into the top half of a group of peer
companies.
Mr. Pepper's base salary was established based on the Committee's
evaluation of his performance toward the achievement of the Company's
financial, strategic and other goals, his length of service as Chief
Executive, and competitive chief executive officer pay information derived
from an independent consulting organization. His Performance Bonus Award
was based on the Committee's overall evaluation of his individual
performance. Although the final amount has not yet been determined, it is
expected that Mr. Pepper will qualify for a Profit Incentive Award
attributable to 1996-97 in the amount of approximately $_______.
The Chief Executive's LTIP award reflecting the Company's relative TSR
performance over the most recent three fiscal years was calculated on the
same basis as for all other covered executives. This equaled ___% of Mr.
Pepper's Performance Bonus Award.
Mr. Pepper's regular award of stock options for 1997, as with other
optionees, was based on his total short-term compensation and competitive
survey data.
Norman R. Augustine, Chairman Joseph T. Gorman
Donald R. Beall Marina v.N. Whitman
Richard B. Cheney
EXECUTIVE COMPENSATION TABLES
The following tables and notes present the compensation provided by the
Company to its Chief Executive officer, and to each of the Company's four
most highly compensated executive officers, other than the Chief Executive,
for services rendered in all capacities to the Company for the fiscal years
ended June 30, 1997, 1996 and 1995.
<TABLE>
SUMMARY COMPENSATION TABLE
(DOLLAR FIGURES SHOWN IN THOUSANDS)
<CAPTION>
Annual Compensation
Name and ______________________________________________
Principal Other Annual
Position Year Salary Bonus<F1> Compensation<F2>
______________ _______ ______ ________ ____________
<S> <C> <C> <C> <C>
John E. Pepper 1996-97 <F6>
Chairman of the 1995-96 1,110.0 0 <F7> 0
Board and Chief 1994-95 910.0 50.8 0
Executive
Durk I. Jager 1996-97 <F8>
President and 1995-96 910.0 58.0<F9> 0
Chief Operating 1994-95 760.0 218.3 0
Officer
Harald Einsmann 1996-97 <F10>
Executive Vice 1995-96 635.0 457.0<F11> 403.3<F12>
President 1994-95 582.5 524.9 537.5<F12>
Wolfgang C. Berndt 1996-97 <F13>
Executive Vice 1995-96 620.0 378.0<F14> 338.5<F12>
President 1994-95 555.0 293.7 318.0<F12>
Gordon F. Brunner 1996-97 <F15>
Senior Vice 1995-96 525.0 0 <F16> 0
President 1994-95 500.0 400.0 0
<CAPTION>
Long-Term Compensation
Awards
_____________________________
Securities
Name and Restricted Underlying
Principal Stock Options/ All Other
Position Year Awards<F3> SARs<F4> Compensation<F5>
_______________ ____ __________ __________ _______________
<S> <C> <C> <C> <C>
John E. Pepper 1996-97
Chairman of the 1995-96 480.0 91,200 284.5
Board and Chief 1994-95 571.3 70,542 240.0
Executive
Durk I. Jager 1996-97
President and 1995-96 0 81,521 230.5
Chief Operating 1994-95 228.7 55,322 189.4
Officer
Harald Einsmann 1996-97
Executive Vice 1995-96 0 43,531 302.4
President 1994-95 84.0 25,300 290.1
Wolfgang C. Berndt 1996-97
Executive Vice 1995-96 0 39,433 295.4
President 1994-95 111.5 22,000 335.7
Gordon F. Brunner 1996-97
Senior Vice 1995-96 561.3 33,196 138.9
President 1994-95 126.8 19,800 130.9
<FN>
<F1> The Performance Bonus and Profit Incentive Awards may be made in the
form of cash, restricted stock or stock options and Long-Term Incentive
Plan Awards may be made in the form of stock, restricted stock or stock
options as approved by the Compensation Committee. Awards received in
the form of cash or stock are reported in this column. Awards received
in the form of restricted stock or stock options are reported under the
appropriate long-term compensation column. Although the final amount of
the Profit Incentive Award for fiscal year 1996-97 has not yet been
determined, the amount of the estimated award has been noted below in
footnotes _, _, _, __ and __.
<F2> Any perquisites or other personal benefits received from the Company
by any of the named executives were substantially less than the
reporting thresholds established by the Securities and Exchange
Commission (the lesser of $50,000 or 10% of the individual's cash
compensation).
<F3> All restricted stock awarded to the named executives for 1996-97 will
vest on retirement. The number and value (in thousands of dollars)
of aggregate restricted stock holdings of each of the named executives
on June 30, 1997 was: Mr. Pepper, _______ shares ($_______);
Mr. Jager, _______ shares ($_______); Mr. Einsmann, 0 shares ($0);
Mr. Berndt, _______ shares ($_______); Mr. Brunner, _______ shares
($_______). The value of the restricted stock is determined by
multiplying the total shares held by each named executive by the
average of the high and low price on the New York Stock Exchange
on June 30, 1997 ($_____). Dividends are paid on all restricted
Common Stock at the same rate as paid on the Company's Common Stock.
<F4> For fiscal year 1996-97, in addition to the regular award of stock
options, these figures include options granted on July 1, 1997 to
Messrs. Pepper and Jager for the 1996-97 Performance Bonus Award
and options granted on July 9, 1997 to all five named executives
for the 1996-97 Long-Term Incentive Plan Award. See footnotes
_, _, _, __ and __ below. Options for the 1996-97 Profit Incentive
Award will be granted on or about September 15, 1997 and reported
in the proxy statement for the annual meeting of shareholders on
October 13, 1998.
<F5> All Other Compensation (in thousands of dollars) -- details for 1996-97
</FN>
</TABLE>
<TABLE>
<CAPTION>
Profit Inter-
Sharing national
and Flexible Assignment
Related Compensation Equali- Total
Contribu- Program Imputed zation All Other
Name tions Contributions Income Payments Compensation
________________ ________ _____________ _______ ________ ____________
<S> <C> <C> <C> <C> <C>
John E. Pepper $ $ $ $ $
Durk I. Jager
Harald Einsmann
Wolfgang C. Berndt
Gordon F. Brunner
<FN>
<F6> Mr. Pepper's Performance Bonus Award of $________ was paid in the
form of retirement restricted stock; his Long-Term Incentive Plan
Award of $_______ was paid in the form of stock options ($_______)
and retirement restricted stock ($_______); and his estimated Profit
Incentive Award of $_______ will be paid in the form of stock options
($_______) and retirement restricted stock ($______) to be granted
on or about September 15, 1997.
<F7> In fiscal year 1995-96, Mr. Pepper's Performance Bonus Award of
$640,041 was paid in the form of retirement restricted stock
($480,041) and stock options ($160,000); his Long-Term Incentive
Plan Award of $691,200 was paid in the form of stock options;
and his Profit Incentive Award of $371,000 was paid in the form of
stock options.
<F8> Mr. Jager's Performance Bonus Award of $_______ was paid in the
form of stock options; his Long-Term Incentive Plan Award of
$_______ was paid in the form of stock options; and his estimated
Profit Incentive Award of $_______ will be paid in the form of
stock options to be granted on or about September 15, 1997.
<F9> In fiscal year 1995-96, Mr. Jager's Performance Bonus Award of
$490,000 was paid in the form of cash ($58,000) and stock options
($432,000); his Long-Term Incentive Plan Award of $529,200 was paid
in the form of stock options; and his Profit Incentive Award of
$309,000 was paid in the form of stock options.
<F10> Mr. Einsmann's Performance Bonus Award of $_______ was paid in the
form of retirement restricted stock; his Long-Term Incentive Plan
Award of $_______ was paid in the form of stock options; and his
estimated Profit Incentive Award of $_______ will be paid in the
form of retirement restricted stock.
<F11> In fiscal year 1995-96, Mr. Einsmann's Performance Bonus Award of
$275,000 was paid in the form of cash; his Long-Term Incentive Plan
Award of $297,000 was paid in the form of stock options; and his
Profit Incentive Award of $182,187 was paid in the form of cash.
<F12> Tax equalization payments to cover incremental taxes required to be
paid to Belgium for Mr. Einsmann and to the United Kingdom for
Mr. Berndt, as paid in accordance with Company policies applicable
generally to managers assigned outside their home countries.
<F13> Mr. Berndt's Performance Bonus Award of $_______ was paid in the
form of stock options; his Long-Term Incentive Plan Award of
$_______ was paid in the form of stock options; and his estimated
Profit Incentive Award of $_______ will be paid in the form of
stock options to be granted on or about September 15, 1997.
<F14> In fiscal year 1995-96, Mr. Berndt's Performance Bonus Award of
$240,000 was paid in the form of cash; his Long-Term Incentive Plan
Award of $259,200 was paid in the form of stock options; and his
Profit Incentive Award of $148,000 was paid in the form of cash
($138,610) and stock options ($10,000).
<F15> Mr. Brunner's Performance Bonus Award of $_______ was paid in the
form of retirement restricted stock; his Long-Term Incentive Plan
Award of $_______ was paid in the form of stock options; and his
estimated Profit Incentive Award of $_______ will be paid in the
form of retirement restricted stock.
<F16> In fiscal year 1995/96, Mr. Brunner's Performance Bonus Award of
$265,000 was paid in the form of retirement restricted stock; his
Long-Term Incentive Plan Award of $286,280 was paid in the form of
retirement restricted stock ($143,180) and stock options ($143,100);
and his Profit Incentive Award of $153,700 was paid in the form of
retirement restricted stock.
</FN>
</TABLE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
(DOLLAR FIGURES SHOWN IN THOUSANDS)
<CAPTION>
Number of % of Total
Securities Options
Underlying Granted to
Options Employees Exercise or
Name Granted(1) in Fiscal Year Base Price
_________________ __________ ______________ ___________
<S> <C> <C> <C>
John E. Pepper(3) 65,311 % $120.4375
%
Durk I. Jager(4) 53,775 % 120.4375
%
%
Harald Einsmann 35,797 % 120.4375
%
Wolfgang C. Berndt(5) 32,959 % 120.4375
%
%
Gordon F. Brunner 31,586 % 120.4375
%
<CAPTION>
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Price Appreciation
for Option Term (2)
____________________
Expiration (a) (b)
Name Date 5% 10%
_________________ __________ __ ___
<S> <C> <C> <C>
John E. Pepper(3) 2/28/07 $ $
Durk I. Jager(4) 2/28/07
Harald Einsmann 2/28/97
Wolfgang C. Berndt(5) 2/28/97
Gordon F. Brunner 2/28/97
<FN>
<F1> All of these options, which were granted pursuant to The Procter &
Gamble 1992 Stock Plan, were non-qualified, were granted at market
value on the date of grant, vest on the first anniversary of the date
of grant, and have a term of ten years. Stock options expiring on July
1, 2007 and July 9, 2007 related to Performance Bonus and Long-Term
Incentive Plan Awards, respectively.
<F2> We recommend caution in interpreting the financial significance of
these figures. They are calculated by multiplying the number of
options granted by the difference between a future hypothetical stock
price and the option exercise price and are shown pursuant to rules of
the Securities and Exchange Commission. They assume the value of
Company stock appreciates 5% or 10% each year, compounded annually, for
ten years (the life of each option). They are not intended to forecast
possible future appreciation, if any, of such stock price or to
establish a present value of options. Also, if appreciation does occur
at the 5% or 10% per year rate, the amounts shown would not be realized
by the recipients until the year 2007. Depending on inflation rates,
these amounts may be worth significantly less in 2007, in real terms,
than their value today.
<F3> Mr. Pepper also received an award of 12,105 stock options on September
13, 1996 with an exercise price of $92.00 and an expiration date of
September 13, 2006 for his Profit Incentive Award earned in fiscal year
1995-96. This option award had potential realizable values of
$__________ and $__________ at assumed rates of appreciation of 5% and
10%, respectively.
<F4> Mr. Jager also received an award of 10,107 stock options on September
13, 1996 with an exercise price of $92.00 and an expiration date of
September 13, 2006 for his Profit Incentive Award earned in fiscal year
1995-96. This option award had potential realizable values of
$________ and $_________ at assumed rates of appreciation of 5% and
10%, respectively.
<F5> Mr. Berndt also received an award of 315 stock options on September 13,
1996 with an exercise price of $92.00 and an expiration date of
September 13, 2006 for his Profit Incentive Award earned in fiscal year
1995-96. This option award had potential realizable values of
$________ and $_________ at assumed rates of appreciation of 5% and
10%, respectively.
</FN>
</TABLE>
<TABLE>
AGGREGATED OPTION/STOCK APPRECIATION RIGHT (SAR)
EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES(1)
(DOLLAR FIGURES SHOWN IN THOUSANDS)
<CAPTION>
Shares Number of Securities
Acquired Value Underlying Unexercised
Name on Exercise Realized(2) Options/SARs at FY End(3)
_____________ ___________ ___________ __________________________
Exercisable Unexercisable
___________ _____________
<S> <C> <C> <C>
John E. Pepper
Durk I. Jager
Harald Einsmann
Wolfgang C. Berndt
Gordon F. Brunner
<CAPTION>
Value of Unexercised
In-the-Money
Name Options/SARs at FY End (3)
____________ ___________________________
Exercisable Unexercisable
____________ _____________
<S> <C> <C>
John E. Pepper
Durk I. Jager
Harald Einsmann
Wolfgang C. Berndt
Gordon F. Brunner
<FN>
<F1> Optionees may satisfy the exercise price by submitting currently owned
shares and/or cash. Income tax withholding obligations may be
satisfied by electing to have the Company withhold shares otherwise
issuable under the option/stock appreciation right (SAR) with a fair
market value equal to such obligations.
<F2> Options/SARs were granted for terms of up to ten years. The value
realized on options/SARs exercised during the last fiscal year
represents the total gain over the years the options/SARs were held by
the executive. If this total gain is divided by the average number of
years the options/SARs were held, a more relevant annualized gain is
produced. The annualized gains (in thousands of dollars) on these
option/SAR exercises were as follows: Mr. Pepper, $_____; Mr. Jager,
$_____; and Mr. Brunner, $_____.
<F3> Calculated based on the fair market value of the Company's Common Stock
on June 30, 1997 ($______ per share) minus the exercise price.
</FN>
</TABLE>
RETIREMENT BENEFITS
Retirement benefits for U.S.-based executive officers are provided
primarily by The Procter & Gamble Profit Sharing Trust and Employee Stock
Ownership Plan. This is a defined contribution plan. Under the rules set
by the Securities and Exchange Commission, these Company contributions are
included in the Summary Compensation Table in the "All Other Compensation"
column (see footnote (5) to such Table). In addition, Mr. Einsmann is
enrolled in the Pension Plan of Procter & Gamble GmbH (Germany) and Mr.
Jager is enrolled in the Pension Plan of Procter & Gamble Benelux N.V.
(Netherlands Branch), where they joined the Company. Mr. Jager is also
enrolled in the Supplemental Retirement Plan for U.S.-based managers who
previously participated in pension plans of international subsidiaries.
Mr. Berndt is enrolled in the Pension Plan of Procter & Gamble GmbH
(Germany). Mr. Berndt was a participant in the Austrian pension plan and
enrolled in the supplemental plan for Germans who previously participated
in other pension plans. These Plans are defined benefit plans funded by
book reserves or insurance contracts in order to pay retirement benefits in
cash. Given their age and service with the Company, their estimated annual
benefit, if payable in the form of a straight annuity upon retirement at
age 65, would be $917,007 for Mr. Einsmann, $_______ for Mr. Jager and
$831,862 for Mr. Berndt.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The following graph compares the five-year cumulative total return of
the Company's Common Stock as compared with the S&P 500 Stock Index and a
composite of the S&P Household Products Index, the S&P Paper & Forest
Products Index, the S&P Personal Care Index, the S&P Health Care
Diversified Index and the S&P Foods Index weighted based on the Company's
current fiscal year revenues.
{Performance Graph}
The graph assumes a $100 investment made on July 1, 1992 and the
reinvestment of all dividends, as follows:
<TABLE>
<CAPTION>
DOLLAR VALUE OF $100 INVESTMENT AT JUNE 30
__________________________________________
1992 1993 1994 1995 1996 1997
______ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C>
P&G Common $100.00 $115.56 $123.06 $167.32 $216.46 $336.69
Composite Group $100.00 $107.79 $112.95 $154.73 $184.83 $266.94
S&P 500 $100.00 $113.63 $115.23 $145.27 $183.04 $246.55
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following tables give information concerning the beneficial
ownership of the Company's Common and Series A and B ESOP Convertible Class
A Preferred Stock by all Directors and nominees, each named executive, all
Directors and executive officers as a group, and the owners of more than
five percent of the outstanding Series A and B ESOP Convertible Class A
Preferred Stock, on August 8, 1999:
<TABLE>
<CAPTION>
COMMON STOCK
Amount and Nature of Beneficial Ownership
____________________________________________
Direct<F1>
and Trusteeships
Profit Right and Percent
Sharing to Family of
Owner Plan <F2> Acquire<F3>Holdings<F4> Class
________________ _________ ___________ ____________ _______
<S> <C> <C> <C> <C>
Edwin L. Artzt -- <F5>
Norman R. Augustine -- <F5>
Donald R. Beall <F5>
Wolfgang C. Berndt -- <F5>
Gordon F. Brunner <F5>
Richard B. Cheney -- <F5>
Harald Einsmann -- <F5>
Richard J. Ferris -- <F5>
Joseph T. Gorman -- <F5>
Durk I. Jager -- <F5>
Charles R. Lee -- <F5>
Lynn M. Martin -- <F5>
John E. Pepper <F5>
John C. Sawhill -- -- <F5>
John F. Smith, Jr. -- -- <F5>
Ralph Snyderman -- -- <F5>
Robert D. Storey -- -- <F5>
Marina v.N. Whitman -- <F5>
__ Directors and executive
officers, as a group ___%
<FN>
<F1> Sole discretion as to voting and investment of shares.
<F2> Shares allocated to personal accounts of executive officers under
the Retirement Trust pursuant to The Procter & Gamble Profit Sharing
Trust and Employee Stock Ownership Plan. Plan participants have sole
discretion as to voting and, within limitations provided by the Plan,
investment of shares. Shares are voted by the Trustees of such Trusts
in accordance with instructions from participants. If instructions are
not received by the Trustees as to the voting of particular shares,
shares are to be voted in proportion to instructions actually received
from other participants in the Trust.
<F3> If acquired, would have sole discretion as to voting and investment
of shares.
<F4> The individuals involved share voting and/or investment powers with
other persons.
<F5> Less than .___% for any one Director.
</FN>
</TABLE>
<TABLE>
<CAPTION>
SERIES A ESOP CONVERTIBLE CLASS A PREFERRED STOCK
Amount and Nature of Beneficial Ownership
_________________________________________
Profit Percent
Sharing of
Owner Plan<F1> Trusteeships Series
___________________ ________ ____________ ________
<S> <C> <C> <C>
Edwin L. Artzt - <F2>
Norman R. Augustine - - -
Donald R. Beall - - -
Wolfgang C. Berndt - - -
Gordon F. Brunner - <F2>
Richard B. Cheney - - -
Harald Einsmann - - -
Richard J. Ferris - - -
Joseph T. Gorman - - -
Durk I. Jager - <F2>
Charles R. Lee - - -
Lynn M. Martin - - -
John E. Pepper - <F2>
John C. Sawhill - - -
John F. Smith, Jr. - - -
Ralph Snyderman - - -
Robert D. Storey - - -
Marina v.N. Whitman - - -
__ Directors and executive
officers, as a group - .___%
Employee Stock Ownership
Trust of The Procter &
Gamble Profit Sharing
Trust and Employee Stock
Ownership Plan, PO Box
599, Cincinnati, Ohio
45201-0599 (G. V. Dirvin,
W. O. Coleman and
C. C. Carroll, Trustees) -- <F3> __.__%
<FN>
<F1> Shares allocated to personal accounts of executive officers under the
Employee Stock Ownership Trust pursuant to The Procter & Gamble Profit
Sharing Trust and Employee Stock Ownership Plan. Plan participants
have sole discretion as to voting and, within limitations provided by
the Plan, investment of shares. Shares are voted by the Trustees of
such Trust in accordance with instructions from participants. If
instructions are not received by the Trustees as to the voting of
particular shares, shares are to be voted in proportion to
instructions actually received from other participants in the Trust.
<F2> Less than .___% for any one Director; by the terms of the stock, only
persons who are or have been employees can have beneficial ownership
of these shares.
<F3> Unallocated shares. The voting of these shares is governed by the
terms of the Plan, which provides that the Trustees shall vote
unallocated shares held by them in proportion to instructions received
from Trust participants as to voting of allocated shares. The
disposition of these shares in connection with a tender offer would be
governed by the terms of the Plan, which provides that the Trustees
shall dispose of unallocated shares held by them in proportion to
instructions received from Trust participants as to the disposition of
allocated shares.
</FN>
</TABLE>
<TABLE>
<CAPTION>
SERIES B ESOP CONVERTIBLE CLASS A PREFERRED STOCK
Amount and Nature of Beneficial Ownership
_________________________________________
Profit Percent
Sharing of
Owner Plan (1) Trusteeships Series
___________________ ________ ____________ _______
<S> <C> <C> <C>
Edwin L. Artzt - <F2>
Norman R. Augustin - - -
Donald R. Beall - - -
Wolfgang C. Berndt - - -
Gordon F. Brunner - <F2>
Richard B. Cheney - - -
Harald Einsmann - - -
Richard J. Ferris - - -
Joseph T. Gorman - - -
Durk I. Jager - - -
Charles R. Lee - - -
Lynn M. Martin - - -
John E. Pepper - <F2>
John C. Sawhill - - -
John F. Smith, Jr. - - -
Ralph Snyderman - - -
Robert D. Storey - - -
Marina v.N. Whitman - - -
__ Directors and executive
officers, as a group - .___%
Employee Stock Ownership Trust
of The Procter & Gamble Profit
Sharing Trust and Employee Stock
Ownership Plan, PO Box 599,
Cincinnati, Ohio 45201-0599
(G. V. Dirvin, W. O. Coleman and
C. C. Carroll, Trustees) -- <F3> __.__%
<FN>
<F1> Shares allocated to personal accounts of current and former executive
officers under the Employee Stock Ownership Trust pursuant to The
Procter & Gamble Profit Sharing Trust and Employee Stock Ownership
Plan. Plan participants have sole discretion as to voting and, within
limitations provided by the Plan, investment of shares. Shares are
voted by the Trustees of such Trust in accordance with instructions
from participants. If instructions are not received by the Trustees
as to the voting of particular shares, shares are to be voted in
proportion to instructions actually received from other participants
in the Trust.
<F2> Less than .____% for any one Director.
<F3> Unallocated shares. The voting of these shares is governed by the
terms of the Plan, which provides that the Trustees shall vote
unallocated shares held by them in proportion to instructions received
from Trust participants as to voting of allocated shares. The
disposition of these shares in connection with a tender offer would be
governed by the terms of the Plan, which provides that the Trustees
shall dispose of unallocated shares held by them in proportion to
instructions received from Trust participants as to the disposition of
allocated shares.
</FN>
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Ownership of and transactions in Company stock by executive officers
and Directors of the Company are required to be reported to the Securities
and Exchange Commission pursuant to Section 16 of the Securities Exchange
Act. On September 30, 1996, Bruce L. Byrnes, Group Vice President, filed a
Form 4 for July, 1996 to correct an inadvertent failure to report 697.413
shares purchased in his Profit Sharing account. On March 3, 1997, Gordon
F. Brunner, Senior Vice President and Director, filed a Form 4 for shares
purchased from the reinvestment of dividends in a custodial account on
February 16, 1995, May 16, 1995, August 16, 1995, November 16, 1995,
February 16, 1996 and May 16, 1996. On March 24, 1997, Charlotte R. Otto,
Senior Vice President, filed a Form 4 for September, 1996 to correct an
inadvertent failure to report 300 shares indirectly owned by a General
Partnership.
TRANSACTIONS WITH EXECUTIVE OFFICERS, DIRECTORS AND OTHERS
During the past fiscal year, the Company and its subsidiaries had no
transaction in which any Director, or any member of the immediate family of
any Director, had a material direct or indirect interest reportable under
applicable rules of the Securities and Exchange Commission. In the normal
course of business the Company had transactions with other corporations
where certain Directors are or were executive officers; and the Company
utilized the services of the law firm of Thompson, Hine & Flory in which
Robert D. Storey, a Director, is a partner. None of the aforementioned
matters was material in amount as to the Company, the corporations or the
law firm.
During the past fiscal year, the Company and its subsidiaries had no
transactions in which any executive officer of the Company, or any member
of the immediate family of any such executive officer, had a material
direct or indirect interest reportable under applicable rules of the
Securities and Exchange Commission.
PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, acting upon the recommendation of the Audit
Committee of the Board, has appointed the firm of Deloitte & Touche LLP as
the Company's independent auditors for fiscal year 1997-98. Although
action by the shareholders in this matter is not required, the Board
believes that it is appropriate to seek shareholder ratification of this
appointment in light of the critical role played by independent auditors in
maintaining the integrity of Company financial controls and reporting.
One or more representatives of Deloitte & Touche LLP will be in
attendance at the annual meeting on October 14, 1997. The representatives
will have the opportunity to make a statement, if desired, and will be
available to respond to appropriate questions from shareholders.
The following proposal will therefore be presented for action at the
annual meeting by direction of the Board of Directors:
RESOLVED, That action by the Board of Directors appointing Deloitte &
Touche LLP as the Company's independent auditors to conduct the annual
audit of the financial statements of the Company and its subsidiaries
for the fiscal year ending June 30, 1998 is hereby ratified, confirmed
and approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS RESOLUTION.
The affirmative vote of a majority of shares participating in the voting
on this proposal is required for adoption of this resolution. Proxies will
be voted FOR the resolution unless the Proxy Committee is instructed
otherwise on a proxy returned to such Committee. Abstentions indicated on
such a proxy card will not be counted as either "for" or "against" this
proposal.
PROPOSAL TO AMEND THE COMPANY'S AMENDED ARTICLES OF INCORPORATION
The following proposal will be presented for action at the annual
meeting by direction of the Board of Directors:
RESOLVED, That the first paragraph of Article Fourth of the
Amended Articles of Incorporation of The Procter & Gamble Company is
hereby amended to read as follows:
Fourth: The authorized number of shares without par value
is ++five billion eight hundred million (5,800,000,000)++ [[two
billion eight hundred million (2,800,000,000)]] of which six
hundred million (600,000,000) are classified and designated as
Class A Preferred Stock, two hundred million (200,000,000) are
classified and designated as Class B Preferred Stock and ++five++
[[two]] billion ++(5,000,000,000)++ [[(2,000,000,000)]] are
classified and designated as Common Stock.<F1>
RESOLVED FURTHER, That the Board of Directors and the appropriate
officers of the Company are authorized and directed to take
appropriate steps to make effective the foregoing amendment to the
Amended Articles of Incorporation of the Company including filing such
amendment in the office of the Secretary of State of Ohio.
[Note: For Edgar purposes, language to be added is enclosed in "++";
language to be deleted is enclosed in "[[" "]]". The printed
version of the proxy statement that will be mailed to share-
holders will include underlining the new language and crossing
out the deleted language.]
The Board of Directors recommends a vote FOR this resolution for the
following reasons:
______________________
<F1> New language is indicated by underlining. Language to be deleted is
lined out.
The proposed amendment to Article Fourth would change the number of
authorized shares of Common Stock without par value from 2,000,000,000
shares to 5,000,000,000 shares. This change is recommended by the Board of
Directors in order to replace authority for the issuance of Common Shares
which was utilized in implementing the two-for-one stock split effected in
the form of a 100% stock dividend distributed to shareholders of record at
the close of business on August 22, 1997. There would be no change in the
number of authorized shares of Preferred Stock of either Class.
On July 8, 1997 the Board of Directors increased the annual rate of
dividend on the Company's Common Stock from $1.80 to $2.02, by declaring a
quarterly cash dividend of $.505 per share. Simultaneously, the Board also
declared a two-for-one stock split in the form of a 100% stock dividend on
the Company's outstanding Common Stock, effective August 22, 1997.
Distribution of this 100% stock dividend was made using shares of Common
Stock authorized by Article Fourth but not issued.
This distribution is expected to result in the issuance of 743,412,570
shares of Common Stock which were not previously issued (including
67,301,911 shares payable on treasury shares held by the Company itself
which were considered issued for purposes of receiving the stock dividend
but are not outstanding for cash dividend, quorum, voting or other
purposes).
As a result of the distributions described above, the aggregate number
of issued shares of Common Stock (including treasury shares) at the close
of business on August 22, 1997 is expected to be 1,486,825,140, leaving an
unused balance of 513,174,860 shares.
This amount of unused authority to issue Common Stock represents a
significant reduction in authorized but unissued shares available for
future corporate purposes. The Board of Directors believes it would be in
the best interest of the Company and its shareholders to increase the
amount of authorized but unissued shares of Common Stock available under
the Amended Articles of Incorporation as described above. The Company and
the Board have no current plans to use the additional shares for any
particular purpose, but the Board believes it is desirable to have such
shares available for possible use in future acquisitions or for a future
split of the Company's Common Stock by means of a stock dividend, or for
other purposes within the limitations of Ohio law.
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock and Series A and B ESOP Convertible Class A
Preferred Stock issued and outstanding, voting together as a class, is
required to adopt this proposal. If the proposal is adopted by the
shareholders, it will become effective upon the filing of a certificate of
amendment with the Secretary of State of Ohio, which filing the Company
would intend to make on October 14, 1997 immediately following completion
of the annual meeting of shareholders.
PROPOSAL TO AMEND THE COMPANY'S AMENDED ARTICLES OF INCORPORATION
The following proposal will be presented for action at the annual
meeting by direction of the Board of Directors:
RESOLVED, That Appendix A of the Amended Articles of
Incorporation of the Company is hereby amended to read as set forth in
Exhibit A to the proxy statement for this meeting; and
RESOLVED FURTHER, That Appendix B of the Amended Articles of
Incorporation of the Company is hereby amended to read as set forth in
Exhibit B to the proxy statement for this meeting; and
RESOLVED FURTHER, That the Board of Directors and the appropriate
officers of the Company are authorized and directed to take
appropriate steps to make effective the foregoing amendments to the
Amended Articles of Incorporation of the Company, including filing
such amendments in the office of the Secretary of State of Ohio.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS RESOLUTION FOR THE
FOLLOWING REASONS:
On January 10, 1989 the Board of Directors, as authorized by the
Company's Amended Articles of Incorporation, established a series of
Preferred Stock designated as "Series A ESOP Convertible Class A Preferred
Stock" with an initial annual dividend rate of $8.12 per share (the "Series
A Preferred Stock"). Nine million ninety thousand nine hundred nine shares
of Series A Preferred Stock were sold to the Trustees of The Procter &
Gamble Profit Sharing Trust and Employee Stock Ownership Plan (the "Profit
Sharing Trust") to be used for the payment of retirement benefits to
employees participating in the Profit Sharing Trust. The Series A
Preferred Stock allocated to a participant's account is automatically
converted into shares of the Company's Common Stock, no par value (the
"Common Stock") upon the withdrawal of a participant from the Profit
Sharing Trust, and it is also convertible into shares of Common Stock at
any time upon the request of the Trustees.
Since the issuance of the Series A Preferred Stock, the Common Stock
has been split on a two for one basis three times (including the recent
split effective August 22, 1997), resulting in a reduction of the Series A
Preferred Stock annual dividend rate to $1.015 and an anticipated increase
in the number of shares of Series A Preferred Stock issued and outstanding
to ______________ shares as of August 22, 1997, taking into account the
shares that have already been converted to Common Stock.
The Board of Directors is recommending that the shareholders approve a
change in the dividend rate of the Series A Preferred Stock to make it
equal to the higher of $1.015, as adjusted, or the then current dividend
rate on the Common Stock. The holders of the Series A Preferred Stock will
receive the same dividend as the holders of Common Stock in any quarter
where the Common Stock dividend exceeds $.25375 per share, as adjusted,
without the need to convert their shares of Series A Preferred Stock into
Common Stock. This will result in the Series A Preferred Stock being
converted gradually into shares of Common Stock on the same basis as they
have in the past, rather than being converted all at once at such time as
the dividend rate on the Common Stock exceeds the dividend rate on the
Series A Preferred Stock.
A corresponding change is being recommended for the 19,142,418 shares
of Series B ESOP Convertible Class A Preferred Stock, which has a current
annual dividend rate of $2.06 per share (the "Series B Preferred Stock").
The holders of the Series B Preferred Stock will receive the same dividend
as the holders of Common Stock in any quarter where the Common Stock
dividend exceeds $.515 per share, as adjusted, without the need to convert
their shares of Series B Preferred Stock into Common Stock.
For both the Series A Preferred Stock and the Series B Preferred
Stock, when the dividend rate on the Common Stock first exceeds the
respective dividend rates on the Series A Preferred Stock or the Series B
Preferred Stock, the dividends on the Series A Preferred Stock or the
Series B Preferred Stock will thereafter be paid on the same date as the
dividend on the Common Stock.
The affirmative vote of the holders of a majority of the issued and
outstanding shares of the Company's Common Stock and Series B Preferred
Stock, each voting as a class, and of the holders of a majority of the
issued and outstanding shares of the Company's Common Stock and Series A
Preferred Stock and Series B Preferred Stock, voting together as a class,
is required to adopt this proposal. If the proposal is adopted by the
shareholders, it will become effective upon the filing of a certificate of
amendment with the Secretary of State of Ohio, which filing the Company
would intend to make on October 14, 1997 immediately following completion
of the annual meeting of shareholders.
SHAREHOLDER PROPOSALS
SHAREHOLDER PROPOSAL NO. 1
Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue, N.W.,
Suite 215, Washington, DC 20037, owning 200 shares of Common Stock of the
Company, has given notice that she intends to present for action at the
annual meeting the following resolution:
RESOLVED: That the shareholders of P&G recommend that the Board of
Directors take the necessary steps to reinstate the election of
directors ANNUALLY, instead of the stagger system which was recently
adopted.
Mrs. Davis has submitted the following statement in support of her
resolution:
REASONS: Until recently, directors of P&G were elected annually by
all shareholders.
The great majority of New York Stock Exchange listed corporations
elect all their directors each year.
This insures that ALL directors will be more accountable to ALL
shareholders each year and to a certain extent prevents the self-
perpetuation of the Board. Last year the owners of 168,678,826 shares,
representing approximately 32.3% of shares voting, voted FOR my similar
proposal.
If you AGREE, please mark your proxy FOR this resolution.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS RESOLUTION FOR THE
FOLLOWING REASONS:
The shareholders of Procter & Gamble decided, by action at the annual
meeting of shareholders in 1985, that its Board of Directors shall be
divided into three classes with Directors elected to staggered three-year
terms. This was to insure continuity of experienced Board members.
This exercise by Procter & Gamble shareholders of their rightful role in
corporate governance has been challenged with this same resolution at every
annual meeting since 1986. On each of these occasions, the shareholders
confirmed that they wanted to retain the continuity of experienced
Directors by having a classified Board of Directors with staggered terms.
In each such year they defeated the proposal to return to annual
election of the entire Board, with over 67% voting against it at the most
recent shareholders meeting. We believe this affirms the Board's view that
the current system of election is working effectively.
This year's resolution and the arguments in support of it are identical
to those in prior years. The Board of Directors agrees with the results of
previous shareholder voting on this issue and again recommends a vote
AGAINST the proposal.
The affirmative vote of a majority of shares participating in the voting
on this proposal is required for adoption of this resolution. Proxies will
be voted AGAINST the resolution unless the Proxy Committee is instructed
otherwise on a proxy returned to such Committee. Abstentions indicated on
such a proxy card will not be counted as either "for" or "against" this
proposal. "Broker non-votes" specified on proxies returned by brokers
holding shares for beneficial owners who have not provided instructions as
to voting on this issue will be treated as not present for voting on this
issue.
SHAREHOLDER PROPOSAL NO. 2
Aaron Belk, Trustee of the International Brotherhood of Teamsters
Affiliates Pension Plan, 25 Louisiana Avenue, N.W., Washington, DC 20001,
owning 7,100 shares of Common Stock of the Company, in conjunction with one
co-sponsoring organization (the name of which organization, with shares of
Common Stock of the Company beneficially held, will be furnished promptly
to any person upon request in writing to Ms. Linda D. Rohrer, Assistant
Secretary, The Procter & Gamble Company, P.O. Box 599, Cincinnati, Ohio
45201 or by telephone at 513-983-8697), have given notice that they intend
to present for action at the annual meeting the following resolution:
RESOLVED:
That the shareholders of Procter & Gamble Co. urge the Board of
Directors to establish corporate political contribution guidelines and
reporting provisions that include the following features:
1. CONTRIBUTION GUIDELINES: The Board of Directors would present
written contribution guidelines in the Company's annual report and
Form 10-K that clearly define the issues and interests that the
Company is seeking to promote with its "soft dollar" political
contributions; and
2. CONTRIBUTION REPORTING: Comprehensive political contribution
reporting would be provided in the Company's annual report and Form
10-K documenting all the entities that were the recipients of the
Company's political "soft dollar" contributions during the previous
twelve month period.
The International Brotherhood of Teamsters Affiliates Pension Plan has
submitted the following statement in support of their resolution:
The American political election process is the cornerstone of the
country's democratic system of government, serving as the central means
by which all citizens can participate in the public debate of ideas and
elect representatives to protect and promote our collective interests.
The integrity of the American political election process is of
critical importance to all citizens.
There has been a significant increase in the amount of money
injected into the political election process in the form of "soft
dollar" contributions from private sector contributors ("Soft dollar"
contributions are those financial contributions given by individuals or
institutions to national and state political parties for "party
building" purposes).
The significant increase in the amount of money injected into the
political election system in the form of "soft dollar" contributions
from private sector contributions has contributed to increasing public
cynicism towards an electoral process in which a declining percentage
of citizens are participating.
The direct contribution of corporate assets, held in the collective
interests of all corporate shareholders, into the political election
process without written contribution guidelines or contribution
reporting to shareholders is inappropriate.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS RESOLUTION FOR THE
FOLLOWING REASONS:
P&G does not have an on-going program of soft dollar contributions.
In the past, infrequent, very small contributions have been made, to both
parties, in support of special events at the request of politicians who
represent areas where the Company's businesses are located. The Company
has no plans to make corporate contributions to any of the national
political party committees during this next election cycle.
Because P&G does not have an on-going program of soft-dollar
contributions, this proposal would not result in any meaningful change.
Therefore, the Board recommends a vote AGAINST this proposal.
The affirmative vote of a majority of shares participating in the voting
on this proposal is required for adoption of this resolution. Proxies will
be voted AGAINST the resolution unless the Proxy Committee is instructed
otherwise on a proxy returned to such Committee. Abstentions indicated on
such a proxy card will not be counted as either "for" or "against" this
proposal. "Broker non-votes" specified on proxies returned by brokers
holding shares for beneficial owners who have not provided instructions as
to voting on this issue will be treated as not present for voting on this
issue.
SHAREHOLDER PROPOSAL NO. 3
Sisters of the Holy Names of Washington, 2911 W. Fort Wright Drive,
Spokane, Washington 99224, owning 800 shares of Common Stock of the
Company, in conjunction with six co-sponsoring religious organizations (the
names of which organization, with shares of Common Stock of the Company
beneficially held, will be furnished promptly to any person upon request in
writing to Ms. Linda D. Rohrer, Assistant Secretary, The Procter & Gamble
Company, P.O. Box 599, Cincinnati, Ohio 45201 or by telephone at 513-983-
8697), have given notice that they intend to present for action at the
annual meeting the following resolution:
WHEREAS: our company seeks to be an environmentally responsible
business, yet makes products using chlorine-bleached paper (whose
production creates dioxin and other persistent toxins proven to harm
human and environmental health in even minute amounts):
Distinguished world bodies publicly recognize the inherent dangers
posed by chlorine-based bleaching of pulp and paper. These include the
World Bank, American Public Health Association, International Joint
Commission on the Great Lakes, and the Intergovernmental Forum on
Chemical Safety (convened by the UN). Such important scientific and
economic findings reflect worldwide financial and scientific support
for phasing-out the industrial use of chlorine-containing compounds;
The International Joint Commission has concluded "that [these]
persistent toxic substances are too dangerous to the biosphere and to
humans to permit their release in any quantity. . . . [T]he primary
means to achieve zero should be the prevention of their production, use
and release rather than their subsequent removal";
These substances pass up the food chain, accumulating in living
organisms. In humans, even minute amounts result in or contribute to
reproductive failure, birth defects, and cancer. The Environmental
Protection Agency (EPA) has found that dioxins are linked to cancer and
numerous other health disorders, including hormone disruption and
dysfunctioning immune systems. In children they cause developmental
impairment, hormonal disruption, and behavioral disorders. Every
person living on earth now has measurable organochlorine contamination;
Using chlorine dioxide to bleach paper does not eliminate dioxins or
other chlorinated pollutants, it only creates lower levels of
organochlorine contamination;
Estimates are that seventy percent of paper mills will make major
investments in upgrade construction over the next decade. The demand
of larger users like P&G for totally chlorine-free (TCF) paper is
critical to determining industry's direction, which will affect public
health for decades to come;
There is momentum around the world to product high-quality, cost-
effective paper products without dangerous poisons. In Europe, market
share for TCF market pulp has grown from 0-25% since 1991. In the US,
Inside EPA reports the agency is considering "an order instructing
federal agencies to purchase only chlorine-free paper," and several
states are developing TCF legislation. Our company can lead in
capturing market share by moving toward TCF products;
RESOLVED: the shareholders request our company to report on steps
which it will take to use chlorine-free pulp and paper, and its plans
for a long-term phase-out of chlorinated compounds in all its products.
The report will be completed within six months of the 1997 annual
meeting.
The Sisters of the Holy Names of Washington have submitted the following
statement in support of their resolution:
Our company's environmental efforts are commendable, but good
science indicates that NO safe or "acceptable" level of exposure to
many organochlorine chemicals exists. P&G's use of chlorinated
bleached paper perpetuates the release of unnecessary toxins.
Our company is an environmental innovator. We should use the
technology that completely eliminates organochlorines from our
production and products, protects our customers, captures an emerging
market, and improves all life on the planet.
VOTE YES FOR THIS COMMON-SENSE PROPOSAL WHICH WILL IMPROVE OUR
CHILDREN'S HEALTH, OUR PRODUCTS' DESIRABILITY, AND OUR COMPANY'S
REPUTATION AND PROFITABILITY.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS RESOLUTION FOR THE
FOLLOWING REASONS:
P&G is a world leader in developing scientific understanding to ensure
our products are safe for consumers and the environment. As part of this
commitment, P&G has extensively studied the use of chlorine in the
manufacture of paper products, relying on both internal research and
outside experts.
Based on these studies, we now use pulp from "Elemental Chlorine Free"
(ECF) technology in paper production. This bleaching process delivers the
high-quality pulp required to produce superior-performing products while
virtually eliminating concerns over waste water by-products.
The U.S. Environmental Protection Agency, in its recent draft of new
regulations, has recognized "Elemental Chlorine Free" technology as a
standard for the pulp and paper industry. Further, we consider ECF and the
"Totally Chlorine Free" process advocated by the proposers to be
scientifically indistinguishable in improving the environmental performance
of pulp production. Several expert scientific panels have supported this
view.
Accordingly, we do not believe the report requested in this proposal
would add meaningful scientific understanding or environmental benefit.
Nonetheless, we remain committed to on-going research with suppliers,
industry associations such as the American Forest & Paper Association and
the National Council for Air and Stream Improvement, and outside scientists
to understand and develop new approaches to further improve the
environmental quality of our products and manufacturing processes.
The Board of Directors therefore recommends a vote AGAINST the proposal.
The affirmative vote of a majority of shares participating in the voting
on this proposal is required for adoption of this resolution. Proxies will
be voted AGAINST the resolution unless the Proxy Committee is instructed
otherwise on a proxy returned to such Committee. Abstentions indicated on
such a proxy card will not be counted as either "for" or "against" this
proposal. "Broker non-votes" specified on proxies returned by brokers
holding shares for beneficial owners who have not provided instructions as
to voting on this issue will be treated as not present for voting on this
issue.
1998 ANNUAL MEETING DATE
It is anticipated that the 1997 annual meeting of shareholders will be
held on Tuesday, October 13, 1998. Pursuant to regulations issued by the
Securities and Exchange Commission, to be considered for inclusion in the
Company's proxy statement for presentation at that meeting, all shareholder
proposals must be received by the Company on or before the close of
business on Friday, May 1, 1998.
OTHER MATTERS
No action will be taken with regard to the minutes of the annual meeting
of shareholders held October 8, 1996 unless they have been incorrectly
recorded.
The Board of Directors knows of no other matters which will come before
the meeting. However, if any matters other than those set forth in the
notice should be properly presented for action, the persons named in the
proxy intend to take such action as will be in harmony with the policies of
the Company and, in that connection, will use their discretion.
EXHIBIT A<F*>
APPENDIX A
SERIES A ESOP CONVERTIBLE CLASS A PREFERRED STOCK
(HEREINAFTER REFERRED TO AS SERIES A PREFERRED STOCK)
2. DIVIDENDS AND DISTRIBUTIOINS.
(A) Subject to the provisions for adjustment hereinafter set forth, the
holders of shares of Series A Preferred Stock shall be entitled to receive,
when and as declared by the Board of Directors out of funds legally
available therefor, cash dividends ("Preferred Dividends") in an amount per
share initially equal to $8.12 per share per annum, subject to adjustment
from time to time as hereinafter provided, [[and no more]] (such amount, as
adjusted from time to time, being hereinafter referred to as the "Preferred
Dividend Rate"), payable quarterly, one-fourth on the third day of March,
one-fourth on the third day of June, one-fourth on the third day of
September, and one-fourth on the third day of December of each year (each a
"Dividend Payment Date") commencing on June 3, 1989, to holders of record
at the start of business on such Dividend Payment Date++,provided that if
the Board of Directors has declared since the prior Dividend Payment Date a
quarterly dividend on the Common Stock at a rate that exceeds one-fourth of
the Preferred Dividend Rate in effect on such day, the holders of record on
the start of business on the payment date for such dividend on the Common
Stock shall be entitled to receive a cash dividend in an amount per share
equal to the quarterly dividend declared on a share of Common Stock,
payable on the same date as such dividend on the Common Stock, and provided
further than the Dividend Payment Date for the Series A Preferred Stock
shall thereafter be the same date as the payment date for the dividend on
the Common Stock or if no dividend is declared on the Common Stock in any
quarter, the Dividend Payment Date shall be, as appropriate, the fifteenth
day of February, May, August or November or if such days are not a day in
which the New York Stock Exchange is open for business, then the next
preceding day when the New York Stock Exchange is open for business.++
Preferred Dividends shall begin to accrue on outstanding shares of Series A
Preferred Stock from the date of issuance of such shares of Series A
Preferred Stock. Preferred Dividends shall accrue on a daily basis, based
on the Preferred Dividend Rate in effect on such day, whether or not the
Company shall have earnings or surplus at the time, but Preferred Dividends
accrued after March 3, 1989 on the shares of Series A Preferred Stock for
any period less than a full quarterly period between Dividend Payment Dates
shall be computed on the basis of a 360-day year of 30-day months. A full
quarterly dividend payment of $2.03 per share shall accrue for the period
from the date of issuance until June 3, 1989. Accumulated but unpaid
Preferred Dividends shall cumulate as of the Dividend Payment Date on which
they first become payable, but no interest shall accrue on accumulated but
unpaid Preferred Dividends.
<F*> Language to be added is indicated by underlining. Language to be deleted
is lined out.
[Note: For Edgar purposes, language to be added is enclosed in "++";
language to be deleted is enclosed in "[[" "]]". The printed
version of the proxy statement that will be mailed to share-
holders will include underlining the new language and crossing
out the deleted language.]
EXHIBIT B<F*>
APPENDIX B
SERIES B ESOP CONVERTIBLE CLASS A PREFERRED STOCK
(HEREINAFTER REFERRED TO AS SERIES B PREFERRED STOCK)
2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the provisions for adjustment hereinafter set forth, the
holders of shares of Series B Preferred Stock shall be entitled to receive,
when and as declared by the Board of Directors out of funds legally
available therefor, cash dividends ("Series B Preferred Dividends") in an
amount per share initially equal to $4.12 per share per annum, subject to
adjustment from time to time as hereinafter provided, [[and no more]] (such
amount, as adjusted from time to time, being hereinafter referred to as the
"Series B Preferred Dividend Rate"), payable quarterly, one-fourth on the
twenty-seventh day of November, one-fourth on the twenty-seventh day of
February, one-fourth on the twenty-seventh day of May, and one-fourth on
the twenty-seventh day of August of each year (each a "Series B Dividend
Payment Date") commencing on August 27, 1993, to holders of record at the
close of business on the second Friday of the relevant Series B Dividend
Payment Date month++, provided that if the Board of Directors has declared
since the prior Dividend Payment Date a quarterly dividend on the Common
Stock at a rate that exceeds one-fourth of the Preferred Dividend Rate in
effect on such day, the holders of record on the start of business on the
payment date for such dividend on the Common Stock shall be entitled to
receive a cash dividend in an amount per share equal to the quarterly
dividend declared on a share of Common Stock, payable on the same date as
such dividend on the Common Stock, and provided further that the Dividend
Payment Date for the Series B Preferred Stock shall thereafter be the same
date as the payment date for the dividend on the Common Stock or if no
dividend is declared on the Common Stock in any quarter, the Dividend
Payment Date shall be, as appropriate, the fifteenth day of February, May,
August or November or if such days are not a day in which the New York
Stock Exchange is open for business, then the next preceding day when the
New York Stock Exchange is open for business.++ Series B Preferred
Dividends shall begin to accrue on outstanding shares of Series B Preferred
Stock from the date of issuance of such shares of Series B Preferred Stock.
Series B Preferred Dividends shall accrue on a daily basis, based on the
Series B Preferred Dividend Rate in effect on such day, whether or not the
Company shall have earnings or surplus at the time, but Series B Preferred
Dividends accrued after June 30, 1993 on the shares of Series B Preferred
Stock for any period less than a full quarterly period between Series B
Dividend Payment Dates shall be computed on the basis of a 360-day year of
30-day months. A partial dividend payment of $.64935 per share shall
accrue for the period from the date of issuance until August 27, 1993.
Accumulated but unpaid Series B Preferred Dividends shall cumulate as of
the Series B Dividend Payment Date on which they first become payable, but
no interest shall accrue on accumulated but unpaid Series B Preferred
Dividends.
<F*>Language to be added is indicated by underlining. Language to be deleted
is lined out.
[Note: For Edgar purposes, language to be added is enclosed in "++";
language to be deleted is enclosed in "[[" "]]". The printed
version of the proxy statement that will be mailed to share-
holders will include underlining the new language and crossing
out the deleted language.]
THE PROCTER & GAMBLE COMPANY
P&G
SHAREHOLDER'S PROXY AND CONFIDENTIAL VOTING INSTRUCTION CARD
ANNUAL MEETING OF SHAREHOLDERS-TUESDAY, OCTOBER 14, 1997
The undersigned hereby appoints John E. Pepper, Durk I. Jager and
Harald Einsmann, and each of them (with respect to any shares of Common
Stock held by the undersigned directly or via the Company's Shareholder
Investment Program) as proxies to attend the annual meeting of shareholders
of the Company to be held on Tuesday, October 14, 1997 at 12 o'clock noon
in Cincinnati, Ohio and any adjournment thereof and vote all shares held by
or for the benefit of the undersigned as indicated on the reverse side of
this card: for the election of Directors; upon the Board of Directors and
shareholder proposals listed; and, finally, upon such other matters as may
properly come before the meeting.
This proxy also provides voting instructions for shares held by the
Trustees of the Retirement Trust and the Employee Stock Ownership Trust of
The Procter & Gamble Profit Sharing Trust and Employee Stock Ownership Plan
(as applicable, with respect to shares of Common Stock and Series A and B
ESOP Convertible Class A Preferred Stock held for the benefit of the
undersigned) and/or the Trustees of The Procter & Gamble/Noxell
Transitional Plan and directs such Trustees to vote as indicated on the
reverse side of this card: for the election of Directors; upon the Board
of Directors and shareholder proposals listed; and, finally, upon such
other matters as may properly come before the meeting. The Trustees of
each Trust will vote shares of the Company's Stock held by them for which
instructions are not received in direct proportion to the voting of shares
for which instructions have been received, provided that such voting is not
contrary to the Employee Retirement Income Security Act of 1974, as
amended. The Trustees will vote unallocated shares in direct proportion to
voting by allocated shares of the same Class in aggregate, for which
instructions have been received.
THIS PROXY/VOTING INSTRUCTION CARD IS SOLICITED JOINTLY BY THE BOARD
OF DIRECTORS OF THE PROCTER & GAMBLE COMPANY AND THE TRUSTEES OF THE PLAN
TRUSTS LISTED ABOVE PURSUANT TO A SEPARATE NOTICE OF ANNUAL MEETING AND
PROXY STATEMENT, RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED. THIS CARD SHOULD
BE MAILED IN THE ENCLOSED ENVELOPE IN TIME TO REACH THE COMPANY'S PROXY
TABULATOR, BANKBOSTON, P.O. BOX 9375, BOSTON, MA 02205-9375 BY 9:00 A.M. ON
TUESDAY, OCTOBER 14, 1997 FOR COMMON SHARES TO BE VOTED AND 5:00 P.M. ON
MONDAY, OCTOBER 13, 1997 FOR THE TRUSTEES TO VOTE THE PLAN SHARES.
BANKBOSTON WILL REPORT SEPARATELY TO THE PROXY COMMITTEE AND TO THE
TRUSTEES AS TO PROXIES RECEIVED AND VOTING INSTRUCTIONS PROVIDED,
RESPECTIVELY. INDIVIDUAL PROXY VOTING AND VOTING INSTRUCTIONS WILL BE KEPT
CONFIDENTIAL BY BANKBOSTON AND NOT PROVIDED TO THE COMPANY.
(Continued from other side)
PLEASE MARK
X VOTES AS IN
THIS EXAMPLE
The Board of Directors recommends a vote FOR the following actions or
proposals (as described in the accompanying Proxy Statement). If you sign
and return this card without marking, this proxy card will be treated as
being FOR each proposal.
A. ELECTION OF DIRECTORS (terms expiring in 2000) Nominees: Edwin L.
Artzt, Norman R. Augustine, Richard J. Ferris, John C. Sawhill,
John F. Smith, Jr., Marina v.N. Whitman
FOR WITHHELD
___ ____
EXCEPTIONS:
_______________________________________
For all nominees except as noted above
B. Ratify Appointment of Independent Auditors
FOR AGAINST ABSTAIN
___ ___ ___
C. Amend Articles of Incorporation to increase Common Stock
FOR AGAINST ABSTAIN
___ ___ ___
D. Amend Articles of Incorporation to revise terms of Preferred Stock
FOR AGAINST ABSTAIN
___ ___ ___
The Board of Directors recommends a vote AGAINST the following shareholder
proposal (as described in the accompanying Proxy Statement), if presented
at the annual meeting. If you sign and return this card without marking,
this proxy card will be treated as being AGAINST such proposal.
1. Board of Directors terms
FOR AGAINST ABSTAIN
___ ___ ___
2. Report on "soft dollar" political contributions.
FOR AGAINST ABSTAIN
___ ___ ___
3. Report on use of chlorine.
FOR AGAINST ABSTAIN
___ ___ ___
NOTE: Please sign exactly as name(s) appear hereon.
When signing as attorney, executor, administrator,
trustee, or guardian, please give full name as such.
Signature _____________Date______ 1997 Signature___________Date______ 1997
PLEASE SIGN THIS PROXY AS NAME(S) APPEAR ABOVE.
