<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:
-----------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
[LOGO]
OWENS-ILLINOIS, INC.
NOTICE AND PROXY STATEMENT
FOR
THE ANNUAL MEETING OF SHARE OWNERS
TO BE HELD
WEDNESDAY, MAY 10, 2000
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 10, 2000, 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 two 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 1999 and provides other information about the Company
which will be of interest.
The Board of Directors fixed the close of business on March 13, 2000, 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
James W. Baehren
Secretary
March 31, 2000
Toledo, Ohio
<PAGE>
OWENS-ILLINOIS, INC.
ONE SEAGATE
TOLEDO, OHIO 43666
-------------------
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHARE OWNERS
TO BE HELD MAY 10, 2000
------------------------
The Annual Meeting of the share owners of Owens-Illinois, Inc. (herein
called the "Company") will be held on Wednesday, May 10, 2000, 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 two 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, 2000.
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 13, 2000 (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 Joseph H. Lemieux and Michael W.
Michelson 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 ten members, three
of whom are Class III directors whose terms expire at this year's Annual
Meeting, four of whom are Class I directors whose terms expire at the 2001
Annual Meeting, and three of whom are Class II directors whose terms expire at
the 2002 Annual Meeting. All of the directors listed herein, including the
nominees, have served as directors since the last Annual Meeting.
As a result of the recent decision of Mr. Henry R. Kravis not to seek
election to another term, the Board has elected to reduce the size of the Board
from ten to nine. The Board is searching for qualified candidates to serve as
additional outside directors. Once suitable candidates are identified, the Board
will
1
<PAGE>
expand the size of the Board to eleven directors and appoint such qualified
candidates to fill the resulting vacancies.
The Board has nominated two persons for election as Class III directors to
serve for a three-year term expiring at the Annual Meeting of share owners to be
held in 2003 and until their successors have been elected and qualified. The two
nominees of the Board are Joseph H. Lemieux and Michael W. Michelson, each of
whom is currently serving as a director of the Company. 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 TWO NOMINEES IDENTIFIED BELOW.
CLASS III: NOMINEES FOR 3-YEAR TERM
<TABLE>
<S> <C>
Joseph H. Lemieux Director since 1987
Chairman of the Board and Age 69
Chief Executive Officer
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 Manor Care Inc. He is chairman of the Executive
Committee.
<TABLE>
<S> <C>
Michael W. Michelson Director since 1987
Member of KKR & Co. L.L.C., Age 48
the general partner of
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. and KinderCare Learning
Centers, Inc. He is chairman of the Compensation Committee and a member of the
Executive Committee.
CLASS I: TERM EXPIRES IN 2001
<TABLE>
<S> <C>
James H. Greene, Jr. Director since 1987
Member of KKR & Co. L.L.C., Age 49
the general partner of
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.
2
<PAGE>
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, and Safeway Inc. He is a member of
the Compensation Committee.
<TABLE>
<S> <C>
George R. Roberts Director since 1987
Managing Member of KKR & Co. L.L.C., Age 56
the general partner of
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., The Boyds
Collection, Ltd., Evenflo Company Inc., IDEX Corporation, KinderCare Learning
Centers, Inc., KSL Recreation Group, Inc., PRIMEDIA, Inc., Safeway Inc. and
Spalding Holdings Corporation. He is a member of the Executive Committee.
<TABLE>
<S> <C>
Robert J. Dineen Director since 1994
Chairman of the Board of Directors Age 70
Layne Christensen Company
</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 Director since 1998
Executive Vice President Age 56
Owens-Illinois, Inc.
</TABLE>
Mr. Young has been Executive Vice President, Administration and General Counsel
since 1998. He previously served the Company as Executive Vice President,
Administration, General Counsel, and Secretary (1993-1998). Mr. Young is a
director of Manor Care Inc.
CLASS II: TERM EXPIRES IN 2002
<TABLE>
<S> <C>
Edward A. Gilhuly Director since 1987
Member of KKR & Co. L.L.C., Age 40
the general partner of
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. He is Chairman of the Audit Committee and
a member of the Executive and Compensation Committees.
3
<PAGE>
<TABLE>
<S> <C>
Robert J. Lanigan Director since 1987
Chairman Emeritus Age 72
</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 founding partner of Palladium Equity Partners. Mr. Lanigan is a
director of DaimlerChrysler AG and IMS Health Incorporated.
<TABLE>
<S> <C>
John J. McMackin, Jr. Director since 1994
Member Age 48
Williams & Jensen, P.C.
</TABLE>
Mr. McMackin has been a member of Williams & Jensen for more than five years. He
is a member of the Audit Committee.
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. 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 1999, the Board held four formal meetings, the Audit Committee held
four formal meetings and the Compensation Committee held one formal meeting. The
Executive Committee held no meetings in 1999. During 1999, 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 Henry R. Kravis. 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.
4
<PAGE>
DIRECTOR AND EXECUTIVE COMPENSATION AND OTHER INFORMATION
DIRECTOR COMPENSATION
Directors of the Company who are not Company officers are paid a fee of
$35,000 annually plus expenses associated with meetings of the Company's Board.
SUMMARY COMPENSATION TABLE
The following table shows, for the years ended December 31, 1997, 1998 and
1999, the cash compensation paid by the Company and its subsidiaries, as well as
certain other compensation paid or accrued for those years, to the Company's
Chief Executive Officer and the four most highly compensated executive officers
of the Company (the "named executive officers") in all capacities in which they
served.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------
OTHER
ANNUAL
NAME AND SALARY BONUS COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($)(3)
- ----------------------------------- -------- -------- -------- --------------
<S> <C> <C> <C> <C>
Joseph H. Lemieux.................. 1999 $625,697 $278,750 $ 77,681
Chairman and Chief 1998 601,400 387,500 76,028
Executive Officer 1997 578,333 537,500 113,066
Peter J. Robinson (9).............. 1999 480,168(10) 463,543 0
V.P., General Manager, 1998 275,981 126,755 0
Asia Pacific Operations
R. Scott Trumbull.................. 1999 277,500 160,000 29,846
Executive V.P.,--International 1998 262,500 200,000 28,869
Operations/Corp. Development 1997 247,833 240,000 18,610
Terry L. Wilkison.................. 1999 277,500 160,000 11,791
Executive V.P.--Latin 1998 99,375 90,000 4,532
American Operations 1997 248,333 240,000 42,090
Thomas L. Young.................... 1999 276,333 160,000 29,057
Executive V.P.--Administration 1998 255,000 200,000 15,320
and General Counsel 1997 236,167 240,000 21,876
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------------
AWARDS PAYOUTS
------------------------------ ----------
RESTRICTED SECURITIES LONG-TERM
STOCK UNDERLYING INCENTIVE ALL OTHER
NAME AND AWARD(S) OPTIONS/SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION ($) (#)(4) ($)(5) ($)(6)
- ----------------------------------- ---------- -------------- ---------- --------------
<S> <C> <C> <C> <C>
Joseph H. Lemieux.................. $2,322,094(7) 160,000 $105,651 $ 54,243(8)
Chairman and Chief 746,825 160,000 119,951 57,056
Executive Officer 593,208 200,000 231,840 23,113
Peter J. Robinson (9).............. 558,750(11) 100,000 0 4,555(12)
V.P., General Manager, 0 100,000 0 4,152
Asia Pacific Operations
R. Scott Trumbull.................. 419,063(13) 75,000 97,718 11,100
Executive V.P.,--International 0 75,000 109,418 10,500
Operations/Corp. Development 0 75,000 104,218 9,913
Terry L. Wilkison.................. 419,063(14) 75,000 78,778 883
Executive V.P.--Latin 0 75,000 89,279 3,975
American Operations 0 0 106,514 9,933
Thomas L. Young.................... 558,750(15) 75,000 93,600 11,053
Executive V.P.--Administration 0 75,000 100,152 10,200
and General Counsel 0 101,567 94,944 9,447
</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) Except as otherwise provided in footnote 10 below, the amounts disclosed in
this column represent awards under the Owens-Illinois, Inc. Senior
Management Incentive Plan for the year indicated. Except as otherwise
provided in footnote 7 below, amounts, if any, deferred at the election of a
named 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 1999.
(5) The amounts disclosed in this column represent awards under the
Owens-Illinois, Inc. Performance Award Plan for the year indicated. Except
as otherwise provided in footnote 7 below, amounts, if any, deferred at the
election of an executive officer are included in the year earned.
(6) Except as otherwise provided in footnote 12 below, the amounts disclosed in
this column for 1999 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 1999,
whichever is lower. 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 participants account in the absence
of the IRS limitation on participant's earnings in excess of $160,000 for
1999. Such amount, including interest, is paid in cash to the individual at
termination of employment.
(7) Represents aggregate value of 104,350 shares of restricted stock received
by Mr. Lemieux in or with respect to 1999, consisting of 60,000 shares
granted under the Company's 1997 Equity Participation Plan and 44,350 shares
of restricted stock granted in lieu of cash payments in the amounts of
$221,250 and $316,953 pursuant to elections by Mr. Lemieux 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. As of
December 31, 1999, Mr. Lemieux held 104,862 shares of restricted stock of
the Company with a value of $2,628,104 (determined by the closing price of
the Common Stock on the New York Stock Exchange on December 31, 1999).
(8) Also includes the $29,215 cash value of a whole life insurance policy
purchased by the Company under the Senior Executive Life Insurance Plan and
owned by Mr. Lemieux.
(9) Mr. Robinson became an employee of the Company in May 1998 upon the
purchase by the Company of the packaging businesses of BTR plc. His
compensation for 1998 is for the period from May 1, 1998 through
December 31, 1998.
5
<PAGE>
(10) Includes payment in the amount of $95,773, which payments were made to
Mr. Robinson in lieu of contributions on his behalf to a superannuation fund
to provide post-retirement pension benefits. Mr. Robinson's bonus is
provided under a separate bonus plan relating to the Company's Asia/Pacific
business.
(11) Represents aggregate value of 20,000 shares of stock subject to phantom
stock units received by Mr. Robinson in 1999 under the Company's 1997 Equity
Participation Plan. See "Board Compensation Committee Report on Executive
Compensation--Long-Term Incentives" below. As of December 31, 1999, Mr.
Robinson held phantom stock units with respect to 20,000 shares of Common
Stock of the Company with a value of $501,250 (determined by the closing
price of the Common Stock on the New York Stock Exchange on December 31,
1999).
(12) Represents the statutory minimum amounts contributed by the Company to a
superannuation fund on behalf of Mr. Robinson.
(13) Represents aggregate value of 15,000 shares of restricted stock received by
Mr. Trumbull in 1999 under the Company's 1997 Equity Participation Plan. See
"Board Compensation Committee Report on Executive Compensation--Long-Term
Incentives" below. As of December 31, 1999, Mr. Trumbull held 15,000 shares
of restricted stock of the Company with a value of $375,938 (determined by
the closing price of the Common Stock on the New York Stock Exchange on
December 31, 1999).
(14) Represents aggregate value of 15,000 shares of restricted stock received by
Mr. Wilkison in 1999 under the Company's 1997 Equity Participation Plan. See
"Board Compensation Committee Report on Executive Compensation--Long-Term
Incentives" below. As of December 31, 1999, Mr. Wilkison held 15,000 shares
of restricted stock of the Company with a value of $375,938 (determined by
the closing price of the Common Stock on the New York Stock Exchange on
December 31, 1999).
(15) Represents aggregate value of 20,000 shares of restricted stock received by
Mr. Young in 1999 under the Company's 1997 Equity Participation Plan. See
"Board Compensation Committee Report on Executive Compensation--Long-Term
Incentives" below. As of December 31, 1999, Mr. Young held 20,000 shares of
restricted stock of the Company with a value of $501,250 (determined by the
closing price of the Common Stock on the New York Stock Exchange on
December 31, 1999).
OPTION/SAR GRANTS IN LAST FISCAL YEAR(1)
The following table provides information on option grants in 1999 to the
named executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- --------------------------------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES
SECURITIES % OF TOTAL OF STOCK PRICE
UNDERLYING OPTIONS/SARS APPRECIATION FOR
OPTIONS/SARS GRANTED TO EXERCISE OR OPTION TERM(3)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5% 10%
- ------------------------------- ------------ ------------ ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Joseph H. Lemieux.............. 160,000(2) 9.0% $23.9375 04/07/09 $2,408,666 $ 6,104,034
Peter J. Robinson.............. 100,000(2) 5.6% 23.9375 04/07/09 1,505,417 3,815,021
R. Scott Trumbull.............. 75,000(2) 4.2% 23.9375 04/07/09 1,129,062 2,861,266
Terry L. Wilkison.............. 75,000(2) 4.2% 23.9375 04/07/09 1,129,062 2,861,266
Thomas L. Young................ 75,000(2) 4.2% 23.9375 04/07/09 1,129,062 2,861,266
</TABLE>
- ------------------------------
(1) No SAR's were granted to any of the named executive officers during 1999.
(2) Exercises of one-half of the options are permitted after each of the fifth
and sixth anniversaries of the date 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% $28.73 25%
144% 34.47 50%
172% 41.17 75%
206% 49.31 100%
</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 obligation is paid using shares of
Owens-Illinois
6
<PAGE>
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) 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 $38.992 and $62.088, respectively.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
Shown below is information with respect to the unexercised options to
purchase the Company's Common Stock granted in 1999 and prior years to the named
executive officers and held by them at December 31, 1999. No options were
exercised by named executive officers in 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
DECEMBER 31, 1999 AT DECEMBER 31, 1999(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Joseph H. Lemieux......................................... 325,000 470,000 $3,404,688 $180,000
Peter J. Robinson......................................... 0 200,000 0 112,500
R. Scott Trumbull......................................... 47,500 206,250 300,859 84,375
Terry L. Wilkison......................................... 0 150,000 0 84,375
Thomas L. Young........................................... 83,491 206,250 420,572 84,375
</TABLE>
- ------------------------------
(1) Based on the closing price of the Company's Common Stock on the New York
Stock Exchange on that date of $25.0625.
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 1999-2001
award period, performance will be evaluated in comparison to the Company's
attained level of earnings per share 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 ESTIMATED FUTURE PAYOUTS UNDER
PERIOD UNTIL NON-STOCK PRICE-BASED PLANS
MATURATION --------------------------------
NAME OR PAYOUT THRESHOLD TARGET MAXIMUM
- ---- ------------ --------- -------- ---------
<S> <C> <C> <C> <C>
Joseph H. Lemieux........................................... 1999-2001 $101,250 $506,250 (1)
Peter J. Robinson........................................... 1999-2001 33,053 165,267 (1)
R. Scott Trumbull........................................... 1999-2001 24,480 122,400 (1)
Terry L. Wilkison........................................... 1999-2001 24,496 122,480 (1)
Thomas L. Young............................................. 1999-2001 24,400 122,000 (1)
</TABLE>
- ------------------------------
(1) The maximum dollar amount that may be earned under PAP is not capped.
7
<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 THREE-YEAR ---------------------------------------------------------------------
AVERAGE ANNUAL EARNINGS 20 25 30 35 40 45
- ----------------------- -------- -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 52,838 $ 66,047 $ 79,257 $ 92,466 $ 104,586 $ 116,706
400,000 109,373 136,716 164,059 191,402 213,866 238,106
600,000 166,515 208,144 249,773 291,402 323,146 359,506
800,000 223,658 279,573 335,487 391,402 432,426 480,906
1,000,000 280,801 351,001 421,202 491,402 541,706 602,306
1,200,000 337,944 422,430 506,916 591,402 650,986 723,706
1,400,000 395,087 493,859 592,630 691,402 760,266 845,106
1,600,000 452,230 565,287 678,345 791,402 869,546 966,506
1,800,000 509,373 636,716 764,059 891,402 978,826 1,087,906
2,000,000 566,515 708,144 849,773 991,402 1,088,106 1,209,306
2,200,000 623,658 779,573 935,487 1,091,402 1,197,386 1,330,706
</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, Senior Management
Incentive Plan and Performance Award 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, 2000, Mr. Lemieux had 42 years of credited service, Mr. Trumbull had
28 years of credited service, Mr. Wilkison had 1 year of credited service and
Mr. Young had 23 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. Peter J. Robinson is
not covered by a Company-sponsored pension plan.
EMPLOYMENT AGREEMENTS. The Company 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 permitted executive officers to take part
in the Senior Executive Life Insurance Plan, as in effect through the end of
1999, whereby the Company purchased life insurance policies which were
transferred to the participants subject, in part, to the executive agreeing not
to compete with the Company.
8
<PAGE>
CERTAIN TRANSACTIONS
During 1999, 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.
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 1999 the payment for the management fee and expenses was
$1,520,879. 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 1999,
Mr. Lemieux was granted a $24,500 increase in base salary, representing a 4.0%
adjustment on an annualized basis.
9
<PAGE>
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 annual rate of return on net assets ("RONA") and an earnings
per share ("EPS") targets, 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 performance relative to
the corporate RONA and EPS objectives for the year.
The SMIP establishes 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 Committee's evaluation of the Company's RONA and EPS
performance relative to its 1999 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 $500,000 for
1999.
LONG-TERM INCENTIVES. There are two forms of long-term incentives utilized
for key executives: PAP, which provides cash awards, and the Company's Equity
Participation Plan, which provides for grants of stock options and restricted
stock.
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
1998-2000 and 1999-2001 award period, 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
1997-1999 award period of $451,500, and the Committee determined, in the manner
described in the immediately preceding
10
<PAGE>
paragraph, that performance in 1997-1999 award period relative to the earnings
per share objective established for this period warranted a 93.6% payout of
Mr. Lemieux's 1997-1999 PAP allotment.
In 1999, the Committee approved a PAP allotment to Mr. Lemieux for the
1999-2001 award period of $506,250.
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 1999
a pool approximately equal to 1.2% 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 share owner 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
1999, Mr. Lemieux was granted options on 160,000 shares.
In addition to the options granted in 1999, the Committee approved the
granting of restricted stock to certain eligible key employees, including the
Chief Executive Officer and each executive officer. These shares of restricted
stock were granted under the 1997 Equity Participation Plan as part of the
Company's program to retain the services of its key employees. The restrictions
on the shares do not lapse until the later to occur of (a) the third anniversary
of the granting of the shares and (b) normal retirement, early retirement with
consent of the Chief Executive Officer of the Company (or, in the case of the
Chief Executive Officer of the Company, with the consent of the Committee), or a
termination of employment of the grantee that is not initiated by, and not
voluntary on the part of the grantee, other than for cause. The restrictions
also lapse upon the death or total disability of the grantee. In the event of a
termination of the grantee's employment prior to the lapse of the restrictions,
the Company may repurchase the shares for $.01 per share. In consideration of
the granting of the shares of restricted stock, each grantee agreed to a
non-competition covenant. In 1999, Mr. Lemieux was granted 60,000 shares of such
restricted stock.
For some foreign executives, the receipt of restricted stock is not tax
effective. In those cases, phantom stock units are issued in lieu of shares of
restricted stock. The terms under which the phantom stock units vest are
substantially the same as those applicable to the lapsing of restrictions on
shares of restricted stock. Upon the vesting of each phantom stock unit, the
grantee will receive one share of the Company's common stock.
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.
11
<PAGE>
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 1999 such that his total
compensation will not in any event exceed the $1 million deductibility limit in
2000. Of the amount deferred by Mr. Lemieux for 1999, $538,203 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
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OWENS-ILLINOIS S&P 500 REVISED PACKAGING GROUP PREVIOUS PACKAGING GROUP
<S> <C> <C> <C> <C>
1994 $100.00 $100.00 $100.00 $100.00
1995 $131.82 $137.58 $112.24 $118.19
1996 $206.82 $169.17 $145.51 $146.27
1997 $344.88 $225.60 $186.56 $175.63
1998 $278.41 $290.08 $156.79 $165.82
1999 $227.84 $351.12 $154.91 $228.68
</TABLE>
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 "revised" packaging group presented above reflects changes from the
"previous" packaging group which was presented in the prior year performance
graph. American National Can Group, Inc. has been added using market quotations
from the date first available in July, 1999. This addition to the packaging
group did not have a significant effect on the total return for 1999. The
following companies were removed from the previous packaging group because they
have divested the lines of business or product end uses which were comparable to
those of the Company: Johnson Controls, Inc., The Mead Corp., Reynolds Metals
Co., and Tredegar Industries. Their elimination from the packaging group in 1999
did not have a significant effect on total returns for prior periods. Aluminum
Co. of America ("Alcoa") has also been eliminated from the group. Based on
market capitalization, Alcoa accounted for over 25% of the previous packaging
group's weighted average return in 1999. Because Alcoa's packaging businesses
are relatively small compared to its non-packaging businesses, the Company
determined that it should be eliminated from the group. The elimination of Alcoa
did not have a significant effect on total returns for
13
<PAGE>
any of the periods presented except 1999. The performance of the group as
constituted in the prior year is shown as the "previous" packaging group.
The "revised" packaging group consists of: AptarGroup, Inc., Avery Dennison
Corp., Ball Corp., Bemis Company, Inc., BWAY Corp., Chesapeake Corp., Crown Cork
& Seal Company, Inc., Liqui-Box Corp., Multi-Color Corp., Owens-Illinois, Inc.,
Sealed Air Corp., Silgan Holdings Inc., Sonoco Products Co., U.S. Can Corp., and
Vitro Sociedad Anonima (ADSs).
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.
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 13, 2000 (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. No director,
nominee for director, named executive officer or other executive officer
beneficially owned any of the Company's preferred stock.
<TABLE>
<CAPTION>
NUMBER OF
NAME AND ADDRESS SHARES BENEFICIALLY
OF BENEFICIAL OWNER OWNED(1) PERCENTAGE
- ------------------------------------------------------------ ------------------- ----------
<S> <C> <C>
KKR Associates, L.P.(2)..................................... 36,000,000 24.5%
9 West 57th Street
New York, New York 10019
FMR Corp.(3)................................................ 20,177,262 13.7
82 Devonshire Street
Boston, Massachusetts 02109
Sanford C. Bernstein & Co., Inc.(4)......................... 13,263,010 9.0
767 Fifth Avenue
New York, New York 10153
Putnam Investments, Inc.(5)................................. 9,260,581 6.3
One Post Office Square
Boston, MA 02109
State Street Bank and Trust Company(6)...................... 16,176,606 11.0
225 Franklin Street
Boston, MA 02110
Joseph H. Lemieux(1)........................................ 925,166(7)(8) 0.6
Thomas L. Young(1).......................................... 160,372(7)(8) 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 0.2
John J. McMackin, Jr.(1).................................... 28,019 --
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
NAME AND ADDRESS SHARES BENEFICIALLY
OF BENEFICIAL OWNER OWNED(1) PERCENTAGE
- ------------------------------------------------------------ ------------------- ----------
<S> <C> <C>
Michael W. Michelson(2)(9).................................. 20,000 --
George R. Roberts(2)........................................ -- --
Peter J. Robinson(1)........................................ 20,000(7)(8) --
R. Scott Trumbull(1)........................................ 172,996(7)(8) 0.1
Terry L. Wilkison(1)........................................ 57,444(7)(8) --
All directors and executive officers as a group (other than
as set forth in relation to KKR Associates, L.P.) (28
persons)(1)............................................... 2,598,289(7)(8) 1.8
</TABLE>
- ------------------------
(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, Young, Dineen, Lanigan, McMackin, Robinson, Trumbull and Wilkison.
The number of shares beneficially owned includes 325,000 shares subject to
options granted to Mr. Lemieux; 83,491 shares subject to options granted to
Mr. Young; 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; 47,500 shares subject to options granted to
Mr. Trumbull; and 943,339 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.). Mr. Robinson and Mr. Wilkison hold no options exercisable
within 60 days. For purposes of this table, Mr. Robinson is deemed to have
"beneficial ownership" of 20,000 phantom stock units issued under the
Company's 1997 Equity Participation Plan.
(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, Michael W. Michelson, James H. Greene, Jr., Edward A. Gilhuly (all
directors of the Company), Robert I. MacDonnell, Paul E. Raether,
Michael T. Tokarz, Perry Golkin, 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 Schedule 13G received by the Company from FMR Corp. ("FMR"), Edward C.
Johnson 3d, Abigail P. Johnson and Fidelity Management & Research Company
("Fidelity"), indicated that Fidelity, a wholly-owned subsidiary of FMR and
an investment advisor under the Investment Advisors Act of 1940, is the
beneficial owner of 18,613,351 shares of the Common Stock as a result of
acting as investment advisor to various investment companies. The number of
shares of Common Stock owned by the investment companies at December 31,
1999 included 726,250 shares of Common Stock resulting from the assumed
conversion of 765,200 shares of the $2.375 Convertible Preferred Stock
(0.949 shares of Common Stock for each share of the $2.375 Convertible
Preferred Stock). Edward C. Johnson 3d, FMR, through its control of
Fidelity, and the funds each has sole power to dispose of the
15
<PAGE>
18,613,351 shares owned by the funds. Fidelity Management Trust Company, a
wholly-owned subsidiary of FMR, is the beneficial owner of 1,383,801 shares
of Common Stock outstanding of the Company as a result of its serving as
investment manager of the institutional account(s). The number of shares of
Common Stock owned by the institutional account(s) at December 31, 1999
included 84,280 shares of Common Stock resulting from the assumed conversion
of 88,800 shares of the $2.375 Convertible Preferred Stock described above.
Edward C. Johnson 3d and FMR, through its control of Fidelity Management
Trust Company, each has sole dispositive power over 1,383,801 shares of
Common Stock and sole power to vote or to direct the voting of 781,921
shares of Common Stock, and no power to vote or to direct the voting of
601,880 shares of Common Stock owned by the institutional account(s) as
reported above.
(4) The Schedule 13G received by the Company from Sanford C. Bernstein & Co.,
Inc. indicated it is beneficial owner of 13,263,010 shares of Common Stock
with sole dispositive power with respect to 13,263,010 shares of Common
Stock, shared dispositive power with respect to 0 shares of Common Stock,
sole voting power with respect to 5,708,849 shares of Common Stock and
shared voting power with respect to 1,627,066 shares of Common Stock. The
foregoing 13G indicated that for the shares for which shared voting power is
indicated, Sanford C. Bernstein & Co., Inc. clients have appointed an
independent voting agent to vote such shares in the same manner as
Sanford C. Bernstein & Co., Inc.
(5) The Schedule 13G received by the Company from Putnam Investments, Inc.
("PI") indicated that the filing was made on behalf of PI, its parent
company, Marsh & McLennan Companies, Inc. ("MMC"), two subsidiaries of PI
which are registered investment advisors, Putnam Investment Management, Inc.
("PIM") and The Putnam Advisory Company, Inc. ("PAC"). The Schedule 13G
filing further stated that neither MMC nor PI have any power to vote or
dispose of, or direct the voting or disposition of, any of the securities
covered by the Schedule 13G. The Schedule 13G indicated that PI had shared
voting power over 566,856 shares of Common Stock and shared dispositive
power over 9,260,581 shares of Common Stock; PIM had shared dispositive
power over 8,588,330 shares of Common Stock; and that PAC had shared voting
power over 566,856 shares of Common Stock and shared dispositive power over
672,251 shares of Common Stock.
(6) The Schedule 13G received by the Company from State Street Bank and Trust
Company ("State Street"), acting in various fiduciary capacities, indicated
it is beneficial owner of 16,176,606 shares of Common Stock, with sole
voting power with respect to 2,357,308 shares of Common Stock, shared voting
power with respect to 13,596,607 shares of Common Stock, sole dispositive
power with respect to 8,440,044 shares of Common Stock, and shared
dispositive power with respect to 7,736,562 shares of Common Stock. The
majority of the shares with respect to which State Street is the beneficial
owner are owned on behalf of (a) the Owens-Illinois Hourly Supplemental
Retirement Plan, (b) the Owens-Illinois Non-Union Retirement and Savings
Plan, (c) the Owens-Illinois Stock Purchase and Savings Program, and
(d) the Owens-Illinois Long Term Savings Plan. State Street expressly
disclaims beneficial ownership of all of the shares of Common Stock reported
in the Schedule 13G pursuant to Rule 13D-4.
(7) The table includes the number of shares of Common Stock that Joseph H.
Lemieux, Thomas L. Young, R. Scott Trumbull, Terry L. Wilkison 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 29, 2000. No shares are held in such program for Peter J. Robinson.
16
<PAGE>
(8) The number of shares shown as beneficially owned includes the following
number of shares of unvested restricted stock over which the following
persons or group had voting, but not investment, power as of February 29,
2000; Mr. Lemieux--149,212 shares; Mr. Young--20,000 shares;
Mr. Trumbull--15,000 shares; Mr. Wilkison--15,000 shares; and all directors
and officers as a group (other than as set forth in relation to
KKR Associates, L.P.)--313,098 shares. The number of shares shown as
beneficially owned by Mr. Robinson includes 20,000 phantom stock units
issued under the Company's 1997 Equity Participation Plan.
(9) 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.
The limited partnership agreements pursuant to which two of the limited
partnerships noted in footnote 2 above (the "KKR Partnerships") were organized,
by their terms, expired on December 31, 1999. The limited partnership agreement
may be amended by all of the limited partners to extend the term beyond such
date. No such amendment has been adopted. There can be no assurance that KKR
Associates, L.P., as general partner of the KKR Partnerships, will seek an
amendment or, if sought, that an amendment will be approved by the limited
partners. In connection with the dissolution and winding up of the limited
partnerships, KKR Associates, L.P. has sole discretion regarding the timing
(which may be one or more years after the expiration of the partnership
agreements) and manner of the disposition of any Common Stock held by such
limited partnerships, including public or private sales of such Common Stock,
the distribution of such Common Stock to the limited partners of the limited
partnerships or a combination of the foregoing.
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 2000.
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 146,952,743 shares of the Company's Common Stock was
outstanding at the close of business on March 13, 2000. 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 2000 Annual Meeting.
17
<PAGE>
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 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 a particular proposal.
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.
18
<PAGE>
OTHER MATTERS
Management of the Company does not know of any matter that will be presented
for action at the 2000 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, all of its
directors and executive officers made all required filings on time during 1999,
except that for 1999, Michael D. McDaniel filed one report late covering one
transaction.
SHARE OWNER PROPOSALS AND NOMINATIONS FOR 2000 ANNUAL MEETING
A share owner desiring to submit a proposal for inclusion in the Company's
Proxy Statement for the 2001 Annual Meeting must deliver the proposal so that it
is received by the Company no later than December 1, 2000. The Company requests
that all such proposals be addressed to James W. Baehren, Secretary,
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 1999 Annual
Report to each share owner entitled to vote at the Annual Meeting. Included in
the 1999 Annual Report are the Company's consolidated financial statements for
the year ended December 31, 1999.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1999, 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, 2000
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[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
James W. Baehren 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 13, 2000, at the Annual Meeting of Share Owners to be
X held on May 10, 2000, or at any adjournment thereof.
Y Election of Directors, Nominees:
Class III: Joseph H. Lemieux and Michael W. Michelson
(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
