<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
OWENS-ILLINOIS, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
- - --------------------------------------------------------------------------------
[LOGO]
OWENS-ILLINOIS, INC.
NOTICE AND PROXY STATEMENT
FOR
THE ANNUAL MEETING OF SHARE OWNERS
TO BE HELD
WEDNESDAY, MAY 13, 1998
YOUR VOTE IS IMPORTANT
PLEASE MARK, DATE AND SIGN THE ENCLOSED PROXY CARD AND PROMPTLY RETURN IT IN
THE ENCLOSED ENVELOPE.
<PAGE>
OWENS-ILLINOIS, INC.
ONE SEAGATE
TOLEDO, OHIO 43666
-------------------
NOTICE OF ANNUAL MEETING OF SHARE OWNERS
-------------------
Dear Share Owner:
You are cordially invited to attend the Annual Meeting of Owens-Illinois'
share owners which will be held on Wednesday, May 13, 1998, at 2:00 p.m. in the
auditorium of the Owens-Illinois World Headquarters Building, One SeaGate,
Toledo, Ohio for the purpose of considering and voting upon the following
matters:
1. The election of four directors for a term of three years.
2. Such other business as may properly be presented for action at the
meeting or any adjournment thereof.
Enclosed is a Proxy Statement which provides information concerning the
Company and the Board of Directors' nominees for election as directors. Also
enclosed is a copy of the Company's Annual Report which describes the results of
our operations during 1997 and provides other information about the Company
which will be of interest.
The Board of Directors fixed the close of business on March 16, 1998, as the
record date for the determination of share owners owning the Company's Common
Stock, par value $.01 per share, entitled to notice of and to vote at the Annual
Meeting.
Enclosed is a proxy card which provides you with a convenient means of
voting on the matters to be considered at the meeting whether or not you attend
the meeting in person. All you need do is mark the proxy card to indicate your
vote, sign and date the card, then return it in the enclosed envelope as soon as
conveniently possible. If the shares are held in more than one name, all holders
of record should sign. If you desire to vote for all of the Board of Directors'
nominees, you need not mark your votes on the proxy card but need only sign and
date it and return it in the enclosed envelope.
Management sincerely appreciates your support. We hope to see you at the
Annual Meeting.
By order of the Board of Directors,
Joseph H. Lemieux
Chairman of the Board
Thomas L. Young
Secretary
March 31, 1998
Toledo, Ohio
<PAGE>
OWENS-ILLINOIS, INC.
ONE SEAGATE
TOLEDO, OHIO 43666
-------------------
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHARE OWNERS
TO BE HELD MAY 13, 1998
------------------------
The Annual Meeting of the share owners of Owens-Illinois, Inc. (herein
called the "Company") will be held on Wednesday, May 13, 1998, at 2:00 p.m. in
the auditorium of the Owens-Illinois World Headquarters Building, One SeaGate,
Toledo, Ohio. At the Annual Meeting, share owners will elect four directors for
a term of three years, as more fully described below.
This Proxy Statement has been prepared in connection with the solicitation
by the Company's Board of Directors of proxies for the Annual Meeting and
provides information concerning the persons nominated by the Board of Directors
for election as directors, and other information relevant to the Annual Meeting.
The Company intends to commence distribution of this Proxy Statement and the
materials which accompany it on or about March 31, 1998.
The record of share owners entitled to notice of and to vote at the Annual
Meeting was taken as of the close of business on March 16, 1998 (the "record
date"), and each share owner will be entitled to vote at the meeting any shares
of the Company's Common Stock, par value $.01 per share ("Common Stock"), held
of record at the record date.
Each share owner of record is requested to complete, date and sign the
accompanying proxy card and return it promptly in the enclosed envelope. The
proxy card lists each person nominated by the Board of Directors for election as
director. Proxies duly executed and received in time for the meeting will be
voted in accordance with share owners' instructions. If no instructions are
given, proxies will be voted (a) to elect James H. Greene, Jr., George R.
Roberts, Robert J. Dineen and Thomas L. Young as directors of the Company for a
term of three years, and (b) in the discretion of the proxy holders as to any
other business which may properly come before the meeting.
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation provides for a
classified Board of Directors consisting of three classes as nearly equal in
size as practicable. Each class holds office until the third Annual Meeting for
selection of directors following the election of such class. The Board of
Directors of the Company (the "Board") currently consists of eleven members,
four of whom are Class I directors whose terms expire at this year's Annual
Meeting, three of whom are Class II directors whose terms expire at the 1999
Annual Meeting, and four of whom are Class III directors whose terms expire at
the 2000 Annual Meeting. Ten of the eleven directors listed herein, including
three of the four nominees, have served as directors since the last Annual
Meeting. Lee A. Wesselman, a director since 1988, will retire from the Board at
the Annual Meeting.
The Board has nominated four persons for election as Class I directors to
serve for a three-year term expiring at the Annual Meeting of share owners to be
held in 2001 and until their successors have been
1
<PAGE>
elected and qualified. The four nominees of the Board are James H. Greene, Jr.,
George R. Roberts and Robert J. Dineen, each of whom is currently serving as a
director of the Company, and Thomas L. Young. If for any reason any of them
should be unavailable to serve, proxies solicited hereby may be voted for a
substitute as well as for the other nominees. The Board, however, expects all
nominees to be available.
The nominees and the directors whose terms of office continue after this
year's Annual Meeting are listed below with brief statements setting forth their
present principal occupations and other information, including directorships in
other public companies.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT THE SHARE OWNERS
VOTE FOR THE FOUR NOMINEES IDENTIFIED BELOW.
CLASS I: NOMINEES FOR 3-YEAR TERM
<TABLE>
<S> <C>
James H. Greene, Jr. Director since
Member of KKR & Co. L.L.C., 1987
the general partner of Age 47
Kohlberg Kravis Roberts & Co., L.P.
</TABLE>
Mr. Greene was a general partner of Kohlberg Kravis Roberts & Co., L.P. from
January 1, 1993 until January 1, 1996, when he became a member of the limited
liability company which is the general partner of Kohlberg Kravis Roberts & Co.,
L.P. Mr. Greene has been a general partner of KKR Associates, L.P. since January
1, 1993, and prior thereto was a limited partner of KKR Associates, L.P. and an
executive of Kohlberg Kravis Roberts & Co., L.P. Mr. Greene is a director of
Accuride Corporation, Bruno's Inc., Randall's Food Markets, Inc., RELTEC
Corporation, Safeway Inc. and Union Texas Petroleum Holdings, Inc. He is a
member of the Compensation Committee.
<TABLE>
<S> <C>
George R. Roberts Director since
Managing Member of KKR & Co. L.L.C., 1987
the general partner of Age 54
Kohlberg Kravis Roberts & Co., L.P.
</TABLE>
Mr. Roberts is a Founding Partner of Kohlberg Kravis Roberts & Co., L.P. and,
effective January 1, 1996, he became a managing member of the limited liability
company which is the general partner of Kohlberg Kravis Roberts & Co., L.P. Mr.
Roberts also is a general partner of KKR Associates, L.P. Mr. Roberts is a
director of Accuride Corporation, Amphenol Corporation, Borden, Inc., Bruno's,
Inc., Evenflo & Spalding Holdings Corporation, IDEX Corporation, KinderCare
Learning Center, Inc., KSL Recreation Group, Inc., PRIMEDIA, Inc., Randall's
Food Markets, Inc., Safeway Inc., Union Texas Petroleum Holdings, Inc. and World
Color Press, Inc. He is a member of the Executive Committee.
2
<PAGE>
<TABLE>
<S> <C>
Robert J. Dineen Director since
Chairman of the Board of Directors 1994
Layne Christensen Company Age 68
</TABLE>
Mr. Dineen has been Chairman of the Board of Directors of Layne Christensen
Company since 1992. Prior to 1993, Mr. Dineen was President and Chief Executive
Officer of The Marley Company for more than five years. Mr. Dineen is a director
of Layne Christensen Company and Kansas City Power & Light Company. He is a
member of the Audit Committee.
<TABLE>
<S> <C>
Thomas L. Young Nominee
Executive Vice President Age 54
Owens-Illinois, Inc.
</TABLE>
Mr. Young has been Executive Vice President, Administration, General Counsel and
Secretary since 1993. He previously served the Company as Vice President,
General Counsel, General Manager--Operations Administration and Secretary
(1992-1993). Mr. Young is a director of Health Care and Retirement Corporation.
CLASS II: TERM EXPIRES IN 1999
<TABLE>
<S> <C>
Edward A. Gilhuly Director since
Member of KKR & Co. L.L.C., 1987
the general partner of Age 38
Kohlberg Kravis Roberts & Co., L.P.
</TABLE>
Mr. Gilhuly was a general partner of Kohlberg Kravis Roberts & Co., L.P. from
January 1, 1995 until January 1, 1996, when he became a member of the limited
liability company which is the general partner of Kohlberg Kravis Roberts & Co.,
L.P. Mr. Gilhuly has been a general partner of KKR Associates, L.P. since
January 1, 1995, and prior thereto was a limited partner of KKR Associates, L.P.
and an executive of Kohlberg Kravis Roberts & Co., L.P. Mr. Gilhuly is a
director of Layne Christensen Company and Union Texas Petroleum Holdings, Inc.
He is Chairman of the Audit Committee and a member of the Executive and
Compensation Committees.
<TABLE>
<S> <C>
Robert J. Lanigan Director since
Chairman Emeritus 1987
Age 70
</TABLE>
Mr. Lanigan was the Chairman of the Board of Directors of the Company from 1984
to 1991 and the Chief Executive Officer of the Company from 1984 to 1990. Mr.
Lanigan is a director of Chrysler Corporation, Cognizant Corporation, The Dun
and Bradstreet Corporation, Sonat, Inc. and Transocean Offshore Drilling, Inc..
<TABLE>
<S> <C>
Robert I. MacDonnell Director since
Member of KKR & Co. L.L.C., 1987
the general partner of Age 60
Kohlberg Kravis Roberts & Co., L.P.
</TABLE>
Mr. MacDonnell has been a member of the limited liability company which is the
general partner of Kohlberg Kravis Roberts & Co., L.P. since January 1, 1996.
Prior thereto, he was a general partner of Kohlberg Kravis Roberts & Co., L.P.
Mr. MacDonnell also is a general partner of KKR Associates, L.P. Mr. MacDonnell
is a director of Safeway Inc.
3
<PAGE>
<TABLE>
<S> <C>
John J. McMackin, Jr. Director since
Member 1994
Williams & Jensen, P.C. Age 46
</TABLE>
Mr. McMackin has been a member of Williams & Jensen for more than five years. He
is a member of the Audit Committee.
CLASS III: TERM EXPIRES IN 2000
<TABLE>
<S> <C>
Joseph H. Lemieux Director since
Chairman of the Board and 1987
Chief Executive Officer Age 67
Owens-Illinois, Inc.
</TABLE>
Mr. Lemieux has been Chairman of the Board of the Company since 1991 and Chief
Executive Officer of the Company since 1990. Mr. Lemieux was President and Chief
Operating Officer of the Company and its predecessor from 1986 to 1990. Mr.
Lemieux is a director of Health Care and Retirement Corporation, National City
Corporation and National City Bank, Northwest. He is chairman of the Executive
Committee.
<TABLE>
<S> <C>
Henry R. Kravis Director since
Managing Member of KKR & Co. L.L.C., 1987
the general partner of Age 54
Kohlberg Kravis Roberts & Co., L.P.
</TABLE>
Mr. Kravis is a Founding Partner of Kohlberg Kravis Roberts & Co., L.P. and,
effective January 1, 1996, he became a managing member of the limited liability
company which is the general partner of Kohlberg Kravis Roberts & Co., L.P. Mr.
Kravis also is a general partner of KKR Associates, L.P. Mr. Kravis is a
director of Accuride Corporation, Amphenol Corporation, Borden, Inc., Bruno's,
Inc., Evenflo & Spalding Holdings Corporation, The Gillette Company, IDEX
Corporation, KinderCare Learning Centers, Inc., KSL Recreation Group, Inc.,
Newsquest Capital plc, PRIMEDIA, Inc., Randall's Food Markets, Inc., Safeway
Inc., Sotheby's Holdings, Inc., Union Texas Petroleum Holdings, Inc. and World
Color Press, Inc.
Messers. Kravis and Roberts are first cousins.
<TABLE>
<S> <C>
Michael W. Michelson Director since
Member of KKR & Co. L.L.C., 1987
the general partner of Age 46
Kohlberg Kravis Roberts & Co., L.P.
</TABLE>
Mr. Michelson has been a member of the limited liability company which is the
general partner of Kohlberg Kravis Roberts & Co., L.P. since January 1, 1996.
Prior thereto, he was a general partner of Kohlberg Kravis Roberts & Co., L.P.
Mr. Michelson also is a general partner of KKR Associates, L.P. Mr. Michelson is
a director of Amphenol Corporation, AutoZone, Inc., Promus Corporation and Union
Texas Petroleum Holdings, Inc. He is chairman of the Compensation Committee and
a member of the Executive Committee.
4
<PAGE>
FUNCTIONS OF THE BOARD AND ITS COMMITTEES
The Board has the ultimate authority for the management of the Company's
business. The Board selects the Company's executive officers, delegates
responsibilities for the conduct of the Company's operations to those officers,
and monitors their performance.
Important functions of the Board are performed by committees comprised of
members of the Board. Subject to applicable provisions of the Company's By-Laws,
the Board as a whole appoints the members of each committee each year at its
first meeting following the Annual Meeting. The Board may, at any time, change
the authority or responsibility delegated to any committee. There are three
regularly constituted committees of the Board: the Executive Committee, the
Audit Committee and the Compensation Committee. The Company does not have a
nominating committee or any regularly constituted committee performing the
functions of such a committee.
The Executive Committee is empowered to exercise the authority of the Board
in the management of the Company between meetings of the Board, except that the
Executive Committee may not fill vacancies on the Board, appoint or remove
officers, amend the Company's By-Laws or exercise certain other powers reserved
to the Board or delegated to other Board committees.
The Audit Committee recommends to the Board the firm of independent auditors
to audit the Company's financial statements for each fiscal year; reviews with
the independent auditors the general scope of this service; reviews the nature
and extent of the non-audit services performed by the independent auditors; and
consults with management on the activities of the Company's independent auditors
and the Company's internal control structure.
The Compensation Committee administers the Amended and Restated Stock Option
Plan, the 1997 Equity Participation Plan and certain other benefit plans of the
Company and makes recommendations to the Board with respect to the compensation
to be paid and benefits to be provided to directors, officers and employees of
the Company.
During 1997, the Board held three formal meetings, the Executive Committee
held two formal meetings and the Audit Committee held two formal meetings. The
Compensation Committee held no meetings in 1997. During 1997, each member of the
Board attended 75% or more of the aggregate number of meetings of the Board and
of committees of the Board of which he was a member, except James H. Greene,
Jr., Henry R. Kravis, Robert J. Lanigan and Robert I. MacDonnell. In addition to
the formal meetings indicated above, the Board and the committees of the Board
consulted frequently and often acted by written consent taken without a meeting.
5
<PAGE>
DIRECTOR AND EXECUTIVE COMPENSATION AND OTHER INFORMATION
DIRECTOR COMPENSATION
Directors of the Company who are not Company officers are paid a fee of
$35,000 annually plus expenses associated with meetings of the Company's Board.
SUMMARY COMPENSATION TABLE
The following table shows, for the years ended December 31, 1995, 1996 and
1997, the cash compensation paid by the Company and its subsidiaries, as well as
certain other compensation paid or accrued for those years, to the Company's
Chief Executive Officer and the four most highly compensated executive officers
of the Company (the "named executive officers") in all capacities in which they
served.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------
ANNUAL COMPENSATION AWARDS
-------------------------------- -------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS
PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($)(3) ($) (#)(4)
- - --------------------------------------------- ---- -------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Joseph H. Lemieux............................ 1997 $578,333 $537,500 $113,066(7) $593,208(8) 200,000
Chairman and Chief Executive Officer 1996 558,333 750,000 105,588 0 20,000
1995 540,000 620,000 126,105 0 20,000
Lee A. Wesselmann............................ 1997 264,000 255,000 19,807 0 0
Senior V.P. & Chief Financial Officer 1996 254,000 235,000 21,291 0 12,000
1995 244,000 190,000 21,048 0 12,000
Terry L. Wilkison(9)......................... 1997 248,333 240,000 42,090 0 0
Executive V.P. 1996 240,000 220,000 24,957 0 15,000
1995 230,000 190,000 15,396 0 15,000
R. Scott Trumbull............................ 1997 247,833 240,000 18,610 0 75,000
Executive V.P., International Operations 1996 237,000 220,000 24,278 0 15,000
1995 225,000 200,000 28,682 0 15,000
Thomas L. Young.............................. 1997 236,167 240,000 21,876 0 101,567(10)
Exec. V.P.-Administration, Secretary & Gen. 1996 217,000 220,000 16,584 0 15,000
Counsel 1995 205,000 190,000 16,966 0 15,000
<CAPTION>
PAYOUTS
---------
LONG-TERM
INCENTIVE ALL OTHER
NAME AND PAYOUTS COMPENSATION
PRINCIPAL POSITION ($)(5) ($)(6)
- - --------------------------------------------- --------- ------------
<S> <C> <C>
Joseph H. Lemieux............................ $231,840 $ 23,133
Chairman and Chief Executive Officer 453,600 10,000
417,555 8,500
Lee A. Wesselmann............................ 141,257 10,560
Senior V.P. & Chief Financial Officer 138,186 9,500
125,782 8,093
Terry L. Wilkison(9)......................... 106,514 9,933
Executive V.P. 104,198 9,500
94,852 7,700
R. Scott Trumbull............................ 104,218 9,913
Executive V.P., International Operations 101,952 9,000
92,790 7,500
Thomas L. Young.............................. 94,944 9,447
Exec. V.P.-Administration, Secretary & Gen. 92,880 6,000
Counsel 84,542 4,500
</TABLE>
- - ------------------------------
(1) Includes amounts deferred at the election of the named executive officer
pursuant to the salary reduction provisions of the Stock Purchase and
Savings Program.
(2) The amounts disclosed in this column represent awards under the
Owens-Illinois, Inc. Senior Management Incentive Plan for the year
indicated. Amounts, if any, deferred at the election of an executive officer
are included in the year earned.
(3) The amounts disclosed in this column represent amounts reimbursed during
the year for the payment of taxes.
(4) No SAR's were granted to any of the named executive officers during 1997.
(5) The amounts disclosed in this column represent awards under the
Owens-Illinois, Inc. Performance Award Plan for the year indicated. Amounts,
if any, deferred at the election of an executive officer are included in the
year earned.
(6) The amounts disclosed in this column for 1997 represent matching cash
contributions by the Company to the Stock Purchase and Savings Program
("SPASP") and the Executive Savings Plan, both defined contribution plans.
The SPASP is a tax-qualified defined contribution plan intended to satisfy
the requirements of Section 401(k) of the Internal Revenue Code of 1986. The
Company contributes to each participant's account maintained under the SPASP
an amount of Company stock equal to 50% of the participant's contributions
to the SPASP but not more than 4% of (a) the participant's earnings or (b)
$160,000 for 1997, whichever is lower.
The Executive Savings Plan provides a benefit to any eligible individual for
whom the 4% matching contribution would otherwise be in excess of the
maximum permitted under the SPASP. The difference between the theoretical
Company matching contribution under the SPASP for each participant, without
regard to the legally imposed maximum, and the maximum contribution
permitted under law is used to determine the number of theoretical shares of
Company Common Stock which would have been purchased for the participant's
account in the absence of the IRS limitation on participant's earnings of
$160,000 for 1997. Such amount, including interest, is paid in cash to the
individual at termination of employment.
(7) The amount shown reflects $56,380 reimbursed to Mr. Lemieux in 1997 for the
payment of taxes. The amount shown also reflects the value of certain
perquisites provided by the Company to Mr. Lemieux totalling $56,686, of
which $29,037 is attributable to his personal use of Company aircraft.
(8) Represents aggregate value of restricted stock received in lieu of cash
payments in the amounts of $262,500 and $231,840 pursuant to elections under
the Company's Senior Management Incentive Plan and Performance Award Plan,
respectively. See "Board Compensation Committee Report on Executive
Compensation--Annual Incentive" and "--Long-Term Incentives" below.
(9) Mr. Wilkison retired as Executive Vice President of the Company as of the
end of 1997.
(10) Represents 75,000 options awarded in 1997 under the 1997 Equity
Participation Plan and 26,567 Addition Options (reload options) issued in
1997. See "Option/SAR Grants in Last Fiscal Year" below.
6
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR(1)
The following table provides information on option grants in 1997 to the
named executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- - ---------------------------------------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES
SECURITIES % OF TOTAL OF STOCK PRICE
UNDERLYING OPTIONS/SARS APPRECIATION FOR
OPTIONS/SARS GRANTED TO EXERCISE OR OPTION TERM(4)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5% 10%
- - -------------------------------------- ------------- ------------- ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph H. Lemieux..................... 200,000(2) 16.8% $ 31.6250 07/18/07 $ 3,977,759 $ 10,080,421
Lee A. Wesselmann..................... 0 0.0% 31.6250 07/18/07 0 0
Terry L. Wilkison..................... 0 0.0% 31.6250 07/18/07 0 0
R. Scott Trumbull..................... 75,000(2) 6.3% 31.6250 07/18/07 1,491,659 3,780,158
Thomas L. Young....................... 75,000(2) 6.3% 31.6250 07/18/07 1,491,659 3,780,158
17,252(3) 1.5% 36.3125 05/14/02 164,527 361,856
5,572(3) .5% 36.3125 04/02/03 64,426 145,042
3,743(3) .3% 36.3125 06/29/04 54,459 126,639
</TABLE>
- - ------------------------------
(1) No SAR's were granted to any of the named executive officers during 1997.
(2) Exercises of one-half of the options are permitted after each of the fifth
and sixth anniversaries of the dates of the grant; provided, options shall
become exercisable after the first anniversary of the date of the grant
thereof at the time when the average fair market value per share (as
evidenced by the closing price of the underlying stock on the principal
exchange on which it is traded) for any period of 20 consecutive trading
days (commencing after such first anniversary) is at least equal to the
product of the fair market value per share on the date of grant times the
amount shown below under "Stock Price Multiple" as to the percentage of the
shares of stock initially subject to the option shown below under "Exercise
Percentage."
<TABLE>
<CAPTION>
STOCK PRICE RESULTING
MULTIPLE STOCK PRICE EXERCISE PERCENTAGE
<S> <C> <C>
120% $ 37.95 25%
144% 45.54 50%
172% 54.40 75%
206% 65.15 100%
</TABLE>
Under the Second Amended and Restated Stock Option Plan for Key Employees of
Owens-Illinois, Inc., for all options granted between January 1, 1992 and
December 31, 1996, rights to receive Additional Options, as defined in the
Second Amended and Restated Stock Option Plan for Key Employees of
Owens-Illinois, Inc., are attached to each option and Additional Options
will be granted upon exercise, subject to certain conditions, if the
exercise price is paid using shares of Owens-Illinois Common Stock owned by
the optionee or the related tax obligation is paid using shares of
Owens-Illinois Common Stock owned by the optionee or by relinquising
Owens-Illinois Common Stock which the optionee is entitled to receive upon
the exercise of the options. Under the 1997 Equity Participation Plan of
Owens-Illinois, Inc., for all options granted under the plan, rights to
receive Additional Options, as defined in the 1997 Equity Participation Plan
of Owens-Illinois, Inc., are attached to each option and Additional Options
will be granted upon exercise, subject to certain conditions, if the
exercise price is paid using shares of Owens-Illinois Common Stock owned by
the optionee or the related tax obligations is paid using shares of
Owens-Illinois Common Stock owned by the optionee or by relinquishing
Owens-Illinois Common Stock which the optionee is entitled to receive upon
the exercise of the options.
(3) Options are Additional Options issued under the Second Amended and Restated
Stock Option Plan for Key Employees of Owens-Illinois, Inc.
(4) Based on actual option term and annual compounding. The assumed annual rates
of appreciation of 5 and 10 percent would result in the price of the
Company's Common Stock increasing to $51.514 and $82.027, respectively.
7
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
Shown below is information with respect to option exercises in 1997 by named
executive officers and the unexercised options to purchase the Company's Common
Stock granted in 1997 and prior years to the named executive officers and held
by them at December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
ACQUIRED DECEMBER 31, 1997 AT DECEMBER 31, 1997(1)
ON VALUE -------------------------- --------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ----------------------------------- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph H. Lemieux.................. 654,056 $12,951,717 275,000 200,000 $6,945,313 $ 1,262,500
Lee A. Wesselmann.................. 108,637 2,051,067 98,000 0 2,697,875 0
Terry L. Wilkison.................. 208,131 3,909,429 15,000 0 321,563 0
R. Scott Trumbull.................. 188,250 3,106,785 28,750 75,000 671,016 473,438
Thomas L. Young.................... 116,388 2,483,395 64,741 75,000 955,234 473,438
</TABLE>
- - ------------------------------
(1) Based on the closing price of the Company's Common Stock on the New York
Stock Exchange on that date of $37.9375.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
The named executive officers are covered by the Company's Performance Award
Plan ("PAP") under which eligible employees receive annual cash awards payable
at the end of the three-year period covered by the grant of the award. Award
payouts under PAP are based on the average annual attainment of the performance
objectives set by the Compensation Committee of the Board. For the 1997-1999
award period, performance will be evaluated in comparison to the Company's
attained levels of return on assets and earnings per share on an equally
weighted basis relative to objectives for that period. The target amounts shown
below are earned by Company performance at the level of 100% of the established
objectives, with such payment percentage increasing or decreasing four
percentage points for each single percentage point increase or decrease,
respectively, in performance.
<TABLE>
<CAPTION>
PERFORMANCE
OR OTHER
PERIOD ESTIMATED FUTURE PAYOUTS UNDER
UNTIL NON-STOCK PRICE-BASED PLANS
MATURATION ---------------------------------
NAME OR PAYOUT THRESHOLD TARGET MAXIMUM
- - ------------------------------------------------------------------ ----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Joseph H. Lemieux................................................. 1997-1999 $ 90,300 $451,500 (1)
Lee A. Wesselmann................................................. 1997-1999 27,790 138,950 (1)
Terry L. Wilkison................................................. 1997-1999 20,896 104,480 (1)
R. Scott Trumbull................................................. 1997-1999 20,880 104,400 (1)
Thomas L. Young................................................... 1997-1999 20,000 100,000 (1)
</TABLE>
- - ------------------------------
(1) The maximum dollar amount that may be earned under PAP is not capped.
8
<PAGE>
PENSION PLANS
The following table illustrates the estimated annual benefits payable under
the Owens-Illinois Salary Retirement Plan (the "Retirement Plan") and
nonqualified retirement plans in various average earnings classifications upon
normal retirement at age 65:
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
-----------------------------------------------------
HIGHEST CONSECUTIVE THREE-YEAR
AVERAGE ANNUAL EARNINGS 20 25 30 35 40
--------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 200,000.................................................... $ 53,112 $ 66,390 $ 79,668 $ 92,947 $ 105,067
400,000.................................................... 109,685 137,106 164,527 191,948 214,347
600,000.................................................... 166,827 208,534 250,241 291,948 323,627
800,000.................................................... 223,970 279,963 335,955 391,948 432,907
1,000,000.................................................... 281,113 351,391 421,670 491,948 542,187
1,200,000.................................................... 338,256 422,820 507,384 591,948 651,467
1,400,000.................................................... 395,399 494,249 593,098 691,948 760,747
1,600,000.................................................... 452,542 565,677 678,813 791,948 870,027
1,800,000.................................................... 509,685 637,106 764,527 891,948 979,307
</TABLE>
The above pension table illustrates benefits calculated on a straight-life
annuity basis, and reflects the greater of the regular benefit or the
"grandfathered" benefit available under the formula in effect prior to January
1, 1989. The regular benefit does not contain an offset for social security or
other amounts, whereas the "grandfathered" benefit does provide for a partial
offset for social security benefits.
The compensation covered by the plans under which the benefits are
summarized in the table above equals the sum of base salary and Senior
Management Incentive Plan payments, as reported in the Summary Compensation
Table for the named executive officers for the last three fiscal years, and is
equal to the highest three-year average of such amounts. At January 31, 1998,
Mr. Lemieux had 40 years of credited service, Mr. Wesselmann had 37 years of
credited service, Mr. Wilkison had 34 years of credited service, Mr. Trumbull
had 26 years of credited service and Mr. Young had 21 years of credited service
under the Retirement Plan. To the extent that benefits in the preceding table
cannot, under the limitations of the Code, be provided under the Retirement
Plan, such benefits will be provided under the Company's Supplemental Retirement
Benefit Plan.
EMPLOYMENT AGREEMENTS. The Company has entered into employment agreements
with certain officers, including the named executive officers listed above, that
entitle the participants to receive their base salaries and to participate in
designated benefit plans of the Company. The agreements provide for termination
of employment at any time, with or without cause, and the benefit plans
designated therein and each employee's rights to receive salary and bonuses
pursuant thereto are subject to modification by the Company in its sole
discretion. Such employment agreements permit executive officers to take part in
the Senior Executive Life Insurance Plan, whereby the Company purchases life
insurance policies which are transferred to the participants subject, in part,
to the executive agreeing not to compete with the Company.
CERTAIN TRANSACTIONS
During 1997, the law firm of Williams & Jensen, P.C., of which Mr. McMackin
is a member, received fees for legal services in connection with various
matters. It is anticipated that the Company will continue to utilize the
services of Williams & Jensen, P.C. on various Company matters.
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The following non-employee directors serve on the Compensation Committee of
the Company's Board of Directors: Edward A. Gilhuly, James H. Greene, Jr. and
Michael W. Michelson (chair). Until June, 1987, Mr. Gilhuly and Mr. Greene were
officers of the Company. Messrs. Greene, Michelson and Gilhuly are members of
KKR & Co. L.L.C., the general partner of Kohlberg Kravis Roberts & Co., L.P.,
which provides management, consulting and financial services to the Company for
an annual fee. In 1997 the payment for the management fee and expenses was
$1,256,900. Such services include, but are not necessarily limited to, advice
and assistance concerning any and all aspects of the operation, planning and
financing of the Company and its subsidiaries, as needed from time to time.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Company's Board of
Directors establishes the Company's policies regarding the compensation of its
executive officers and other key managers, and oversees the compensation
practices employed pursuant to those policies. The Committee also administers
the Company's Equity Participation Plan, the Performance Award Plan ("PAP"),
and, with the Chief Executive Officer, the Senior Management Incentive Plan
("SMIP"). The Committee has direct responsibility for the compensation of the
Chief Executive Officer.
The Company's principal objective is to increase share owner value over
time. The Committee's executive compensation policies are intended and
structured to achieve this objective by emphasis on and adherence to the
following principles: (1) focus on a significant equity orientation among
executives to align their interests with those of all other share owners, (2)
linkage of compensation with achievement of certain specific financial,
strategic and operating goals which underlie long-term share owner value, (3)
maintenance of plans which are intended to be competitive with those of other
successful companies of comparable size, particularly those in the industries in
which the Company competes, and (4) effective communication and straightforward
administration of plans that are well understood and not unduly complex.
The components of the Company's executive officer compensation are:
- Base Salary
- Annual Incentive
- Long-Term Incentives
- Benefits
BASE SALARY. Base salaries are set at levels intended to be competitive
with industrial companies of comparable size in a broad range of American
industries, which the Committee believes are the Company's competitors for
executive talent. The Committee reviews salaries annually and provides salary
adjustments based on periodic reviews of competitive considerations. In 1996,
Mr. Lemieux was granted a $22,000 increase in base salary, representing a 3.6%
adjustment on an annualized basis.
ANNUAL INCENTIVE. The Company's SMIP establishes target annual incentives
for key executives in the form of a percentage of base salary (up to a maximum
target incentive of 100% in the case of the Chief Executive Officer). The SMIP
provides for annual incentive awards consisting of a corporate performance
component based on the Company's attainment of an annual rate of return on net
assets ("RONA") and
10
<PAGE>
an earnings per share ("EPS") target, on an equally weighted basis, established
by the Board as the performance objectives for the year, an operating unit RONA
performance component (for executive positions at the unit level), and a
discretionary component. Each performance component and, in the aggregate, the
discretionary components are contingent on the Company's attainment of the
corporate RONA and EPS objectives for the year.
The SMIP establishes precise quantitative relationships between performance
and payout percentages within defined minimum/maximum ranges. The total bonus
pool available for distribution to all covered executives, including the Chief
Executive Officer, cannot exceed 150% of the total of all target bonuses for the
covered executives.
A recipient of an SMIP payment may elect to receive restricted stock in lieu
of cash for all or a portion of such payment. Such restricted stock is issued
under the terms of the 1997 Equity Participation Plan of Owens-Illinois, Inc.,
which plan was approved by the share owners at the 1997 Annual Meeting. A
recipient who so elects receives a number of shares of restricted stock equal to
120% of the amount of cash forgone divided by the closing price of the Common
Stock on the last trading day prior to the date on which the cash amount would
have been paid. Except as otherwise provided in the 1997 Equity Participation
Plan of Owens-Illinois, Inc., such restricted stock vests on the third
anniversary of the date on which the cash amount would have been paid.
Based on the Company's RONA and EPS performance relative to its 1997 RONA
and EPS objectives, and further based on the Committee's evaluation of certain
other performance factors relating to the Chief Executive Officer, Mr. Lemieux
was granted an SMIP award of $800,000 in 1997.
LONG-TERM INCENTIVES. There are two forms of long-term incentives utilized
for key executives: PAP, which provides cash awards, and stock options granted
pursuant to the Company's Equity Participation Plan.
The PAP establishes target cash awards for key executives based on a
percentage of base salary at the time of the award (up to a maximum target award
of 75% in the case of the Chief Executive Officer). The PAP is based on a
three-year performance cycle. Award payouts are based on the average annual
attainment of the performance objectives set by the Board for each year of each
award period. The Board establishes the performance criteria under this Plan and
sets the relative weighting where multiple criteria are applicable. For the
1996-98 and 1997-1999 award periods, performance will be evaluated in comparison
to the Company's attained level of EPS relative to objectives for these periods.
Under the Plan, performance at the level of 100% of these established objectives
results in a 100% payment of the PAP award, with such payment percentage
increasing or decreasing four percentage points for each single percentage point
increase or decrease, respectively, in performance.
A recipient of a PAP payment may elect to receive restricted stock in lieu
of cash for all or a portion of such payment on the same terms described above
with respect to SMIP payments.
The Committee previously approved a PAP allotment to Mr. Lemieux for the
1995-97 award period of $420,000, and the Committee determined, in the manner
described in the immediately preceding paragraph, that performance in 1995-97
award period relative to the RONA and earnings per share objectives established
for this period warranted a 110% payout of Mr. Lemieux's 1995-97 PAP allotment.
11
<PAGE>
In 1996, the Committee approved a PAP allotment to Mr. Lemieux for the
1997-1999 award period of $451,500.
The Company Equity Participation Plan provides executives with the
opportunity to acquire an equity interest in the Company and to share in the
appreciation of the value of the stock. Stock options only have value if the
stock price appreciates from the date the options are granted. Furthermore,
under the form of Stock Option Agreement currently approved by the Committee,
exercisability of options is not available until the fifth year after the grant
date unless exercisability has been accelerated by virtue of increase(s) in the
Company stock price.
Each year the Committee determines the total number of options to be awarded
to all eligible key employees as a group. The Committee determined that in 1997
a pool approximately equal to .85% of the total number of outstanding shares of
common stock of the Company was sufficient to achieve the overall goals of the
plan. The number of options awarded to each eligible key employee, including the
Chief Executive Officer and each executive officer, is based on the opportunity
for such individual to enhance shareholder value through the effective
performance of such individual's job responsibilities. Consideration is also
given to the total number of options previously granted to such individual. In
1997, Mr. Lemieux was granted options on 200,000 shares.
BENEFITS. Benefits offered to executive officers are essentially the same
as those offered to all salaried employees of the Company. The level and nature
of such benefits are reviewed from time to time to ensure that they are
competitive, tax efficient, and otherwise appropriate in the judgment of the
Committee.
The Committee believes that the executive compensation policies and programs
described above serve the interest of all share owners and the Company and
substantially link the compensation of the Company's executives with the
Company's performance.
TAX DEDUCTIBILITY COMPENSATION. During 1993, the Internal Revenue Code of
1986 was amended by adding a new Section 162(m), which denies a tax deduction to
a publicly held corporation for compensation paid to its Chief Executive Officer
and its other four most highly compensated officers to the extent any such
compensation exceeds $1 million in a taxable year after 1993. Such denial of tax
deductibility is subject, however, to an exception for "performance-based
compensation." The Internal Revenue Service has issued regulations purporting to
interpret and implement the provisions of Section 162(m).
Mr. Lemieux is the only executive whose compensation under the Company's
cash compensation plans is potentially subject to the provisions of Section
162(m). Mr. Lemieux has elected, pursuant to a deferred compensation plan
previously approved by the Committee, to defer until his retirement an amount of
his potential incentive compensation for 1998 such that his total compensation
will not in any event exceed the $1 million deductibility limit in 1998. Of that
amount, $494,340 was taken in the form of restricted stock under the 1997 Equity
Participation Plan.
Michael W. Michelson, Chairman
Edward A. Gilhuly
James H. Greene, Jr.
12
<PAGE>
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG OWENS-ILLINOIS, S&P 500 AND PACKAGING GROUP
.........................................
400-
350-
300- [LINE GRAPH OF THE VALUES
CONTAINED IN THE TABLE BELOW,
250- AT THE VARIOUS DATES INDICATED]
200-
150-
100-
50- .....................................................
'92 '93 '94 '95 '96 '97
- - ---------------------------------------------------------------------
1992 1993 1994 1995 1996 1997
------- ------- ------- ------- ------- -------
Owens-Illinois.. $100.00 $123.75 $110.00 $145.00 $227.50 $379.37
------- ------- ------- ------- ------- -------
S&P 500........ $100.00 $110.08 $111.53 $153.45 $188.68 $251.63
------- ------- ------- ------- ------- -------
Packaging
Group......... $100.00 $104.30 $112.21 $132.14 $163.34 $195.82
------- ------- ------- ------- ------- -------
The above graph compares the performance of the Company's Common Stock with
that of a broad market index (the S&P 500 Composite Index) and a packaging group
consisting of companies with lines of business or product end uses comparable to
those of the Company for which market quotations are available.
The packaging group consists of: Aluminum Co. of America, Aptargroup Inc.,
Avery Dennison Corp., Ball Corp., Bemis Co., Chesapeake Corp., Continental Can,
Crown Cork & Seal Co., Johnson Controls Inc., Liqui-Box Corp., The Mead Corp.,
Multi-Color Corp., Owens-Illinois Inc., Reynolds Metals Co., Sealed Air Corp.,
Sealright Co., Sonoco Products Co., Tredegar Industries, U.S. Can Co., and Vitro
Sociedad Anonima (ADSs). Market quotations ceased to be available for Kerr Group
Inc. following its acquisition in 1997. Its elimination from the packaging group
did not have a significant effect on total return for periods prior to 1997.
The comparison of total return on investment for each period is based on the
change in market value of the stock, including additional shares assumed
purchased through reinvestment of dividends, if any.
13
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of March 16, 1998 (except as otherwise noted in
the footnotes below) by each beneficial owner of more than five percent of the
Company's outstanding Common Stock known to the Company, each of the Company's
directors and nominees for director, each of the named executive officers and
all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
NAME AND ADDRESS BENEFICIALLY
OF BENEFICIAL OWNER OWNED(1) PERCENTAGE
- - ------------------------------ ---------------- ------------
<S> <C> <C>
KKR Associates, L.P.(2)....... 36,000,000 25.6%
9 West 57th Street
New York, New York 10019
FMR Corp.(3).................. 19,665,862 14.0
82 Devonshire Street
Boston, Massachusetts 02109
Trust for Owens-Illinois
Hourly Retirement Plan...... 7,884,285 5.6
200 Newport Avenue--7N
North Quincy, Massachusetts
02171
Joseph H. Lemieux(1).......... 701,513(4) 0.5
Lee A. Wesselmann(1).......... 169,398(4) 0.1
Robert J. Dineen(1)........... 27,282 --
Edward A. Gilhuly(2).......... 10,000 --
James H. Greene, Jr.(2)....... -- --
Henry R. Kravis(2)............ -- --
Robert J. Lanigan(1).......... 353,278 0.3
Robert I. MacDonnell(2)....... -- --
John J. McMackin, Jr.(1)...... 28,019 --
Michael W. Michelson(2)(5).... 20,000 --
George R. Roberts(2).......... -- --
Terry L. Wilkison(1).......... 64,119(4) --
R. Scott Trumbull(1).......... 132,853(4) 0.1
Thomas L. Young(1)............ 115,279(4) 0.1
All directors and executive
officers as a group (other
than as set forth in
relation to KKR Associates,
L.P.) (25 persons).......... 2,266,186(4) 1.6
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
14
<PAGE>
(FOOTNOTES FOR PRECEDING PAGE)
- - ------------------------
(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares as of a given date if such person has
the right to acquire such shares within 60 days after such date. For
purposes of computing the percentage of outstanding shares held by each
person or group of persons named above on a given date, any security which
such person or persons has the right to acquire within 60 days after such
date is deemed to be outstanding, but is not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person. The
information includes: all currently exercisable options granted to Messrs.
Lemieux, Wesselmann, Dineen, Lanigan, McMackin, Wilkison, Trumbull and
Young. The number of shares beneficially owned includes 275,000 shares
subject to options granted to Mr. Lemieux; 98,000 shares subject to options
granted to Mr. Wesselmann; 18,182 shares subject to options granted to Mr.
Dineen; 75,000 shares subject to options granted to Mr. Lanigan; 18,391
shares subject to options granted to Mr. McMackin; 15,000 shares subject to
options granted to Mr. Wilkison; 28,750 shares subject to options granted to
Mr. Trumbull; 64,741 shares subject to options granted to Mr. Young; and
974,664 shares subject to options granted to all directors and officers as a
group (other than as set forth in relation to KKR Associates, L.P.).
(2) Shares shown as owned by KKR Associates, L.P. are owned of record by three
limited partnerships of which KKR Associates, L.P. is the sole general
partner and as to which it possesses sole voting and investment power. KKR
Associates is a limited partnership of which Henry R. Kravis, George R.
Roberts, Robert I. MacDonnell, Michael W. Michelson, James H. Greene, Jr.,
Edward A. Gilhuly (all directors of the Company), Paul E. Raether, Michael
T. Tokarz, Perry Golkin, Clifton S. Robbins, and Scott Stuart are the
general partners. Such persons may be deemed to share beneficial ownership
of the shares shown as owned by KKR Associates, L.P. The foregoing persons
disclaim beneficial ownership of such shares of the Company.
(3) The Company has received a Schedule 13G filed by FMR Corp., Edward C.
Johnson 3d, Abigail P. Johnson and Fidelity Management & Research Company
with respect to the shares of Common Stock identified as owned as of
December 31, 1997 and in which such reporting persons assert dispositive
and/or voting power with respect to portions or all of such shares as a
result of their direct or indirect investment advisory relationship to, or
ownership interest in, various investment companies, institutional accounts
or investment advisers which own such shares. The Company has not attempted
to independently verify any of the foregoing information which is based
solely on the information contained in the Schedule 13G.
(4) The table includes the number of shares of Common Stock that Joseph H.
Lemieux, Lee A. Wesselmann, Terry L. Wilkison, R. Scott Trumbull, Thomas L.
Young and all directors and officers as a group (other than as set forth in
relation to KKR Associates, L.P.) held in the Stock Purchase and Savings
Program as of February 28, 1998.
(5) Does not include 3,000 shares of Common Stock held in an irrevocable trust
created by Mr. Michelson for the benefit of his children with respect to
which Mr. Michelson disclaims any beneficial ownership.
15
<PAGE>
GENERAL INFORMATION
AUDITORS
The Board, upon the recommendation of the Audit Committee, has approved the
selection of Ernst & Young LLP as the Company's independent auditors for 1998.
Representatives of Ernst & Young LLP will attend the Annual Meeting, will have
the opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions.
OUTSTANDING STOCK
An aggregate of 140,759,753 shares of the Company's Common Stock was
outstanding at the close of business on March 16, 1998. Each share entitles its
holder of record to one vote on each matter upon which votes are taken at the
Annual Meeting. Shares of Common Stock held by the trustee under the Company's
401(k) plans must be voted by the trustee in accordance with written
instructions from participants in such plan or, as to those shares for which no
instructions are received, in a uniform manner as a single block in accordance
with the instructions received with respect to the majority of shares for which
instructions were received from participants. No other securities are entitled
to be voted at the Annual Meeting.
REVOCABILITY OF PROXIES
Any proxy solicited hereby may be revoked by the person or persons giving it
at any time before it has been exercised at the Annual Meeting by giving notice
of revocation to the Company in writing or at the 1998 Annual Meeting.
SOLICITATION COSTS
The Company will pay the cost of preparing and mailing this Proxy Statement
and other costs of the proxy solicitation made by the Board. Certain of the
Company's officers and employees may solicit the submission of proxies
authorizing the voting of shares in accordance with the Board's recommendations,
but no additional remuneration will be paid by the Company for the solicitation
of those proxies. Such solicitations may be made by personal interview,
telephone and telegram. Arrangements have also been made with brokerage firms
and others for the forwarding of proxy solicitation materials to the beneficial
owners of Common Stock, and the Company will reimburse them for reasonable
out-of-pocket expenses incurred in connection therewith.
VOTING PROCEDURES
The By-laws of the Company (the "By-laws") provide that a majority of the
Common Stock issued and outstanding and entitled to vote at the Annual Meeting,
the holders of which are present in person or represented by proxy, shall
constitute a quorum at any Annual Meeting.
Votes cast at the Annual Meeting will be tabulated by the persons appointed
by the Company to act as inspectors of election for the Annual Meeting. The
inspectors of election will treat shares of voting stock represented by a
properly signed and returned proxy as present at the Annual Meeting for purposes
of determining a quorum, without regard to whether the proxy is marked as
casting a vote or abstaining. Likewise, the inspectors of election will treat
shares of voting stock represented by "broker non-votes" (i.e., shares of voting
stock held in record name by brokers or nominees as to which (i) instructions
have
16
<PAGE>
not been received from the beneficial owners or persons entitled to vote, (ii)
the broker or nominee does not have discretionary voting power under applicable
New York Stock Exchange rules or the instrument under which it serves in such
capacity, and (iii) the recordholder has indicated on the proxy card or
otherwise notified the Company that it does not have authority to vote such
shares on that matter) as present for purposes of determining a quorum.
The By-Laws provide that all matters to come before the Annual Meeting
require the approval of the vote of the holders of a majority of the stock
present in person or represented by proxy, unless the question is one upon which
by express provision of law, or the Certificate of Incorporation, or the
By-Laws, a different vote is required, in which case such express provision
shall govern and control the decision of such question. On any such matters,
abstentions as to particular proposals will have the same effect as votes
against such proposals. Broker non-votes as to particular proposals, however,
will be deemed shares not having voting power on such proposals. Accordingly,
broker non-votes will not be counted for purposes of determining whether the
requisite majority vote has been received in favor of the approval of the
benefit plans described herein.
The By-Laws further provide that all elections shall be had and all
questions decided by a plurality vote. Therefore, directors will be elected by a
favorable vote of a plurality of the shares of Common Stock present and entitled
to vote, in person or by proxy, at the Annual Meeting. Accordingly abstentions
or broker non-votes as to the election of directors will not affect the election
of the candidates receiving the plurality of votes.
If a properly signed proxy form is returned to the Company and is not
marked, it will be voted in accordance with management's recommendations on all
proposals.
OTHER MATTERS
Management of the Company does not know of any matter that will be presented
for action at the 1998 Annual Meeting other than the election of directors.
However, if any other matter should be brought to a vote at the meeting, all
shares covered by proxies solicited hereby will be voted with respect to such
matter in accordance with the proxy holders' discretion.
SECTION 16 BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership (Forms 3, 4 and 5) with the Securities and
Exchange Commission and the New York Stock Exchange. Officers, directors and
greater-than-ten-percent holders are required by SEC regulation to furnish the
Company with copies of all such forms which they file. To the Company's
knowledge, based solely on review of the copies of such reports furnished to the
Company and written representations that no reports were required, other than
Mr. Gilhuly who filed a late Form 4 relating to the purchase of 5,000 shares of
the Company's Common Stock, all of its directors and executive officers made all
required filings on time during 1997.
SHARE OWNER PROPOSALS AND NOMINATIONS FOR 1999 ANNUAL MEETING
A share owner desiring to submit a proposal for inclusion in the Company's
Proxy Statement for the 1999 Annual Meeting must deliver the proposal so that it
is received by the Company no later than
17
<PAGE>
December 1, 1998. The Company requests that all such proposals be addressed to
Thomas L. Young, Executive Vice President, Owens-Illinois, Inc., One SeaGate,
Toledo, Ohio 43666, and mailed by certified mail, return receipt requested.
REPORTS TO SHARE OWNERS
The Company has mailed this Proxy Statement and a copy of its 1997 Annual
Report to each share owner entitled to vote at the Annual Meeting. Included in
the 1997 Annual Report are the Company's consolidated financial statements for
the year ended December 31, 1997.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1997, INCLUDING THE FINANCIAL STATEMENT SCHEDULES, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED WITHOUT CHARGE BY
SENDING A WRITTEN REQUEST THEREFOR TO OWENS-ILLINOIS, INC., INVESTOR RELATIONS,
ONE SEAGATE, TOLEDO, OHIO 43666.
Toledo, Ohio
March 31, 1998
18
<PAGE>
[LOGO]
<PAGE>
OWENS-ILLINOIS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P The undersigned hereby appoints David G. Van Hooser, Jeffrey A. Denker and
Thomas L. Young and each of them, or if more than one is present and acting
R then a majority thereof, as Proxies with full power of substitution, and
hereby authorize(s) them to represent and to vote, as designated below, all
O shares of common stock of Owens-Illinois, Inc. held of record by the
undersigned on March 16, 1998, at the Annual Meeting of Share Owners to be
X held on May 13, 1998, or at any adjournment thereof.
Y Election of Directors, Nominees:
Class I: Thomas L. Young, James H. Greene, Jr., George R. Roberts,
and Robert J. Dineen.
(PLEASE MARK THIS PROXY AND SIGN AND DATE IT ON THE REVERSE SIDE HEREOF AND
RETURN IT IN THE ENCLOSED ENVELOPE)
SEE REVERSE
SIDE
<PAGE>
PLEASE MARK YOUR
X VOTES AS IN THIS
EXAMPLE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHARE OWNER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE DIRECTOR NOMINEES.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1.
<TABLE>
<S> <C> <C> <C> <C>
FOR WITHHELD
1. Election of Directors / / / / WITHHOLD AUTHORITY to vote for all 2. In their discretion, the Proxies are
FOR nominees listed nominees listed on reverse side authorized to vote upon such other
on the reverse side business as may properly come before
(except as marked to the meeting.
the contrary).
</TABLE>
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
___________________________________________________
Please sign exactly as name appears
hereon. When shares are held by joint
owners, both should sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by
President or other authorized officer.
If a partnership, please sign in
partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
______________________________________
Signature
______________________________________
Signature, if held jointly DATE
