1994
Notice of Annual Meeting
and Proxy Statement
(Picture of Quaker logo goes here)
Annual Meeting of Shareholders
9:30 a.m., Wednesday, November 9, 1994
Bob Carr Performing Arts Centre
Orlando Centroplex
401 West Livingston Street
Orlando, Florida 32801
THE QUAKER OATS COMPANY
321 NORTH CLARK STREET
Chicago, IIlinois 60610
October 3, 1994
Dear Shareholder:
You are cordially invited to attend the 1994 Annual Meeting of Shareholders
of The Quaker Oats Company on Wednesday, November 9, 1994, at 9:30 a.m.
(EST) at the Bob Carr Performing Arts Centre, Orlando Centroplex, 401 West
Livingston Street, Orlando, Florida.
The items of business to be acted on during the meeting include the
election of four directors to serve three-year terms expiring November
1997; the ratification of the appointment of Arthur Andersen LLP as
independent public accountants for fiscal 1995; amendments of the 1990
Long Term Incentive Plan; an amendment to increase the number of
authorized shares; a shareholder proposal; and such other business
as may properly come before the meeting or any adjournment thereof. The
accompanying Proxy Statement contains complete details on the proposals
and other matters.
I hope that you can attend this year's meeting. If you plan to attend,
you may obtain an admittance card by completing the enclosed reservation
form and returning it with your proxy. If your shares are held by a bank
or broker, you may obtain an admittance card by returning the reservation
form they forwarded to you. If, however, you do not receive a reservation
form directly from the Company, or the bank or broker holding your shares,
you may still obtain an admittance card by sending a written request,
accompanied by proof of ownership (such as your brokerage statement), to
Shareholder Services, The Quaker Oats Company, P.O. Box 049001,
Suite 25-9, Chicago, Illinois 60604-9001. For your convenience, we
highly recommend that you bring your admittance card to the meeting so
you can avoid the lines in the registration area and proceed directly to
the auditorium. However, if you do not have an admittance card by the
time of the meeting, please bring proof of ownership to the registration
area located in the lobby of the Bob Carr Performing Arts Centre, where
our personnel will assist you.
Your participation in the affairs of the Company is important, regardless
of the number of shares you hold. To ensure your representation at the
meeting, whether or not you are able to be present, please complete and
return the enclosed proxy card as soon as possible. If you do attend the
meeting, you may then revoke your proxy and vote in person if you so desire.
I look forward to seeing you on November 9. Coffee will be served after
the meeting, when the members of the Board of Directors hope to visit
with you.
Cordially,
William D. Smithburg
Chairman and Chief Executive Officer
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
October 3, 1994
To the Shareholders of The Quaker Oats Company:
Notice is hereby given that the Annual Meeting of Shareholders of The Quaker
Oats Company will be held on Wednesday, November 9, 1994 at the Bob Carr
Performing Arts Centre, Orlando Centroplex, 401 West Livingston Street,
Orlando, Florida at 9:30 a.m. (EST), for the following purposes:
To elect four directors in Class lI to serve for three-year terms
expiring in November 1997 or until their successors are elected
and qualified;
To ratify the Board of Directors' appointment of Arthur Andersen LLP as
independent public accountants for the Company for fiscal 1995;
To amend The Quaker Long Term Incentive Plan of 1990 to increase by 4.0
million the number of shares which may be granted under the Plan;
To amend The Quaker Long Term Incentive Plan of 1990 to permit stock
option exercises for up to five years following retirement or death;
To amend the Company's Restated Certificate of Incorporation to increase
by 200,000,000 the number of authorized shares of common stock;
To consider a shareholder proposal concerning annual election of
directors; and
To transact such other business as may properly come before the meeting
or any adjournment thereof.
By resolution of the Board of Directors, only shareholders of record as of
the close of business on September 21, 1994 are entitled to notice of, and
to vote at, the Annual Meeting. The Annual Report of the Company,
including financial statements for the year ended June 30, 1994, has been
mailed to all shareholders.
By order of the Board of Directors,
Luther C. McKinney
Corporate Secretary
TABLE OF CONTENTS
Page
Notice of Annual Meeting of Shareholders 3
Proxy Statement 4
Election of Directors 5
The Board of Directors 10
Attendance 10
Compensation and Benefits 10
Compliance with Section 16(a) 10
Committees 11
Ownership of the Company's Securities 12
Executive Compensation 13
Summary Compensation Table 13
Option Grants Table 15
Option Exercises Table 16
Pension Plans 16
Termination Benefits 17
Compensation Committee Report 19
Performance Graph 22
Director's Proposals 23
Ratification of Appointment of Independent Public Accountants 23
Amendment of 1990 Long Term Incentive Plan - Shares 23
Amendment of 1990 Long Term Incentive Plan - Stock Options 24
Amendment of Certificate of Incorporation - Authorized Shares 25
Shareholder Proposal 26
Annual Election of Directors 26
For 1995 Annual Meeting 27
Other Business 27
Location of Annual Meeting 28
Additional Information 29
PROXY STATEMENT
This proxy statement is being mailed to shareholders on or
about October 3, 1994 and is furnished in connection with
the solicitation of proxies by the Board of Directors of The
Quaker Oats Company (the " Board" and the "Company") for
use at the Annual Meeting of Shareholders to be held on
November 9, 1994, including any adjournment thereof.
The Annual Meeting is called for the purposes stated in the
accompanying notice of the meeting. All shareholders of the
Company's $5.00 par value common stock and Quaker
Series B ESOP Convertible Preferred Stock as of the close
of business on September 21, 1994 are entitled to vote at
the meeting. As of that date, there were ____________
outstanding shares of common stock and ___________
outstanding shares of Quaker Series B ESOP Convertible
Preferred Stock. Treasury shares are not included in the
totals. On each matter coming before the meeting, a
common stock shareholder is entitled to one vote for each
share of stock held as of the record date and a preferred
stock shareholder is entitled to 1.1 votes for each share held
as of the record date.
A majority of the outstanding shares entitled to vote must be
represented in person or by proxy at the meeting in order to
constitute a quorum for the transaction of business. A proxy
marked "abstain" on a matter will be considered to be
represented at the meeting, but not voted for purposes of
the election of directors and other matters put to a
shareholder vote at the meeting, and therefore will have no
effect on the vote. Shares registered in the names of
brokers or other "street name" nominees for which proxies
are voted on some, but not all matters, will be considered to
be voted only as to those matters actually voted, and will not
be considered for any purpose as to the matters with
respect to which a beneficial holder has not provided voting
instructions (commonly referred to as "broker non-votes").
If a proxy is properly signed and is not revoked by the
shareholder, the shares it represents will be voted at the
meeting by the Proxy Committee in accordance with the
instructions of the shareholder. If no specific instructions
are designated, the shares will be voted as recommended
by the Board.
A proxy may be revoked at any time before it is voted at the
meeting. Any shareholder who attends the meeting and
wishes to vote in person may revoke his or her proxy at that
time. Otherwise, revocation of a proxy must be
communicated in writing to the Corporate Secretary of the
Company at its principal office, P.O. Box 049001, Chicago,
Illinois 60604-9001.
If a shareholder is a participant in the Company's Dividend
Reinvestment and Stock Purchase Plan, Investment Plan,
Stock Bonus Savings Plan, or Employee Stock Ownership
Plan, the proxy card will represent the number of shares
registered in the participant's name and the number of whole
and fractional shares credited or allocated to the
participant's account under the plans. For those shares held
in the plans, the proxy card will serve as a direction to the
trustee or voting agent under the various plans as to how
the shares in the accounts are to be voted. Fractional
shares will not be voted in the Dividend Reinvestment and
Stock Purchase Plan.
Under the Company's Bylaws, for all matters submitted to
the shareholders for a vote, all proxies, ballots and voting
tabulations that identify how shareholders voted will be kept
confidential and not be disclosed to any of the Company's
directors, officers or employees except when disclosure is
mandated by law, is expressly requested by a shareholder,
or during a contested election for the Board.
The Company will bear the cost of the solicitation of proxies,
including the charges and expenses of brokerage firms and
other custodians, nominees and fiduciaries for forwarding
proxy materials to the beneficial owners of shares of stock.
Solicitations will be made primarily by mail, but certain
directors, officers or regular employees of the Company may
solicit proxies in person or by telephone or telegram without
special compensation. In addition, the Company has
retained Kissel-Blake Inc. to assist in soliciting proxies from
brokers, dealers, voting trustees, banks, and other
nominees and institutional holders for an estimated fee not
to exceed $20,000, plus reimbursement of reasonable out-
of-pocket expenses.
ELECTON OF DIRECTORS
The Restated Certificate of Incorporation of the Company
provides that the members of the Board shall be divided into
three classes with staggered three-year terms. The
Certificate requires that successors to directors whose terms
expire at each Annual Meeting of Shareholders shall be
elected at that meeting. The terms of the directors in Class lI
expire with this Annual Meeting.
The Board has nominated four persons for election as
directors in Class II to serve for three-year terms expiring in
November 1997 or until their successors are elected and
qualified. All nominees are currently serving as directors
and have consented to serve for the new term.
Biographical information (including ages as of October 3,
1994) follows for each person nominated and each director
whose term in office will continue after the meeting.
It is the intention of those persons named in the
accompanying proxy to vote in favor of the four nominees
listed below. Should any one or more of these nominees
become unavailable for election, the proxy will be voted for
such other persons, if any, as the Board may recommend.
The election of directors requires a plurality of the votes cast
at the meeting. If all nominees are elected, the Board will be
comprised of twelve members, nine nonemployee directors
and three directors who are officers of the Company.
NOMINEES FOR DIRECTOR
TERMS EXPIRING IN 1997
[Photos of each director are to the left of each biography]
JUDY C. LEWENT
Director
since January 1994
Age 45
Senior Vice President and Chief Financial Officer, Merck
& Co., Inc. (pharmaceuticals) since 1992; formerly Vice
President - Finance and Chief Financial Officer (1990-
1992); and Vice President and Treasurer (1987-1990).
Also a director of Astra Merck, Inc.; The DuPont Merck
Pharmaceutical Company; Johnson & Johnson Merck
Consumer Pharmaceuticals Company; Merck & Co., Inc.;
and Rockefeller Financial Services, Inc.
Member of the Company's Audit, Finance, Nominating
and Public Responsibility Committees.
PHILIP A. MARINEAU
Director
since 1990
Age 47
President and Chief Operating Officer since January
1993; formerly Executive Vice President and Chief
Operating Officer (July 1992-January 1993); Executive
Vice President - Grocery Products, North and South
America (1991-1992); Executive Vice President - U.S.
Grocery Products (1989-1991); and Executive Vice
President - International Grocery Products (1988-1989).
Also a director of Arthur J. Gallagher & Co.
Member of the Company's Executive Committee.
LUTHER C. McKINNEY
Director
since 1978
Age 63
Senior Vice President, Law and Corporate Affairs, and
Corporate Secretary of the Company.
Member of the Company's Executive Committee.
GERTRUDE G. MICHELSON
Director
since 1971
Age 69
Senior Advisor to R. H. Macy & Co., Inc. (retailing) since
September 1992; formerly Senior Vice President -
External Affairs, R. H. Macy & Co., Inc. (1981 - 1992).
Also a director of The Chubb Corporation; General
Electric Company; The Goodyear Tire & Rubber
Company; R.H. Macy & Co., Inc.; and The Stanley Works.
On January 27, 1992, R.H. Macy & Co., Inc. voluntarily
petitioned to reorganize its debts under bankruptcy laws.
Chairman of the Company's Public Responsibility
Committee and Member of the Compensation, Finance
and Nominating Committees.
DIRECTORS CONTINUING IN OFFICE
Terms Expiring in 1996
KENNETH I. CHENAULT
Director
since 1992
Age 43
President, USA, American Express Travel Related
Services Company, Inc. (financial and travel services);
formerly President, Consumer Card Group USA (1989-
1993); and Executive Vice President and General
Manager Personal Card Division, Amex (1988-1989).
Also a director of Brooklyn Union Gas Co.
Member of the Company's Audit, Finance, Nominating
and Public Responsibility Committees.
THOMAS C. MacAVOY
Director
since 1975
Age 66
Paul M. Hammaker Professor of Business
Administration, Colgate Darden Graduate School of
Business Administration, University of Virginia. Also a
director of The Chubb Corporation and The Lubrizol
Corporation.
Member of the Company's Audit, Nominating and
Public Responsibility Committees.
WALTER J. SALMON
Director
since 1971
Age 63
Stanley Roth Sr., Professor of Retailing, Harvard
Business School. Also a director of Circuit City Stores,
Inc.; Hannaford Bros. Co.; Luby's Cafeterias, Inc.;
Neiman-Marcus Group, Inc.; Promus Companies, Inc;
and Telxon Corporation.
Member of the Company's Finance and Nominating
Committees.
DIRECTORS CONTINUING IN OFFICE
Terms Expiring in 1995
FRANK C. CARLUCCI
Director
1983 - 1987
and then
since 1989
Age 63
Chairman, The Carlyle Group (merchant banking).
Formerly U.S. Secretary of Defense (November 1987 -
January 1989). Also Chairman of BDM International,
Inc. and a director of Ashland Oil, Inc.; Bell Atlantic
Corporation; C.B. Commercial Real Estate Group; East
New York Savings Bank; Ecotech, Inc.; General
Dynamics Corp.; Kaman Corporation; Neurogen Corp.;
Northern Telecom Limited; Upjohn Co.; Vought Aircraft
Co.; and Westinghouse Electric Corporation.
Chairman of the Company's Audit Committee and
Member of the Nominating and Public Responsibility
Committees.
SILAS S. CATHCART
Director
1964 - 1987
and then
since 1989
Age 68
Retired Chairman of Kidder, Peabody Group Inc., the
holding company for Kidder, Peabody & Co.
Incorporated (investment banking). Also a director of
Baxter International Inc.; General Electric Company;
Illinois Tool Works Incorporated; and Montgomery
Ward and Co.; and a trustee of the Bradley Trust,
Milwaukee and the Buffalo Bill Memorial Association.
Chairman of the Company's Compensation Committee
and Member of the Nominating Committee.
VERNON R. LOUCKS, JR.
Director
since 1981
Age 59
Chairman and Chief Executive Officer, Baxter
International Inc. (medical care products and services).
Also a director of Anheuser-Busch Companies, Inc.;
Dun & Bradstreet Corporation; and Emerson Electric Co.
Chairman of the Company's Nominating Committee and Member of
the Compensation and Executive Committees.
DIRECTORS CONTINUING IN OFFICE
Terms Expiring in 1995
WILLIAM D. SMITHBURG
Director
since 1978
Age 56
Chairman and Chief Executive Officer of the Company
since October 1983; and also served as President
(November 1990 - January 1993). Also a director of
Abbott Laboratories; Corning Incorporated; Northern
Trust Corporation; and Prime Capital Corp.
Member of the Company's Executive Committee and
ex-officio member of the Nominating Committee.
WILLIAM L. WEISS
Director
since 1985
Age 65
Chairman Emeritus, Ameritech Corporation
(telecommunications) since May 1994; formerly
Chairman and Chief Executive Officer (1984 - 1994).
Also a director of Abbott Laboratories; Merrill Lynch Co;
and Tenneco Inc.
Chairman of the Company's Finance Committee and
Member of the Compensation, Executive and
Nominating Committees.
THE BOARD OF DIRECTORS
Attendance
During the fiscal year ended June 30, 1994, the Board held
six regular meetings. The average attendance of directors at
the meetings was 92%. In addition to membership on the
Board, each nonemployee director serves on one or more
standing committees of the Board. Attendance at all
meetings of the Board and committees averaged 89%
among the directors in fiscal 1994. Vernon R. Loucks, Jr.
attended 67% and William L. Weiss attended 50% of the
total number of meetings of the Board and of committees of
which each was a member.
Compensation and Benefits
Directors who are full-time salaried employees of the
Company are not compensated for their service on the
Board or any committee. Directors who are not employees
of the Company receive an annual retainer of $45,000.
They are also paid a fee of $1,000 per day for each Board
meeting attended, $1,000 for each committee meeting
attended and $1,000 for each action taken by unanimous
written consent, plus travel and lodging expenses where
appropriate. A committee chairman receives an annual
retainer of $5,000.
Under the Deferred Compensation Plan for Directors of The
Quaker Oats Company each nonemployee director may
elect to defer receipt of all or a portion of his or her
compensation until the individual ceases to be a director.
The deferred amounts may be carried at the option of the
director as Cash Units, and credited with interest; Common
Stock Units, which are deferred amounts converted into
whole units on a quarterly basis by dividing the deferred
amount by the fair market value of the Company's common
stock, and credited with amounts equivalent to dividends as
paid on the Company's common stock, which are converted
into additional Common Stock Units; or a combination of
Cash Units and Common Stock Units. The accumulated
deferred amounts will be distributed in cash as of the next
January 1 after the Director leaves the Board, or in equal
annual installments (not exceeding 15) commencing as of
the next January 1 after the Director leaves the Board
pursuant to the director's election, with Common Stock Units
valued at the fair market value of the Company's common
stock immediately prior to the payment date. If the director
has not attained age 55 at the time of leaving the Board,
payments in accordance with the foregoing will be made or
commence on the January 1 next following the director's
attainment of age 55.
Under The Quaker Oats Company Stock Retirement Plan
for Outside Directors separate accounts are opened by the
Company for each nonemployee director. On July 1 of each
year, each account is credited with Common Stock Units
representing 400 shares of the Company's common stock.
In addition, the account is credited with Common Stock
Units with a value equivalent to cash dividends payable on
the shares represented by Units in the account. All accrued
common stock represented by Units in a director's account
will be distributed in kind as of the next January 1 after the
director leaves the Board, or in equal annual installments
(not exceeding 15) commencing as of the next January 1
after the director leaves the Board, pursuant to the director's
election.
Compliance with Section 16(a)
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors, executive officers and
persons who beneficially own more than 10% of a registered
class of the Company's equity securities to file reports of
ownership and changes in ownership with the SEC and the
New York Stock Exchange (the "NYSE"). The Company
inadvertently caused one report for Frank C. Carlucci and
two reports for William L. Weiss to be filed late with respect
to deferred compensation credited to them under the
Deferred Compensation Plan. To the best of the Company's
knowledge, all such reports relating to stock ownership and
all other reports required to be filed under Section 16(a) by
the Company's directors and executive officers were timely
filed.
Committees
The Board has appointed six standing committees from
among its members to assist it in carrying out its obligations.
Committee membership and responsibilities are reviewed by
the Board in November of each year, and committee
appointments are made by the Board in November of every
fourth year. The principal responsibilities of each committee
are described in the following paragraphs.
The Audit Committee, comprised entirely of nonemployee
directors, is primarily concerned with the effectiveness of the
Company's accounting policies and practices, financial
reporting and internal controls. Specifically, the Committee
recommends to the Board the firm to be appointed as the
Company's independent public accountants, subject to
ratification by the shareholders; reviews and approves the
scope of the annual examination of the books and records of
the Company and its subsidiaries and reviews the audit
findings and recommendations of the independent public
accountants; considers the organization, scope and
adequacy of the Company's internal auditing function;
monitors the extent to which the Company has implemented
changes recommended by the independent public
accountants, the internal audit staff, or the Committee; and
provides oversight with respect to accounting principles to
be employed in the Company's financial reporting. The
Committee met three times during fiscal 1994.
The Compensation Committee, comprised entirely of
nonemployee directors, oversees the Company's
compensation and benefit policies and programs, including
administration of the Management Incentive Bonus Plan,
Long Term Incentive Plan of 1990, and 1984 Long-Term
Incentive Plan. It also recommends to the Board annual
salaries, bonuses and stock option awards for elected
officers and certain other key executives. The Committee
met four times during fiscal 1994.
The Executive Committee, comprised of three directors
who are also officers of the Company and two nonemployee
directors, exercises all the powers and authority of the
Board in the management of the business and affairs of the
Company during the intervals between meetings of the
Board, subject to the restrictions set forth in the Bylaws.
The Committee acted by unanimous written consent three
times during fiscal 1994.
The Finance Committee, comprised entirely of
nonemployee directors, is charged with reviewing the
Company's annual financing plan, including its projected
financial condition and requirements for funds; approving
certain long-term debt borrowing arrangements; advising the
Board on all financial recommendations requiring Board
approval; and monitoring the investment performance of the
Company's pension funds and participant directed
investment accounts. The Committee met two times during
fiscal 1994.
The Nominating Committee, comprised of all the
nonemployee directors and Mr. Smithburg as an ex-officio
member, develops and recommends to the Board guidelines
with respect to the size and composition of the Board and
criteria for the selection of candidates for director. It also
recommends the slate of director nominees to be included in
the proxy statement, and recommends candidates to fill any
vacancies that may occur and candidates for directorships
created by an increase in the total number of directors.
The Committee will entertain nominees for directorships
recommended by shareholders. A shareholder
recommendation should be sent to the Committee in care of
the Corporate Secretary of the Company, accompanied by a
statement of the nominee indicating willingness to serve if
elected. The nomination should also state the shareholder's
reasons for the recommendation and should disclose the
principal occupations the nominee has held over the past
five years and a list of all publicly held companies for which
the individual serves as a director. The Committee met two
times during fiscal 1994.
The Public Responsibility Committee, comprised entirely
of nonemployee directors, provides guidance on the
Company's policies and programs in major areas of social
responsibility and corporate citizenship, including product
quality and safety and other consumer issues,
environmental protection, equal employment opportunity
and employee health and safety. It also reviews and
approves policy guidelines and budgets for the Company's
corporate contributions program. The Committee met two
times during fiscal 1994.
OWNERSHIP OF THE COMPANY'S SECURITIES
As of September 1, 1994, The Quaker Employee Stock Ownership Plan, through
The Quaker Employee Stock Ownership Trust, The 1988 Quaker Employee Stock
Ownership Trust and The 1989 Quaker Employee Stock Ownership Trust
beneficially owned 5,531,229 shares of common stock of the Company,
representing 8.1% of the outstanding common stock of the Company. This
amount includes 1,326,195 shares of the Company's common stock based on
the conversion of 1,227,958 shares of the Company's Series B ESOP
Convertible Preferred Stock (at the conversion rate of 1.08) held in The
1989 Quaker Employee Stock Ownership Trust and representing 100 % of
the outstanding stock of that class.
As of September 1, 1994, each director, each nominee, and all directors
and executive officers of the Company as a group beneficially owned the
number of shares of the Company's common stock set forth in the following
table. Shares subject to acquisition within 60 days through the exercise
of stock options are shown separately.
<TABLE>
<CAPTION>
Amount and nature Shares subject
Name of individual of beneficial to acquisition
or persons in group ownership (a) within 60
days (a)
<S> <C> <C>
Frank C. Carlucci 3,043 (b)(c) 0
Silas S. Cathcart 11,862 (c)(d) 0
Kenneth I. Chenault 1,236 (c) 0
James F. Doyle 10,229 (e)(f) 74,226
Judy C. Lewent 400 (c) 0
Vernon R. Loucks, Jr. 5,200 (c) 0
Thomas C. MacAvoy 5,200 (c) 0
Philip A. Marineau 54,756 (e)(f)(g)(h) 217,669
Luther C. McKinney 35,125 (e)(f)(g) 137,912
Gertrude G. Michelson 5,400 (c) 0
Walter J. Salmon 8,491 (c) 0
William D. Smithburg 125,585 (e)(f)(g) 353,921
Robert S. Thomason 15,444 (e)(f)(g)(i) 81,402
William L. Weiss 4,657 (c)(j) 0
All directors and
executive officers
as a group 440,516 (e)(f)(g) 1,440,147
</TABLE>
(a) Unless otherwise indicated, each named individual and
each person in the group has sole voting power and sole
investment power with respect to the shares shown. These
shares represent less than 1% for every person, and
approximately 3% for all directors and executive officers as
a group, of the total shares outstanding, including shares
subject to acquisition within 60 days after September 1,
1994.
(b) Of these shares, 150 are held in a custodial account for
Mr. Carlucci's daughter, through which he shares voting and
investment power with his wife.
(c) The figures shown for these directors include an
aggregate of 29,980 common stock units credited to them
under The Quaker Oats Company Stock Retirement Plan for
Outside Directors.
(d) Of these shares, 6,780 are held in a trust of which Mr.
Cathcart is a co-trustee and has a contingent beneficial
interest and shares voting and investment power.
(e) The figures shown for these executive officers include an
aggregate of 45,772 shares (which includes 7,091 shares
on the basis of the conversion of 6,566 shares of Series B
ESOP Convertible Preferred at the conversion rate of 1.08)
allocated to them in The Quaker Employee Stock Ownership
Plan.
(f) The figures shown for these executive officers include an
aggregate of 79,337 shares granted to them under The
Quaker Long Term Incentive Plan of 1990 for which the
restricted period has not lapsed.
(g) The figures shown for these executive officers include an
aggregate of 26,341 shares representing their proportionate
interests in the Quaker Stock Fund of The Quaker
Investment Plan.
(h) Of these shares, 100 are owned jointly by Mr. Marineau
and his mother, and 1,156 are held in trust of which his
children have beneficial interest.
(i) Of these shares, 800 are held in trust of which Mr.
Thomason's children have beneficial interest and through
which he has voting and investment power.
(j) Of these shares, 400 are held in a trust of which Mr.
Weiss' wife is income beneficiary.
EXECUTIVE COMPENSATION
The following table details annual and long term compensation paid during
the Company's three most recent fiscal years to the Company's Chairman
and Chief Executive Officer and four most highly compensated executive
officers for fiscal 1994 ("Named Executives").
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long Term Compensation
Other Restricted All
Annual Stock Other
Fiscal Salary Bonus Compensation Awards Options Compensation
Name Year ($) ($)(1) ($)(2) ($)(3) (#)(4) ($)(5)
<S> <C> <C> <C> <C> <C> <C> <C>
William D. Smithburg 1994 $825,006 $570,000 $2,607 $83,316 170,000 $165,520
Chairman and Chief 1993 $795,000 $748,800 $2,208 $81,940 100,000 $175,074
Executive Officer 1992 $762,667 $476,000 $-- $79,999 100,000 -
Philip A. Marineau 1994 $595,834 $415,000 $3,261 $56,673 60,000 $116,530
President and Chief 1993 $533,500 $500,700 -0- $1,974,811 60,000 $110,481
Operating Officer 1992 $386,833 $271,000 - $38,672 48,000 -
James F. Doyle 1994 $299,208 $254,800 -0- $25,247 24,000 $55,753
Senior Vice President - 1993 $270,790 $221,100 -0- $19,416 30,000 $54,938
President - Gatorade 1992 $215,506 $110,000 - $10,932 16,000 -
Worldwide Division
Luther C. McKinney 1994 $354,678 $199,300 -0- - 22,000 $64,984
Senior Vice President - 1993 $340,500 $255,700 -0- $21,766 30,000 $67,730
Law and Corporate Affairs, 1992 $324,017 $158,000 - $23,886 30,000 -
and Corporate Secretary
Robert S. Thomason 1994 $349,168 $163,200 $109,592 $31,958 24,000 $67,210
Senior Vice President - 1993 $325,017 $249,400 $131,579 $9,667 21,000 $48,941
International Grocery 1992 $296,698 $61,000 $-0- $-0- 13,000 -
Products
</TABLE>
(1) Amounts for fiscal
1993 include the cash awards that have been paid
under the Management Incentive Bonus Plan ("MIB") based on the Company's
financial performance and the Named Executive's personal performance for
fiscal 1993; and the portions of the MIB awards for fiscal 1992 which
were withheld from the fiscal 1992 MIB award pool and put at risk,
subject to achievement of certain Company financial objectives during
the first half of fiscal 1993. The financial objectives were achieved in
fiscal 1993, and the withheld 1992 MIB awards were paid in fiscal 1993
along with the 1993 MIB awards as follows: Mr. Smithburg, $123,800
and $625,000; Mr. Marineau, $75,700 and $425,000;
Mr. Doyle, $31,900 and $189,200; Mr. McKinney, $41,100 and $214,600; and
Mr. Thomason, $9,700 and $239,700.
(2) Of the amount
shown for Mr. Thomason, $87,346 represents additional
payments relating to his overseas assignment.
(3) Restricted stock
award values reflect the fair market value of the
Company's common stock on the date of each grant. The values include
individual restricted stock awards and Company matching awards of
restricted stock under a broad-based long term incentive program, the
Incentive Investment Program.
In December 1993, vesting was accelerated by one month from January 1994
for the pro-rata portion of restricted stock awards granted in fiscal 1991
for Messrs. Smithburg and Marineau: respectively, 40,000 shares of the
Company's common stock and 20,400 shares of Mattel Inc. common stock;
and 6,668 shares of the Company's common stock and 3,401 shares of Mattel
Inc. common stock. A discussion of the acceleration is contained in the
"Compensation Committee Report".
Dividends on restricted shares were and continue to be paid on an on-going
basis at the same rate as paid to all shareholders. The aggregate number
and value of restricted shares for each of the Named Executives, valued as
of the last day of fiscal 1994 (6/30/94) are as follows:
<TABLE>
<CAPTION>
Number of
Name Shares Description Value
<S> <C> <S> <C>
Mr. Smithburg 3,777 Quaker common stock $266,770
Mr. Marineau 32,191 Quaker common stock $2,273,650
Mr. Doyle 851 Quaker common stock $60,106
Mr. McKinney 710 Quaker common stock $50,147
Mr. Thomason 629 Quaker common stock $44,426
</TABLE>
Upon a change in control (see "Pension Plans"), restricted shares
outstanding on the date of the change in control will be cancelled and
an immediate lump sum cash payment will be paid which is equal to the
product of (1) the higher of (i) the closing price of common stock as
reported on the NYSE Composite Index on or nearest to the date of
payment (or, if not listed on such exchange, on a nationally recognized
exchange or quotation system on which trading volume in the common
stock is highest) or (ii) the highest per share price for common stock
actually paid in connection with the change in control and (2) the number
of shares of such restricted stock.
(4)All stock option awards in fiscal 1994 were granted with an exercise
price that is equal to the fair market value of the Company's common
stock on the date of the grant. Fifty percent of the stock option awards
in fiscal 1992 and fiscal 1993 were granted with an exercise price that
is equal to the fair market value of the Company's common stock on the
date of the grant. The remaining 50% were granted with an exercise price
that is 125% of the fair market value of the Company's common stock on
the date of grant.
(5) Amounts shown are the total of the value of the stock allocations to
the Named Executives under The Quaker Employee Stock Ownership Plan
("ESOP"), and cash awards to the Named Executives based on earnings in
excess of the Internal Revenue Code limits on the amount of earnings deemed
eligible for purposes of the annual stock allocations made directly under
the ESOP.
The following table contains information covering the grant of stock
options to the Named Executives during fiscal 1994 under the Company's
Long Term Incentive Plan. The exercise price for options granted is equal to
the fair market value of the Company's common stock on the date of the grant.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants (1) for Option Term (2)
% of Total
Options
Granted to
Options Employees
Granted in FiscalExerciseExpiration
Name (#) Year Price ($/Sh) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
William D. Smithburg 90,000 6.2% $68.88 09/08/03$3,898,644 $9,879,928
80,000 5.5% $69.06 01/12/04$3,474,517 $8,805,108
Philip A. Marineau 60,000 4.1% $68.88 09/08/03$2,599,096 $6,586,619
James F. Doyle 24,000 1.7% $68.88 09/08/03$1,039,638 $2,634,648
Luther C. McKinney 22,000 1.5% $68.88 09/08/03 $953,002 $2,415,094
Robert S. Thomason 24,000 1.7% $68.88 09/08/03$1,039,638 $2,634,648
</TABLE>
(1) Options were granted to Mr. Smithburg on September 8, 1993 and January
12, 1994. All other options were granted on September 8, 1993. One-third
of the options granted will vest on each of the three anniversaries
following the date of grant. The options would be cancelled and a lump
sum cash payment would be paid for realizable value upon the occurrence
of a change in control. (See "Pension Plans".)
(2) Based on fair market value on the date of grant and an annual
appreciation at the rate stated (compounded annually) of such fair
market value through the expiration date of such options. The dollar
amounts under these columns are the result of calculations at the 5%
and 10% stock price appreciation rates set by the Securities and Exchange
Commission and therefore do not forecast possible future appreciation, if
any, of the Company's stock price. However, the total of the "Potential
Realizable Value" for the Named Executives would represent less than 0.5%
of the incremental increase of approximately $3 billion and $7 billion
respectively, in the "Potential Realizable Value" that shareholders would
realize under both the prescribed 5% and 10% stock price appreciation
rates.
The following table contains information covering the exercise of options
by the Named Executives during fiscal 1994 and unexercised options held
as of the end of fiscal 1994.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<CAPTION>
Value of Unexercised,
Number of In-the-
Unexercised Money Options
Options at Fiscal Year
at Fiscal Year End (#) End ($) (2)
Shares
Acquired On Value
Name Exercise (#)Realized ($) (1)ExercisableUnexercisable
Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
William D. Smithburg5,705 $262,965.13291,221271,000$5,502,337$519,945
Philip A. Marineau3,401 $146,928.31178,069116,520$3,471,790$247,107
James F. Doyle 1,385 $60,007.2056,406 49,540 $871,590$113,054
Luther C. McKinney-0- $-0- 106,012 52,300$2,184,736$109,554
Robert S. Thomason6,516 $367,542.1566,552 42,490$1,811,117 $91,737
</TABLE>
(1) Represents the difference between the option exercise price and the
fair market value of the Company's common stock on the date of exercise.
(2) Represents the difference between the option exercise price and the
fair market value of the Company's common stock on the last day of fiscal
1994 (6/30/94).
Pension Plans
The Company and its subsidiaries maintain several pension
plans. The Quaker Retirement Plan (the "Retirement Plan"),
which is the principal plan, is a noncontributory, defined
benefit plan covering eligible salaried and hourly employees
of the Company who have completed one year of service as
defined by the Retirement Plan.
Under the Retirement Plan, the participant accrues a benefit
based upon the greater of a Years-of-Service Formula and
an Earnings/Service Formula. Under the Years-of-Service
Formula, participants accrue annual benefits equivalent to
credited years of service times $216. Under the
Earnings/Service Formula, a participant's benefit is the sum
of two parts:
1. Past Service Accrual -- Benefits accrued through
December 31, 1994 are set at the greater of (a) those
earned or (b) 1% of Five-Year Average earnings to $22,700
plus 1.65% of earnings above $22,700, times credited years
of service; and
2. Future Service Accrual -- For each year beginning
January 1, 1994 and after, participants accrue benefits of
1.75% of annual earnings to 80% of the Social Security
wage base plus 2.5% of annual earnings above 80% of the
Social Security wage base.
Eligible earnings used to calculate retirement benefits
include wages, salaries, bonuses, contributions to The
Quaker Investment Plan and allocations under The Quaker
Employee Stock Ownership Plan. Normal retirement age
under the Retirement Plan is age 65. The Retirement Plan
contains provision for early retirement benefits.
Benefit amounts payable under the Retirement Plan are
limited to the extent required by the Employee Retirement
Income Security Act of 1974 ("ERISA"), as amended, and
the Internal Revenue Code of 1986, as amended. If the
benefit formula produces an amount in excess of those
limitations, the excess will be paid out of general corporate
funds in accordance with the terms of The Quaker 415
Excess Benefit Plan, and The Quaker Eligible Earnings
Adjustment Plan. The Quaker Eligible Earnings Adjustment
Plan also provides for payment out of general corporate
funds, based upon benefit amounts which would otherwise
have been payable under the Retirement Plan and The
Quaker 415 Excess Benefit Plan, if the executive had not
previously elected to defer compensation under the
Executive Deferred Compensation Plan.
The Quaker Supplemental Executive Retirement Program
(the "SERP"), may also provide retirement benefits for
officers of the Company designated as participants by the
Compensation Committee. Benefit amounts payable under
the SERP are intended to provide a minimum base
retirement benefit and are therefore offset by amounts
payable under the Retirement Plan, The Quaker 415 Excess
Benefit Plan and The Quaker Eligible Earnings Adjustment
Plan. The SERP benefit is based upon a participant's
average annual earnings for the five consecutive calendar
years during which earnings were highest within the last ten
years of service multiplied by a percentage based upon the
participant's age at his termination date. For the Chief
Executive Officer this percentage ranges from 40% (for a
termination from ages 50 to 55) to 60% (for a termination at
age 65 or later), and for other participants from 35% to 50%
(based upon such ages at termination).
The estimated annual retirement benefits that the Named
Executives would receive under the Retirement Plan, The
Quaker 415 Excess Benefit Plan, The Quaker Eligible
Earnings Adjustment Plan, and the SERP, if each retired at
age 65, are as follows: William D. Smithburg, $842,265;
Philip A. Marineau, $371,541; James F. Doyle, $211,754;
Luther C. McKinney, $272,450; and Robert S. Thomason,
$192,066. The amounts assume that the Named Execu-
tives will continue to work for the Company until their normal
retirement dates and that their earnings will remain the
same as in calendar year 1993 and that each will elect a
straight-lifetime benefit without survivor benefits. (Payment
options such as a 50% joint and survivor annuity or other
annuities are available.)
The Retirement Plan assures active and retired employees
that, to the extent of sufficient plan assets, it will continue in
effect for a reasonable period following a change in control
of the Company without a reduction of anticipated benefits,
and under certain circumstances may provide increased
benefits.
Generally, under the Retirement Plan a change in control
shall be deemed to have occurred in any of the following
circumstances:
(i) An acquisition of 30% or more of Quaker stock unless
such acquisition is pursuant to an agreement with the
Company approved by the Board before the acquisition
becomes the beneficial owner of 5% of the Company's
outstanding voting power;
(ii) A majority of the Board of Directors is comprised of
persons who were not nominated by the Board of Directors
for election as directors;
(iii) A plan of complete liquidation of the Company; or
(iv) A merger, consolidation or sale of all or substantially all
of the Company's assets unless thereafter (a) directors of
Quaker immediately prior thereto continue to constitute at
least 50% of the directors of the surviving entity or
purchaser; or (b) Quaker's securities continue to represent,
or are converted to securities which represent, more than
70% of the combined voting power of the surviving entity or
purchaser.
For a five-year period following a change in control of the
Company, the accrual of benefits for service during such
period cannot be decreased while there are excess assets
(as defined in the Retirement Plan). For a two-year period
following such a change in control, the accrued benefits of
members who meet specified age and service requirements
and who are terminated will be increased. For so long as
there are excess assets during that five-year period, if the
Retirement Plan is merged with any other plan, the accrued
benefit of each member and the amount payable to retired
or deceased members shall be increased until there are no
excess assets. If during that five-year period the Retirement
Plan is terminated, to the extent that assets remain after
satisfaction of liabilities, the accrued benefits shall be
increased such that no assets of the Retirement Plan will
directly or indirectly revert to the Company.
Termination Benefits
The Company has entered into Executive Separation
Agreements (the "Separation Agreements") with the Named
Executives and other executive officers. The Separation
Agreements provide for separation pay should a change in
control of the Company occur (as described for the
Retirement Plan). The Separation Agreements were
unanimously approved by the nonemployee directors.
Under the Separation Agreements, the executive's
employment must be terminated involuntarily, without cause,
whether actual or "constructive" (demotion, relocation, loss
of benefits, or other changes in the executive's terms of
employment short of actual termination) following a change
in control, for separation pay to be available. Under the
Separation Agreements for Messrs. Smithburg and
Marineau, separation pay is also available upon voluntary
termination occurring during the thirteenth month following a
change in control.
Under the Separation Agreements, separation pay equals
two years' annualized base salary and bonuses awarded
pursuant to the Management Incentive Bonus Plan and the
value of life and health insurance coverage and pension
credited service extended for each executive for a period of
two years. The Separation Agreements provide that the
amount of tax penalties under the Internal Revenue Code to
be paid by any person shall be reimbursed to the executive
officer by the Company. The Separation Agreements
terminate two years from their date of execution and are
subject to renewal by the Board.
The Board believes that the Separation Agreements assure
fair treatment of the covered executives, as the benefits
provided are comparable to termination benefits afforded in
the past by the Company to executive officers.
Furthermore, by assuring the executive of some financial
security, the Separation Agreements protect the
shareholders by neutralizing any bias of these executives in
considering proposals to acquire the Company. The Board
believes that these advantages outweigh the disadvantage
of the cost of the benefits.
The officers of the Company also participate in the Quaker
Officers Severance Program (the "Program"). Under the
Program, severance benefits are payable if an officer's
employment is terminated for any reason other than death,
physical or mental incapacity, voluntary resignation,
retirement or gross misconduct. Severance benefits will
continue for a period based on years of service (nine
months continuation for less than ten years of service; 12
months continuation for ten or more years of service).
Severance benefits to be continued are the executive's base
salary at the time of termination, the average bonus for the
past two years under the MIB plan, and medical and life
insurance coverage as in effect at the time of severance.
The program is irrevocable until its termination in 1995, and
is subject to renewal by the Board.
The Board believes that the Program assures fair treatment
to the covered executives by providing termination benefits
in the event of involuntary termination, regardless of whether
such occurrence follows a change in control. The Board
believes that these advantages outweigh the disadvantages
of the cost of the benefits.
The officers of the Company also participate in The Quaker
Salaried Employees Compensation and Benefits Protection
Plan (the "Protection Plan"). Under the Protection Plan,
severance pay and benefits are provided should a change in
control occur (as described for the Retirement Plan) and an
employee's employment is terminated within two years
thereafter for any reason other than death, physical or
mental incapacity, voluntary resignation, retirement or gross
misconduct. Severance payments may be paid in a lump
sum or monthly installments (as determined by the
Protection Plan's Administrative Committee). Severance
payments shall be based on the amount of nine months pay,
plus two weeks pay for each year of service over 20 years.
Pay is to be based on an employee's current salary plus
bonus, if any. Severance benefits are to be continued for a
minimum of nine months, plus two weeks for each year of
service over 20 years, and include all health and medical
benefits, and life insurance coverage at the time of
termination. Only the greater of the severance payment and
benefits to be provided under the Program or the Protection
Plan will be provided to an officer eligible under both,
following a change in control.
The Board believes that the Protection Plan assures fair
treatment of all salaried employees following a change in
control, in coordination with the Separation Agreements and
the Program. The Board believes that these advantages
outweigh the disadvantages of the cost of the benefits.
Under The Quaker Long Term Incentive Plan of 1990 (the
"Incentive Plan"), upon the occurrence of a change in
control (as described for the Retirement Plan), options and
restricted stock outstanding on the date on which the
change in control occurs shall be cancelled, and an
immediate lump sum cash payment shall be paid to the
participant equal to the product of (1) the higher of (i) the
closing price of Quaker common stock as reported on the
NYSE Composite Index on or nearest the date of payment
(or, if not listed on such exchange, on a nationally
recognized exchange or quotation system on which trading
volume in Quaker common stock is highest), or (ii) the
highest per share price for Quaker common stock actually
paid in connection with the change in control (and with
respect to options, reduced by the per share option price of
each such option held, whether or not then fully
exercisable), and (2) the number of shares covered by each
such option, or shares of restricted stock.
Upon the occurrence of a change in control, performance
shares, performance units and other stock based awards
provided for under the Incentive Plan, and still outstanding,
shall also be cancelled, and any profit and/or performance
objective with respect to performance shares and
performance units shall be deemed to have been attained to
the full and maximum extent. An immediate lump sum cash
payment relating thereto shall be paid to the participant in an
amount determined in accordance with the terms and
conditions set forth in the applicable agreement.
If making of payments pursuant to a change in control would
subject the participant to an excise tax under Section 4999
of the Internal Revenue Code or would result in the Company's
loss of a federal income tax deduction for those payments
(either of these consequences is referred to individually as a
"Tax Penalty"), then the Company shall reduce the number
of benefits to be cancelled to the extent necessary to avoid
the imposition of such Tax Penalty. In addition, the
Company shall establish procedures necessary to maintain
for the participants a form of benefit which may be provided
under the Incentive Plan so that such participant will be in
the same financial position with respect to those benefits not
cancelled as he would have been in the ordinary course,
absent a change in control and assuming his continued
employment, except that the foregoing with respect to the
cancellation of benefits, shall not apply if such participant (i)
is entitled to a tax reimbursement for such Tax Penalty
under any other agreement, plan or program of the Company, or
(ii) disclaims any portion of or all payments to be made
pursuant to or under any other agreement, plan or program
of the Company in order to avoid such Tax Penalty.
Disagreements as to whether such payments would result in
the imposition of a Tax Penalty shall be resolved by an
opinion of counsel chosen by the participant and reasonably
satisfactory to the Company.
The Company entered into a trust agreement, known as The
Quaker Oats Company Benefits Protection Trust (the "Trust"
or "Trust Agreement"). The Trust is to be used to set aside
funds necessary to satisfy the Company's obligations to
present and former executives and directors under deferred
compensation programs and agreements, and with respect
to certain retirement and termination benefits, in the event of
a change in control (as described for the Retirement Plan).
Following a change in control, the Trust Agreement
becomes irrevocable, and the Trust shall be funded to
provide for the payment of such obligations accrued at the
time of a change in control. The Trust may also be funded
for the purpose of paying legal expenses incurred by
executives in pursuing benefit claims under such programs
and agreements following a change in control. The Trust is
currently funded only to a nominal extent.
The Trust assets relating to Company contributions are
always subject to the claims of the general creditors of the
Company. No executive with any right or interest to any
benefit or future payment under the Trust Agreement shall
have any right or security interest in any specific asset of the
Trust, nor shall he have any right to alienate, anticipate,
commute, pledge, encumber, or assign any of the benefits
or rights which he may expect to receive from the Trust or
otherwise.
Compensation Committee Report
The Company's executive compensation program is
administered by the Compensation Committee of the Board
(the "Committee"). All members of the Committee are
nonemployee directors. The Committee determines the
compensation of all executive officers of the Company,
including that of the Named Executives. In reviewing the
compensation of individual executive officers (other than Mr.
Smithburg), the Committee takes under consideration the
recommendations of management and the input of leading
compensation consultants. The Committee's determinations
on the compensation of the Chief Executive Officer and
other executive officers are reviewed with all nonemployee
directors who constitute a majority of the full Board.
Overall Policy
The Company's compensation programs have long been
tied closely to Company performance leading to creation of
shareholder value. The Company's compensation programs
are therefore aimed at enabling it to attract and retain the
best possible executive talent, and rewarding those
executives commensurately with their ability to drive
increases in shareholder value.
At least once each year, the Committee conducts a
comprehensive review of the Company's executive
compensation programs. The purpose of the review is to
insure that the Company's executive compensation
programs remain consistent with competitive practice, and
that the programs are meeting their objective of creation of
shareholder value. In its review, the Committee considers
data provided by management. It also considers data
provided by leading compensation consultants, with whom the
Committee meets privately.
The Committee reviewed the proposed Internal Revenue
Service regulations under Section 162(m) of the Internal
Revenue Code covering tax deductibility of compensation in
excess of $1 million to the Named Executives.
The Company took action to modify its Long Term Incentive
Plan in November 1993 in order to conform to Section
162(m) regarding the deductibility of gains from stock
options. These changes were submitted to and approved by
shareholders in November 1993.
The Internal Revenue Service has issued proposed
regulations intended to provide guidance as to what types of
changes would put companies in compliance with the
provisions of Section 162(m). However, these proposed
regulations may change significantly before final regulations
are adopted. The Committee believes it would be premature
at this time to make changes in the Company's key
compensation programs based on preliminary drafts of
regulations.
When more definitive guidance is available, the Committee
will determine if any changes are appropriate to the
Company's compensation programs and consistent with
shareholder interests. The Committee has determined that
the effect of Section 162(m) on the Company's
compensation tax deduction will not be material.
Compensation Programs
The Company's compensation programs consist of base
salary, a short-term cash incentive program (the
"Management Incentive Bonus Plan" or "MIB Plan"), and a
long-term incentive program consisting primarily of a broad-
based stock option program and selective use of restricted
stock. At the executive officer level, the mix of
compensation is weighted more heavily toward the
performance-based elements of compensation (short-term
and long-term incentive programs) rather than the more
fixed elements of compensation such as base salary. Of Mr.
Smithburg's total 1994 compensation, for example, 74%
came from the short-term and long-term incentive programs.
Base Salary
Base salaries for executive officers are determined in the
same manner as that of all other salaried employees.
Salary guidelines are established by comparing the
responsibilities of the individual's position in relation to
similar positions in other comparable companies. Individual
salaries are determined considering the person's
performance against personal objectives for the year. For
fiscal 1994, individual merit adjustments in base pay for
executive officers (including the most highly compensated)
ranged from 3% to 6%. The average 1994 pay increase of
4% for executive officers is the same as the average of the
salary increases granted to all salaried employees.
Annual Incentive
The Company's executive officers are eligible to receive an
annual cash incentive award under the MIB Plan. Including
the executive officers, there are approximately 740 key
managers who participate in the MIB Plan. Under the MIB
Plan, individual target bonuses are established based on
position level. Participants may receive more, or less, than
the target bonus depending upon their performance against
objectives established at the start of the year. For fiscal
1994, 30% of the total award is based on performance
against personal objectives and 70% of the total award is
based on how well the Company performs against financial
objectives.
The Company's financial performance is measured primarily
by progress made toward Controllable Earnings ("CE")
targets. CE is calculated as operating income adjusted for
certain financing costs, less a capital usage charge. Since
CE incorporates a capital usage charge into the internal
profit measure, its use holds all our key managers
accountable for the cost of the Company's investment in
their businesses. CE thus requires our managers to make
an economic valuation of every business decision, helping
us build long-term value for our shareholders. In addition to
CE, the Committee also considers performance against
other key financial measures such as earnings per share,
return on assets, sales and operating income.
It is important to note that in order for the financial portion of
the MIB to be paid at target levels, two criteria must be met.
The Company must meet its internal financial targets and
that result must produce superior financial performance
versus a comparison group of companies approved by the
Committee. This dual internal/external performance
criterion is unusual in competitive practice and provides
shareholders with additional assurance that annual bonus
payouts are directly linked to performance.
Long-Term Incentive
The Company has long believed in the importance of stock
ownership by all of its employees including management.
Consequently, its long-term incentive plans are focused on
stock-based vehicles.
The primary long-term incentive vehicle is a broad-based
stock option program in which approximately 720 key
managers participate, including the executive officers.
Participants are considered for annual awards of stock
options, based upon an assessment of each person's job
level, performance, potential, past award history, and
competitive practice. Stock options currently become
exercisable over a three-year period (1/3 per year) and have
a ten-year term. All stock options are priced at or above the
fair market value of the stock on the date of the grant.
A second broad-based long-term incentive program is the
Incentive Investment Program (the "IIP") introduced in 1992.
Under the IIP, the same group of 720 key managers has the
opportunity to invest up to 20% of their MIB awards in
Company stock. For each three shares purchased by the
manager, the Company matches with two shares of
restricted stock. The vesting of the restricted stock, which
occurs 50% at the end of three years and 100% at the end
of five years, is contingent both upon the manager's
continued employment and upon retaining the purchased
shares. The Committee believes the IIP provides an
incentive for key managers to purchase and hold Company
stock, thus further aligning their interests with those of
shareholders.
The Company also makes periodic use of restricted stock to
motivate and retain selected key employees. In determining
the appropriate restricted stock award, the Committee
considers the person's job level, their performance, potential
for future contribution and competitive practice. The
Committee also considers the timing and size of previous
awards of options and restricted stock.
CEO Compensation
In determining Mr. Smithburg's compensation, the
Committee considers the Company's financial and
nonfinancial performance, as well as an analysis of Mr.
Smithburg's total compensation in relation to that of CEOs in
a comparison group of companies approved by the
Committee. The Committee retained and met privately with
a leading compensation consultant for the purpose of
reviewing Mr. Smithburg's compensation.
The Committee approved a merit increase of 4% for Mr.
Smithburg in September 1993 for fiscal 1994. This increase
was consistent with the 4% average merit increases granted
to salaried employees as a whole.
The Company's key internal financial objective is to
enhance economic value as measured by CE growth. For
fiscal 1994, the Company's CE increased 11% versus the
previous year's result. Strong increases in CE resulting from
excellent domestic performance, were to some extent offset
by disappointing international results. Earnings per share,
excluding one-time items, of $4.32 represented a 4.6%
increase versus fiscal 1993, which was in line with the
average increase in earnings among the comparison group,
but below the Company's objective of 7% (after considering
inflation) earnings growth over time. The Company's
operating return on assets of 23.9%, excluding one-time
items, continues its strong record of year-to-year
improvement.
The Committee notes the significant progress the Company
has made in other key areas such as: the establishment of
a "Senior Leadership Team," comprised of the Company's
16 top officers, to drive value-enhancing change throughout
the organization; the Company's commitment to reengi-
neering and redesign of key processes to drive sustainable
competitive advantage; the establishment of an international
food strategy focusing on the opportunities for nutritionally-
fulfilling foods outside the United States; and, several
acquisitions and divestitures which continue to strengthen
the Company's portfolio of businesses.
Considering the Company's overall performance in fiscal
1994, the Committee approved an MIB award of $570,000 to
Mr. Smithburg for fiscal 1994. This represents a 9%
decrease compared to his 1993 MIB award of $625,000.
The Committee also approved two awards of stock options
under the Long Term Incentive Plan, or "LTIP", totaling
170,000 options for fiscal 1994, compared to 100,000
options awarded in fiscal 1993. The 1994 stock options
awards vest one-third per year for three years.
In determining the size of an award under the LTIP the
Committee considers the value of all types of long-term
incentive awards outstanding. The Committee relies upon a
widely-used valuation model supplied by a leading
compensation consulting firm to make such comparisons. In
1993, for example, the Committee considered the value of
both the annualized portion of Mr. Smithburg's 1991 award
of Restricted Stock and the 1993 award of 100,000 stock
options, and compared that combined award value to
comparable long-term incentive award values made to chief
executive officers in the comparison group of companies.
The last installment of Mr. Smithburg's 1991 award of
Restricted Stock was to vest in 1994 and no additional
award of Restricted Stock was made. Thus, in 1994, the
Committee considered the value of the 170,000 options
awarded in 1994 in comparing Mr. Smithburg's value to the
LTIP award values of CEOs in the comparison group.
The Committee considers Mr. Smithburg's total
compensation to be appropriate in light of the Company's
1994 performance and Mr. Smithburg's record of
shareholder value creation during his 13-year tenure as
Chief Executive Officer.
Other Matters
In December 1993, the vesting for portions of the restricted
stock awards granted in January 1991 to Messrs. Smithburg
and Marineau were accelerated one month by the
Committee into 1993 which were to otherwise vest in
January 1994. (See Summary Compensation Table,
Column entitled "Restricted Stock Awards" including the
footnotes thereto for further details.) The primary purpose
for this acceleration was for the Company to save
approximately $60,000 in taxes. Effective January 1994, the
Omnibus Budget Reconciliation Act of 1993 repealed the
$135,000 limit on compensation subject to the Medicare tax.
By accelerating the Restricted Stock award vesting into
1993, the Company did not have to pay the tax on that
portion of Messrs. Smithburg and Marineau' s compensation
which exceeded $135,000.
Subject to shareholder approval in November 1994, (see
Directors' Proposal, "Amendment of 1990 Long Term
Incentive Plan-Stock Options"), the Committee made Mr.
Smithburg's 1994 stock option award exercisable for five
years following his retirement or death as long as such
exercise is within the option's original ten-year term. In the
event the Directors' Proposal to amend the Long Term
Incentive Plan is not approved, Mr. Smithburg's 1994 stock
options would continue to be exercisable for three years
following retirement or death.
MEMBERS OF THE COMMITTEE
Silas S. Cathcart, Chairman
Vernon R. Loucks, Jr.
Gertrude G. Michelson
William L. Weiss
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total shareholder
return on the Company's common stock against the cumulative total return
of the Standard & Poor's 500 Stock Index and the Standard & Poor's Food
Index for the period of five years commencing June 30, 1989 and ending
June 30, 1994.
<TABLE>
Comparison of Cumulative Five - Year Total Return*
Quaker Oats, S&P 500 and S&P Foods
<CAPTION>
Fiscal Year Ending
6/89 6/90 6/91 6/92 6/93 6/94
<S> <C> <C> <C> <C> <C> <C>
Quaker 100 79 105 106 146 139
Oats
S&P 500 100 116 125 142 161 163
S&P 100 112 137 154 153 154
Foods
<FN>
*Assumes $100 invested on June 30, 1989 with reinvestment of dividends.
</TABLE>
DIRECTOR'S PROPOSALS
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the
Board has appointed Arthur Andersen LLP as independent
public accountants for the fiscal year ending June 30, 1995,
and is requesting ratification by the shareholders. Arthur
Andersen LLP (formerly known as Arthur Andersen & Co.)
has examined the financial statements of the Company each
fiscal year since 1970.
In the event the resolution is defeated, the adverse vote will
be considered as a direction to the Board to select other
independent public accountants for the next fiscal year.
However, because of the difficulty and expense of making
any substitution of independent public accountants after the
beginning of a fiscal year, it is contemplated that the
appointment for fiscal 1995 will be permitted to stand unless
the Board finds other reasons for making a change.
During fiscal 1994, Arthur Andersen LLP performed
recurring audit services including the examination of annual
financial statements, pension plans and limited reviews of
quarterly financial information. Fees for these services
aggregated approximately $1.6 million.
Arthur Andersen LLP also performed services for the
Company in other business areas, including tax and
accounting related services, for which fiscal 1994 fees
aggregated approximately $1.1 million. Andersen
Consulting LLP, the consulting arm of Arthur Andersen &
Co., S.C., also performed various consulting services for the
Company during fiscal 1994. Fees for these services
aggregated approximately $0.1 million.
Representatives of Arthur Andersen LLP will attend the
Annual Meeting and will have an opportunity to make a
statement, if they desire to do so, and to respond to
appropriate questions.
Ratification of the appointment of Arthur Andersen LLP as
independent public accountants requires the affirmative vote
of a majority of votes cast thereon.
The Board unanimously recommends a vote FOR
the proposal.
AMENDMENT OF 1990 LONG TERM
INCENTIVE PLAN - SHARES
The Quaker Long Term Incentive Plan of 1990 (the "Plan")
was approved by shareholders at the 1989 Annual Meeting,
and has been subsequently amended. The Board has
amended the Plan to increase by 4.0 million the number of
shares of the Company's common stock which may be
issued or sold, or for which options, stock appreciation rights
or performance shares may be granted under the Plan. The
amendment will become effective if a majority of the votes
cast are in favor of it.
The number of shares of the Company's common stock
available under the Plan when it was adopted was 6.0
million and was increased by 3.0 million to 9.0 million when
amended in 1992. As of September 21, 1994 there were
approximately 1.3 million shares available for further use, an
amount insufficient to make expected awards in 1995.
Since 1989 when the Plan was adopted, the Company's
stock-based compensation programs under the Plan have
changed materially with the objective of increasing value for
all shareholders.
Most shares have been used under the Plan to issue stock
options to members of key management. Traditionally the
exercise price of options has been the market price of the
Company's common stock on the date of grant. For fiscal
years 1992 and 1993, 50% of the options granted to
employees are at an exercise price 25% higher than market
price on the date of grant. All granted options are intended
to provide a strong incentive to employees to manage the
Company for maximum shareholder value.
In fiscal year 1992, the Company began another Program,
under the Plan, known as the Incentive Investment Program
(the "IIP"), which was aimed at further aligning the interests
of shareholders and employees. Under the IIP, employees
who participate in the MIB were offered the opportunity to
direct up to 20% of their MIB awards to purchase the
Company's common stock at full market value. For every
three shares purchased by the employee and issued under
the Plan at full market value, and held in the Company's
custody, the Company will issue two shares of restricted
stock in the employee's name. Restrictions on one of those
shares of restricted stock will expire three years after
issuance and on the other share five years after issuance, if
at that date (i) the employee is still employed by the
Company or one of its affiliates and (ii) the employee has
not sold any of the shares purchased at full market value.
The IIP should continue to encourage a broad base of
management and professional employees to invest a
meaningful amount of their own funds in the Company's
common stock and to hold that stock for a substantial period
during which they will have an increased community of
interest with other shareholders.
It should be noted that the shares available for future use
under the Plan are not only reduced by the number of
restricted shares issued under the IIP, but also by the
number of shares purchased by employees at full market
value under the IIP, thus mitigating some of the apparent
dilution resulting from the issuance of additional shares.
Under the Plan, shares have been used to date as follows:
Approximately 5.9 million options at fair market value on
date of issuance;
Approximately 1.4 million options at a 25% premium to
market value on date of issuance;
75,000 IIP shares purchased by employees at full market
value on date of issuance; 50,000 shares of restricted stock
issued under the IIP and contingent on continued employment
and holding of purchased shares; and
240,000 shares of other restricted stock.
The Company believes that the Plan as it has been
implemented has been of material benefit to the Company
and its shareholders, and that by increasing key employees'
proprietary interest in the Company it has also increased
their personal interest in the Company's success. The best
interests of the Company and its shareholders will be served
if the Company is in a position to continue to offer stock-
based incentives to its officers and managerial and
professional employees.
Accordingly, the Board unanimously recommends that the
Plan be amended to increase the number of shares
available under the Plan by 4.0 million to 13.0 million.
Approval of the foregoing proposal requires the affirmative
vote of a majority of the votes cast thereon.
The Board unanimously recommends a vote FOR
the proposal.
AMENDMENT OF 1990 LONG TERM
INCENTIVE PLAN - STOCK OPTIONS
The Plan as approved by shareholders at the 1989 Annual
Meeting provided that a stock option would terminate one
year after the employee's retirement or death, but not later
than the date the stock option expired pursuant to its terms.
The Plan was amended by the Board in 1990 pursuant to its
delegated authority to change this period to three years.
The Plan was subsequently amended by the Board pursuant
to its authority to change this period to five years. This
amendment is subject to shareholder approval, and the
amendment will become effective if a majority of the votes
cast are in favor of it.
The Plan is intended to align the interests of key employees
with shareholders by providing key employees with a
financial incentive to make decisions which drive share price
and therefore shareholder value over the longer term. (The
term of options granted under the Plan runs for ten years.)
The Company believes that shareholder value would be
enhanced by providing those key employees nearing
retirement with the opportunity to share in the potential gain
resulting from their decisions during an extended period
following their retirement (but not later than the option
expires pursuant to its terms).
Accordingly, the Board unanimously recommends that the
Plan be amended to provide that stock options granted in
1994 or later may be permitted to be exercised for up to five
years following retirement or death.
Approval of the foregoing proposal requires the affirmative
vote of a majority of the votes cast thereon.
The Board unanimously recommends a vote FOR
the proposal.
AMENDMENT OF CERTIFICATE OF INCORPORATION - AUTHORIZED SHARES
The Board unanimously recommends that the shareholders
approve the adoption of an amended Article Fourth of the
Company's Restated Certificate of Incorporation which
would increase the authorized number of shares of common
stock to 400,000,000. The Company presently has
authorized 200,000,000 shares of common stock. As of
August 31, 1994, 83,989,396 shares are issued, including
17,328,720 shares held in the Treasury, and 116,010,604
shares are unissued. The Company also has authorized
1,000,000 shares of preference stock, which are unissued
and not reserved for issuance, and 10,000,000 shares of
preferred stock, of which 1,000,000 shares are reserved for
issuance upon exercise of the Rights distributed by dividend
on July 30, 1986 pursuant to the Company's Shareholder
Rights Plan, and 1,750,000 shares are reserved for
issuance to The 1989 Quaker Employee Stock Ownership
Trust.
Proposed Article Fourth would not change the provisions of
the present Article Fourth in any manner other than to
increase the number of authorized shares of common stock.
The complete text of the proposed first sentence of Article Fourth
is set forth as follows:
Fourth. - The aggregate number of shares which
the Corporation shall have authority to issue is
411,000,000 shares divided into 400,000,000
shares of common stock of the par value of $5.00
per share, 1,000,000 shares of preference stock
without par value and 10,000,000 shares of
preferred stock without par value.
The Board believes that the adoption of this proposal is
advantageous to the Company and its shareholders
because it would provide authorized capital stock which
could be used for corporate purposes which the Board
deems desirable including, without limitation, financings,
acquisitions, stock splits, stock dividends, employee benefit
plans, dividend reinvestment plans and other distributions.
On September 14, 1994, the Board approved a two-for-one
split-up of the common stock (by way of a stock distribution)
conditional on approval by the shareholders of this
amendment. If this amendment is approved by the
shareholders, each shareholder of record of common stock
as of the close of business on November 9, 1994, shall be
deemed the holder of one additional share for each share
held at that time. On December 5, 1994, the Company will
distribute to each such shareholder a certificate or
certificates representing the additional shares to which the
shareholder is entitled. If a shareholder is a participant in
the Company's Dividend Reinvestment and Stock Purchase
Plan, the additional shares will be credited to the
Participant's account and reflected on the next reinvestment
statement.
If adopted, the Board believes that the increase in the number
of outstanding shares of common stock will be beneficial.
Although the effect on the market price of the shares of common
stock cannot be predicted with certainty, it is likely that the split-up
would initially result in a reduction by one-half of the market price
of each share. The market value of all shares held by a particular
shareholder should remain approximately the same. The lower
price per share resulting from the split-up is beneficial in that,
among other things, it may cause a broader market for, increased
liquidity of and greater investor interest in the shares of common
stock.
The two-for-one split-up will result in corresponding
adjustments in outstanding stock options and in authorized
limits for future awards of stock under The Quaker Long
Term Incentive Plan of 1990, and any other plans providing
for compensation of employees or directors of the Company
in shares of common stock or in units denominated in
shares of common stock. Passage of this proposal and the
other directors' proposal to increase the number of shares of
the Company's common stock which may be issued or
granted under The Quaker Long Term Incentive Plan of
1990 will result in each of those shares to be subject to the
split-up.
Except for the split-up, the Company presently has no plans
to issue any additional stock other than the issuance of
shares of common stock pursuant to the Dividend
Reinvestment and Stock Purchase Plan and existing employee
benefit plans.
The Company will apply for the listing on the NYSE of the
shares of common stock which will be issued if this
amendment is adopted and the stock split-up is effected.
Authorization of the additional shares of common stock will
allow the Company to maintain the current ratio of
authorized to issued shares after the proposed two-for-one
split-up. In addition, authorization of the additional shares
will enable the Company to continue to take timely
advantage of market conditions and the availability of
favorable opportunities without the delay and expense
associated with the holding of a special meeting of its
shareholders, unless required by law or stock exchange
regulations.
Holders of the common stock do not have any preemptive
rights to purchase new shares issued by the Company.
Therefore, issuance of additional common stock other than
pro rata, as in the case of the stock split-up, would have a
dilutive effect on the present voting power of the current
holders of the common stock.
Approval of proposed amended Article Fourth requires the
affirmative vote of two-thirds of the votes cast thereon.
The Board unanimously recommends a vote FOR the proposal.
SHAREHOLDER PROPOSAL
ANNUAL ELECTION OF DIRECTORS
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600
Virginia Avenue, N.W. Suite 215, Washington, D.C. 20037,
record holder of 100 shares of common stock of the
Company, has given notice that she will introduce the
following resolution and supporting statement at the
meeting:
RESOLVED: "That the shareholders of Quaker Oats Co.
recommend that the Board of Directors take the necessary
steps to reinstate the election of directors ANNUALLY,
instead of the stagger system which was recently adopted."
REASONS: "Until recently, directors of Quaker Oats were
elected annually by all shareholders."
"The great majority of New York Stock Exchange listed
corporations elect all their directors each year."
"This insures that ALL directors will be more accountable to
ALL shareholders each year and to a certain extent prevents
the self-perpetuation of the Board."
"Last year the owners of 17,592,340 shares, representing
approximately 30.4% of shares voting, voted FOR this
resolution."
"If you AGREE, please mark your proxy FOR this
resolution."
Approval of the foregoing shareholder proposal requires the
affirmative vote of a majority of the votes cast thereon.
The Board unanimously recommends a vote
AGAINST the proposal for the following reasons:
The same shareholder proposal was presented at the past
several Annual Meetings and has been consistently
opposed by an overwhelming majority of shares voted. At
the 1993 meeting, the proposal was opposed by 40,259,080
votes, or 69.6% of the total number of shares voted.
At the 1983 Annual Meeting, shareholders voted decisively
to amend the Certificate of Incorporation to provide in Article
Sixth for a classified Board of Directors with staggered
three-year terms. The proxy statement for that meeting
contained a detailed discussion with respect to reasons for
recommending the classified Board. A portion of that
discussion follows:
"The Board of Directors believes that the adoption
of this proposal is advantageous to the Company and its
shareholders because, by providing that directors will serve
three-year terms rather than one-year terms, it will enhance
the likelihood of continuity and stability in the composition of
the Company's Board of Directors and in the policies
formulated by the Board. The Board believes that this, in
turn, will permit it more effectively to represent the interests
of all shareholders, including responding to circumstances
created by demands or actions by a minority shareholder or
group."
"In recent years, there has been an increasing
number of attempts by various individuals and entities to
acquire significant minority positions in certain companies
with the intent of obtaining actual control of the companies
by electing their own slate of directors, or by achieving some
other goal, such as the repurchase of their shares at a
premium, by threatening to obtain such control."
In the opinion of the Board, the reasons set forth above are
still valid and the election of directors by classes should be
continued. A staggered, classified Board makes it more
likely that at any given time at least two-thirds of the
directors will be familiar with the principal businesses and
the key issues of current interest to the Company, thus
providing a valuable measure of continuity in managing the
affairs of the Company.
Under New Jersey corporation law, the amendment to
Article Sixth of the Certificate of Incorporation contemplated
by the shareholder proposal must first be approved by the
Board of Directors and then submitted to the shareholders
for a vote. The Board has not approved the shareholder
proposal. Thus, a vote in favor of the shareholder proposal
is only an advisory recommendation to the Board of
Directors that it take the steps to amend Article Sixth
consistent with such shareholder proposal.
SHAREHOLDER PROPOSALS FOR 1995
ANNUAL MEETING
Shareholders may submit proposals appropriate for
shareholder action at the Company's annual meetings
consistent with regulations adopted by the Securities and
Exchange Commission. To be considered for inclusion in
the Company's Proxy Statement and proxy for the 1995
Annual Meeting a proposal must be received by the
Company no later than June 5, 1995. Proposals should be
directed to Luther C. McKinney, Corporate Secretary, The
Quaker Oats Company, P.O. Box 049001, Chicago, Illinois
60604-9001.
OTHER BUSINESS
The Board is not aware of any matters requiring shareholder
action to be presented at the meeting other than those
stated in the Notice of Annual Meeting. Should other proper
matters be introduced at the meeting, those persons named
in the enclosed proxy have discretionary authority to act on
such matters and will vote the proxy in accordance with their
best judgment.
By order of the Board of Directors,
Luther C. McKinney
Corporate Secretary
October 3, 1994
LOCATION OF ANNUAL MEETING
(Map to the Bob Car Performing Arts Centre goes here)
Bob Carr Performing Arts
Centre
Directions from Orlando
Directions for Westbound I-4: International Airport:
1)Take exit #42, Colonial 1)Take 436 North to East-West
Drive/Highway 50. Expressway
2)Proceed straight through (approx. 3 miles).
the traffic light at the 2)Go West on East-West to I-4
bottom of the off-ramp to Expressway.
the next traffic light, 3)Go East on I-4 to Exit #40,
Amelia Street. Robinson Street.
3)Turn right on Amelia 4)Proceed straight through
Street to Revere Street. the traffic light at the
4)Turn left on Revere Street bottom of the off-ramp to
to Alexander Place. the next light,
5)Parking personnel will be Livingston Street.
available to direct you 5)Turn left on Livingston
into a parking lot. Street and proceed two
blocks to the main
Directions for Eastbound I-4: centroplex parking area.
1)Take exit #40, Robinson
Street.
2)Proceed straight through
the traffic light at the See next page for Parking
bottom of the off-ramp to Information.
the next light,
Livingston Street.
3)Turn left on Livingston
Street and proceed two
blocks to the main
centroplex parking area.
ADDITIONAL INFORMATION
Parking Information
To receive complimentary parking at any of the lots indicated on this
map, please identify yourself as a Quaker Shareholder to the parking
attendant.
Passengers may be dropped off in front of the Bob Carr Centre at the
half circle drive located adjacent to the outdoor plaza area on Livingston
Street.
Disabled parking is available in all parking areas. Please ask parking
attendant for the location.
Hotel Information
The Orlando Marriott Downtown hotel (formerly the Omni Orlando Hotel) is
located across the street from the Bob Carr Centre (see map).
If you would like to stay at this hotel the evening of November 8,
please call their reservations office at 1-800-574-3160 by October 25.
Identify yourself as a Quaker Shareholder to receive a special rate of $85
plus tax for a single or double room. Availability is limited.
Miscellaneous
If you think you may need more time getting into the auditorium, the doors
to the Bob Carr Centre will open at 8:15 a.m.
Complimentary hearing assisted head-sets will be available in limited
quantities at the Guest Relations desk in the lobby of the Bob Carr Centre.
This Notice of Annual Meeting
and Proxy Statement is
printed on recycled paper.
THE QUAKER OATS COMPANY
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
(Quaker logo and "1994 Proxy" appears down the left margin)
A vote FOR items 1,2,3,4 and 5 is recommended by the Board of Directors.
For all
1. Election of Directors-- For Withheld Except
Nominees: J.C. Lewent, (Oval appears here)
P.A. Marineau, L.C. McKinney
and G.G. Michelson
2. Ratification of Appointment of Independent For Against Abstain
Public Accountants
(Ovals appear here)
3. Amendment of 1990 Long Term For Against Abstain
Incentive Plan - Shares (Ovals appear here)
4. Amendment of 1990 Long Term For Against Abstain
Incentive Plan - Stock Options (Ovals appear here)
5. Amendment of Certificate of
Incorporation - For Against Abstain
Authorized Shares (Ovals appear here)
6. Shareholder Proposal-- For Against Abstain
Annual Election of Directors (Ovals appear here)
Dated , 1994
Signature
Signature
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SPECIFICATIONS MADE.
IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR ITEMS 1,2,
3,4 AND 5 AND AGAINST ITEM 6.
NOTE: Please sign exactly as name appears hereon. For joint account, both
owners should sign. When signing as executor, administrator, attorney,
trustee or guardian, etc., please sign your full title.
Proxy for Annual Meeting of November 9, 1994
This proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints William D. Smithburg, Silas S. Cathcart,
Thomas C. MacAvoy and Walter J. Salmon proxies each with power to
appoint his or her substitute to represent and to vote all shares of stock
of The Quaker Oats Company which the undersigned is entitled to vote at
the Annual Meeting of Shareholders of the Company to be held at the
Bob Carr Performing Arts Centre, Orlando Centroplex, 401 west Livingston
Street, Orlando, Florida on Wednesday, November 9, 1994 at
9:30 a.m. (EST), and any adjournment thereof, as indicated on the proposals
described in the proxy statement and all other matters properly coming
before the meeting.
Total Shares
IMPORTANT -- This proxy must be signed and dated on the reverse side.
