LANDAUER, INC.
2 SCIENCE ROAD, GLENWOOD, ILLINOIS 60425-1586
TELEPHONE (708) 755-7000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the annual meeting of stockholders of
Landauer, Inc., will be held at the office of Sidley and Austin, 55th Floor
Conference Center, Bank One Plaza, 10 South Dearborn Street, Chicago,
Illinois, at 4:00 p.m., local time, on Wednesday, February 2, 2000 for the
following purposes:
1. To elect two directors to hold office for a term of three years each.
2. To vote on the proposal to approve the selection of Arthur Andersen LLP
as our auditors for the fiscal year ending September 30, 2000.
3. To approve an incentive compensation plan for executive officers.
4. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on December 9,
1999 are entitled to notice of and to vote at the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. THEREFORE,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND DATE YOUR
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING AND VOTE IN PERSON,
YOUR PROXY WILL NOT BE USED.
James M. O'Connell
Vice President, Treasurer, Secretary
and Chief Financial Officer
December 27, 1999
<PAGE>
PROXY STATEMENT
Approximate Date of Mailing: DECEMBER 27, 1999
INFORMATION CONCERNING THE PROXY SOLICITATION
The enclosed proxy is solicited by the board of directors of Landauer, for
use at our annual meeting of stockholders to be held on Wednesday, February
2, 2000 at 4:00 p.m., local time, at the office of Sidley and Austin, 55th
Floor Conference Center, Bank One Plaza, 10 South Dearborn Street, Chicago,
Illinois, or any adjournments or postponements thereof. You may revoke your
proxy at any time prior to it being voted by giving written notice to the
Secretary of Landauer, by submission of a later dated proxy or by voting in
person at the meeting. The costs of solicitation, including the preparation,
assembly and mailing of proxy statements, notices and proxies, will be paid
by Landauer. Solicitations will be made by mail and, in addition, may be
made by the officers and employees of the Company personally or by telephone
or telegram. Forms of proxies and proxy material may also be distributed, at
our expense, through brokers, custodians and others to the beneficial owners
of the Common Stock. We have retained American Stock Transfer Company, 40
Wall Street, New York, New York.
On December 9, 1999, Landauer had outstanding 8,657,957 shares of Common
Stock, which is its only class of voting stock, held of record by
approximately 600 holders. Only stockholders of record at the close of
business on December 9, 1999 will be entitled to receive notice of and to
vote at the meeting. With respect to all matters which will come before the
meeting, each stockholder may cast one vote for each share registered in his
name on the record date. A stockholder may, with regard to the election of
directors (i) vote for the election of all named director nominees, (ii)
withhold authority to vote for all named director nominees or (iii) vote for
the election of all named director nominees other than any nominee with
respect to whom the stockholder withholds authority to vote by so indicating
in the appropriate space on the proxy. A stockholder may, with respect to
the proposal to approve the selection of Arthur Andersen LLP as auditors or
the proposal to approve the incentive compensation plan for executive
officers (i) vote FOR such proposal, (ii) vote AGAINST such proposal or (iii)
ABSTAIN from voting on such proposal. The shares represented by every proxy
received will be voted, and where a choice has been specified, the shares
will be voted in accordance with the specification so made. If no choice has
been specified on the proxy, the shares will be voted FOR the election of the
nominees as directors, FOR approval of Arthur Andersen LLP as auditors and
FOR the approval of the incentive compensation plan for executive officers.
The proxy also gives authority to the proxies to vote the shares in their
discretion on any other matter presented at the meeting. If a proxy
indicates that all or a portion of the shares represented by such proxy are
not being voted with respect to a particular proposal, such non-voted shares
will not be considered present and entitled to vote on such proposal,
although such shares may be considered present and entitled to vote on other
proposals and will count for the purpose of determining the presence of a
quorum. An abstention with respect to a proposal has the effect of a vote
against a proposal.<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table provides information as of December 9, 1999 concerning
beneficial ownership of common stock by each person known by Landauer to own
beneficially more than 5% of the outstanding shares of common stock, each
director, each director nominee, each executive officer named under the
caption "Executive Compensation" and all directors and executive officers as
a group. Unless otherwise noted, the listed persons have sole voting and
dispositive powers with respect to shares held in their names, subject to
community property laws if applicable.
Amount
Beneficially
Name of Beneficial Owner Owned Percent of Class
- -------------------------- -------- --------------
T. Rowe Price Associates 824,900 (1) 9.4%
David L. Babson & Co., Inc. 803,700 (2) 9.1%
Robert J. Cronin 1,500 (3) *
Dr. Gary D. Eppen 2,900 (3) *
Thomas M. Fulton 224,356 2.5%
Richard R. Risk 2,600 (3) *
Paul B. Rosenberg 84,070 (3, 4) 1.0%
Michael D. Winfield 1,958 (3) *
Brent A. Latta 57,859 (5) *
James M. O'Connell 59,000 (6) *
Dr. R. Craig Yoder 50,018 (7) *
All directors and executive officers
as a group (9 persons) 482,761 (8) 5.5%
- -----------------------
*Less than one percent.
(1) As reported in a statement on Schedule 13G filed with the
Securities and Exchange Commission on February 12, 1999. Includes 625,000
shares owned by the T. Rowe Price Small Cap Value Fund, Inc. T. Rowe Price
Associates expressly disclaims that it is the beneficial owner of such
securities. The address of this stockholder is 100 East Pratt Street,
Baltimore, MD 21201.
(2) As reported in a statement on Schedule 13G filed with the
Securities and Exchange Commission on January 21, 1999. The address of this
stockholder is One Memorial Drive, Cambridge, MA, 02142-1300.
(3) Includes 1,500 shares subject to options exercisable within 60
days after December 9, 1999.
(4) Includes 22,960 shares owned by Mr. Rosenberg's wife to which he
disclaims beneficial ownership.
(5) Includes 42,500 shares subject to options exercisable within 60
days after December 9, 1999.
(6) Includes 55,000 shares subject to options exercisable within 60
days after December 9, 1999.
(7) Includes 37,500 shares subject to options exercisable within 60
days after December 9, 1999.
(8) Includes 142,500 shares subject to options exercisable within 60
days after December 9, 1999.<PAGE>
ELECTION OF DIRECTORS
Members of Landauer's board of directors are divided into three classes
serving staggered three-year terms. The terms of two of the seven current
directors (Thomas M. Fulton and Paul B. Rosenberg) expire at the annual
meeting. They are Landauer's nominees for re-election to a three-year term.
Our by-laws provide that nominations for directorships by stockholders may be
made only pursuant to written notice received at our principal office not
less than 50 nor more than 75 days prior to the meeting. No such nominations
were received for the meeting. Directors are elected by a plurality of the
votes present in person or represented by proxy at the meeting and entitled
to vote on the election of directors. Thus, assuming a quorum is present,
the two persons receiving the greatest number of votes will be elected to
serve as directors. Accordingly, withholding authority to vote for a
director and non-votes with respect to the election of directors will not
affect the outcome of the election of directors. If a nominee should become
unavailable for election, the persons voting the accompanying proxy may in
their discretion vote for a substitute.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF THE NAMED
NOMINEES AS DIRECTORS OF LANDAUER.
The following table contains certain information as to the two nominees
for election at the annual meeting and each other person whose term of office
as a director will continue after the meeting. The nominees for election at
the meeting are indicated by an asterisk.
Expira-
tion Business Experience Has Been a
Date of During Past Director of Landauer
Current Five Years or its Predecessor
Name Term and other Directorships Tech/Ops, Inc. Since
- -----------------------------------------------------------------------------
Robert J. Cronin
(3) (4)
Age - 54 2002 Since 1999, Chairman of 1997
the Board and Chief
Executive Officer of Wallace
Computer Services; previously
President, Chief Executive
Officer and director.
Mr. Cronin joined Wallace
Computer Services in 1967,
initially holding various
sales management positions.
Wallace Computer Services
is a provider of
information management
products, services and solutions.
Dr. Gary D.
Eppen 2001 Since July, 1998 Deputy Dean of 1992
(4) Part-time Programs and Ralph and
Age - 63 Dorothy Keller Distinguished
Service Professor of Operations
Management, Graduate School of
Business, The University of Chicago.
Professor of Industrial Administration
since 1970. Dr. Eppen is also a
director of The Hub Group Inc.,
Lombard, Illinois, an intermodal
transportation marketing company.
*Thomas M. Fulton
(2)
Age - 66 2000 President and Chief Executive 1988
Officer of Landauer from January
1988 until December 1998;
previously General Manager
of the personnel dosimetry
division of Tech/Ops, Inc.,
Landauer's predecessor.
Mr. Fulton is a Director
of Great Lakes Chemical
Corporation, a diversified
producer of chemicals, and Octel
Corporation, a fuel additives
and specialty chemicals company.
Brent A. Latta
(1)
Age - 56 2002 President and Chief Executive 1998
Officer of Landauer since December,
1998. Mr. Latta joined Landauer
in 1987 as Vice President -
Marketing until 1997 when he
was elected Executive Vice President.
Richard R. Risk
(2) (3)
Age - 53 2002 President and Chief Executive 1997
Officer of Advocate Health
Care since 1995; previously
Mr. Risk served as President
and CEO of EHS Health Care
(which merged into Advocate
Health Care), a company specializing
in health care management.
*Paul B. Rosenberg
(2)
Age - 67 2000 Mr. Rosenberg is President and 1988
Chief Executive Officer
of Tech/Ops Corporation,
Boston, Mass., a consulting
firm, and is a director of
Tech/Ops Sevcon, Inc.,
Boston, Mass., a manufacturer
of electronic controllers.
Michael D. Winfield
(1) (3)
Age - 59 2001 Since February 1992, President 1994
and Chief Executive Officer (prior
to that date since 1983, a Vice
President) of UOP, a general
partnership of Honeywell
International, Inc. and
Union Carbide Corporation,
engaged in the licensing of
technologies to the oil
refining and petrochemical
industries.
(1) Member of the executive committee
(2) Member of the audit committee.
(3) Member of the compensation committee.
(4) Member of the governance committee.
The board of directors has an audit committee, a compensation
committee, an executive committee and a governance committee. The audit
committee reviews the results and scope of the audit and other services
provided by our independent public accountants and recommends the appointment
of independent public accountants to the board of directors. The
compensation committee approves all executive compensation and has
responsibility for granting stock options to eligible members of management
and administering our stock option and incentive plans. The governance
committee establishes corporate governance policy and selects nominees for
the board of directors. The governance committee will consider nominees that
have been properly and timely recommended by stockholders. See
"Stockholder's Proposals." The membership of each committee other than the
executive committee consists of non-employee directors. During fiscal 1999,
the audit committee met three times, the compensation committee met twice,
the executive committee did not meet and the governance committee met once.
During fiscal 1999, the board of directors held a total of six
meetings. No director attended fewer than 75 percent of the aggregate of the
total number of meetings of the board of directors and the total number of
meetings held by all committees of the board on which such director served.
Mr. Risk, the chairman of the audit committee, Mr. Michael D. Winfield,
then chairman of the compensation committee, and Dr. Gary D. Eppen, the
chairman of the governance committee, were paid $23,000 each in fiscal 1999
for their services as directors. The other directors (except Mr. Latta) were
paid $22,000 each. Landauer maintains a stock option plan for its non-
employee directors which provides an option for each eligible director to
purchase 5,000 shares of common stock at the fair market value on the date of
grant and vests ratably over 10 years. The plan, approved by stockholders at
the 1997 annual meeting, granted options to seven directors for a total of
35,000 shares at an option price of $22.31 per share on January 29, 1997.
Landauer formerly maintained a directors' retirement plan which provides
certain retirement benefits for non-employee directors. This plan was
terminated in January, 1997. Benefits accrued under the retirement plan are
frozen and will be payable to directors upon their retirement at age 70. As
of September 30, 1999, the aggregate liability for these benefits amounted to
$364,000, which has been accrued in the financial statements.<PAGE>
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the compensation
for services to Landauer for the last three fiscal years of our executive
officers.
Summary Compensation Table
Long-Term
Compensa-
tion
Awards
Secur- All
Annual ities Other
Fiscal Compensation Underlying Compen-
Year Salary($) Bonus ($) Options (#) sation ($)(1)
---- ------- -------- ---------- ----------
Brent A. Latta (2) 1999 $241,250 $60,000 50,000 $1,150
President & Chief 1998 196,250 60,000 - 1,150
Executive Officer 1997 183,000 65,000 - 1,150
James M. O'Connell 1999 $160,000 $45,000 20,000 $1,150
Vice President, 1998 152,750 35,000 - 1,150
Treasurer, 1997 144,500 44,000 - 1,150
Secretary, & Chief
Financial Officer
R. Craig Yoder 1999 $162,000 $50,000 30,000 $1,150
Vice President- 1998 151,500 50,000 - 1,150
Operations 1997 139,500 50,000 - 1,150
Mark D. Rahmel (3) 1999 $ 46,667 $ 8,300 - $ -
Vice President-
Marketing
Thomas M. Fulton (4)1999$ 94,403 $ - $ -
President and Chief 1998 295,500 90,000 - 1,150
Executive Officer 1997 279,000 100,000 - 1,150
(Retired)
(1) Represents the Company's contribution to its 401(k) plan on behalf of
each of these employees.
(2) Mr. Latta was elected as President and Chief Executive Officer effective
on December 1, 1998.
(3) Mr. Rahmel's employment began on May 31, 1999.
(4) Mr. Fulton retired as President and Chief Executive Officer effective
December 1, 1998.<PAGE>
STOCK OPTIONS GRANTS IN LAST FISCAL YEAR
Shown below is information regarding stock options granted in the year
ended September 30, 1999 to the Company's executive officers:
% of
Total Potential
Options Realizable Value
No. of Granted at Assumed
Shares to Excer- Annual Rates of
Underlying Employees cise Stock Price
Options in Price Expir- Appreciation for
Granted Fiscal ($/sh) ation Option Term (3)
(#)(1) Year (2) Date 5% 10%
------ ---- ---- ---- --- ---
Brent A. Latta 50,000 31.3% $26.44 11/09 $831,400 $2,106,950
James M.
O'Connell 20,000 12.5% 26.44 11/09 332,560 842,780
R. Craig Yoder 30,000 18.8% 26.44 11/09 488,840 1,264,170
Mark D. Rahmel - - - - - -
Thomas M. Fulton - - - - - -
(1) Each option becomes exercisable over a four-year period, with 25% of
the options becoming exercisable on the first, second, third, and fourth
anniversaries of the date of grant. Each option may become exercisable
earlier than its scheduled vesting date upon discretion of the board of
directors.
(2) The exercise price is the fair market value on the date of grant.
(3) Potential realizable value is calculated based on an assumption that
the price of Landauer's common stock appreciates at the annual rate shown,
compounded annually, from the date of grant of the option until the
expiration date of the option. The value is net of the exercise price but
is not adjusted for the taxes that would be due upon exercise. The 5% and
10% assumed rates of appreciation are required by the rules of the Securities
and Exchange Commission and do not represent Landauer's estimate of future
price. Actual gains, if any, upon the exercise of these options will depend
on the actual performance of the common stock.
AGGREGATED OPTION EXERCISES IN LAST YEAR
AND FISCAL YEAR-END OPTION VALUES
Shown below is information regarding exercises of stock options during
fiscal 1999 and holdings of unexercised stock options at September 30, 1999
by Landauer's executive officers.
Value of
No. of Shares Unexercised
Underlying In-the-money
Shares Unexercised Options at
Acquired Options Held at September 30,
on September 30, 1999 1999 ($)(1)
Exer- Value Exer- Unexer- Exer- Unexer-
cise Realized cisable cisable cisable cisable
---- ------ ---- ----- ------ -------
Brent A. Latta 40,000 $841,377 30,000 50,000 $291,250 $ -
James M.
O'Connell - - 50,000 20,000 443,438 -
R. Craig Yoder - - 30,000 30,000 291,250 -
Mark D. Rahmel - - - - - -
Thomas M. Fulton 99,251 1,842,247 - - - -
(1) Aggregate market value on September 30, 1999 less aggregate exercise
price.<PAGE>
Employment and Compensation Agreements. Landauer has entered into
employment agreements with Messrs. Latta and O'Connell and Dr. Yoder
providing for their employment in their respective capacities indefinitely.
The agreements provide that, in the event of termination of employment under
certain circumstances by Landauer other than for cause, death, disability or
voluntary termination, or by the executive for good reason (which includes a
good faith determination by the executive that he believes that he will not
be able to effectively discharge his duties or where Landauer fails to obtain
an assumption in writing of its obligations under the agreement by a
successor, as defined) the executive will become entitled to continuation of
base salary and average bonuses determined in accordance with the agreement
for a period of eighteen months and certain other benefits. The amounts
otherwise payable to the executive will be offset by any compensation earned
by the executive from employment with a new employer during the eighteen-
month period but will not be reduced below an amount equal to six month's
base salary and average bonuses. The benefits payable to Messrs. Latta and
O'Connell and Dr. Yoder under these agreements if their employment had been
terminated as of September 30, 1999 would have had an estimated value of
$493,000, $303,000 and $328,000, respectively.
Retirement Plan and Supplemental Retirement Plan. Messrs. Latta,
O'Connell, Rahmel and Fulton and Dr. Yoder participate in Landauer's
retirement plan, a defined benefit plan under which benefits are based upon
the average of the annual rates of base salary in effect as of October 1 of
each year for the period of five consecutive years which produces the highest
such average and also based on years of service as set forth below. U.S. tax
law places limitations on the annual compensation eligible for benefit
consideration and on the aggregate annual amount payable to an individual
under qualified retirement plans.
Messrs. Latta and O'Connell, and Dr. Yoder also participate in Landauer's
supplemental key executive retirement plan, under which a participant is
entitled to such payments during his life after retirement at age 65 as may
be necessary, when added to his benefits under other company-funded
retirement or profit sharing plans, to provide a minimum annual benefit equal
to 50% of his highest five-year average or final base salary, whichever is
greater. Such payments continue to a participant's spouse after the
participant's death, but at a decreased percentage of 25%. Benefits are
reduced by 2% (1% for spouses) for each year of service less than 25 years.
Mr. Fulton had been a participant in the supplemental plan until November,
1998, when he agreed to exchange any interest in such plan for a commitment
by Landauer to fund a split-dollar insurance arrangement. Under the terms of
the insurance arrangement, the present value of the insurance premium
commitments, net of refunds thereof, is approximately equal to the lump sum
value of Mr. Fulton's supplemental benefit.
The following table sets forth information concerning the combined annual
benefits payable pursuant to the retirement plan on a straight-life annuity
basis and the supplemental retirement plan on a 50% joint-and-survivor basis
upon retirement at age 65 for specified compensation levels (assuming
continuation of 1999 fiscal year base salary) and years of service
classifications. Benefits under the retirement plan and the supplemental
retirement plan are computed solely on the base salary of participants,
exclusive of bonuses, incentive and other compensation. Benefits under the
retirement plan which are reduced on account of Social Security entitlement
on the basis of the Internal Revenue Service permitted disparity rules may be
reinstated under the supplemental retirement plan.<PAGE>
Pension Plan Table
Earnings
on Which Combined Estimated Combined Annual Pension Based on
Retirement Years of Service Indicated
---------------------------
Benfits are based on 20 years 25 years 30 years 35 years
- -------------------- --------- -------- -------- -------
$ 125,000 $ 50,000 $ 62,500 $ 62,500 $ 70,200
150,000 60,000 75,000 75,000 85,500
175,000 70,000 87,500 87,500 87,500
200,000 80,000 100,000 100,000 100,000
225,000 90,000 112,500 112,500 112,500
250,000 100,000 125,000 125,000 125,000
275,000 110,000 137,500 137,500 137,500
300,000 120,000 150,000 150,000 150,000
Credited years of service at September 30, 1999 were 12 for Mr. Latta, 9
for Mr. O'Connell, 16 for Dr. Yoder, and 1 for Mr. Rahmel. Credited years of
service at age 65 would be 21 for Mr. Latta, 22 for Mr. O'Connell, 35 for Dr.
Yoder and 17 for Mr. Rahmel. Mr. Fulton retired effective December 1, 1998
and receives an annual pension of $53,685.
COMPENSATION COMMITTEE REPORT
Landauer's compensation program is designed to motivate and retain
employees by encouraging and rewarding performance. The program is
administered by the compensation committee of the board of directors (the
"Committee"), consisting of three independent outside directors who are not
employees of Landauer. The Committee regularly reviews and approves
generally all compensation and fringe benefit programs of the Landauer, and
also reviews and determines the base salary, and incentive compensation of
the executive officers named above, as well as stock option grants to all
employees. All compensation actions taken by the Committee are reported to
the full board of directors, who, excluding employee directors, approve the
actions of the Committee. The Committee also reviews and makes
recommendations to the board on policies and programs for the development of
management personnel, as well as management structure and organization. The
Committee administers Landauer's 1996 Equity Plan (the "Equity Plan") and
1995 Incentive Compensation Plan for Executive Officers (the "Executive
Officer Plan"); each of which was approved by the Committee, the board of
directors and stockholders. If approved by the stockholders, the 2000
Incentive Plan for Executive Officers will also be administered by the
Committee.
Landauer believes that stock options are an important incentive to
motivate executive officers and other key employees for improved long-term
performance of Landauer. Landauer considers stock ownership, options
currently held and options previously granted when granting options although
there are no required specific levels of ownership.
Landauer believes that the combination of salary, incentive compensation
and the award of stock options is the best tool for compensating its
executive officers and senior managers to promote uniform excellence, long-
term commitment and team performance. Management salaries are determined as
a result of individual performance, level of responsibility and experience.
Landauer reviews these salaries annually and measures them against
compensation data obtained from published compensation surveys and surveys
that the Committee makes of a group of peer companies. The peer companies
are generally of about the same size as Landauer and are in technical or
service, rather than consumer or distribution fields. The peer companies may
include some of the companies in the testing laboratory group used in the
performance graph. Landauer believes that its competitors for executive
talent are not necessarily companies which engage in the same business as
Landauer and, therefore, the companies used for comparative compensation
purposes differ from the companies included in the testing laboratory group.
The Executive Officer Plan covers executive officers who are elected by
the board of directors to such offices and establishes incentive pools which
are related to aggregate executive officer base salary and performance of
Landauer relative to (i) budgeted operating income ("Operating Income Pool"),
(ii) growth in earnings per share ("EPS Pool"), and (iii) the AMEX Market
Value Index ("Stockholder Return Pool"). The target percentages of aggregate
executive officer base salary for the Operating Income, EPS, and Stockholder
Return Pools are 15%, 7.5%, and 7.5%, respectively. The actual size of each
pool varies as a result of actual performance compared with the performance
measure for each pool.
Operating Income Pool. At 100% actual-to-budget operating income, the
Operating Income Pool is 15% of aggregate executive officer base salary; at
80% actual-to-budget, the pool is 7.5% of base salary; and at 120% actual-to-
budget, the pool is 25.5% of base salary. If actual-to-budget is less than
60%, the Operating Income Pool is zero.
EPS Pool. At average three-year growth in earnings per share of 10%, the
EPS Pool is 7.5% of aggregate executive officer base salary; at average
growth in earnings per share of 8%, the pool is 3.75% of base salary; and at
average growth in earnings per share of 12% the pool is 12.75% of base
salary. If average growth in earnings per share is 6% or lower, the EPS Pool
is zero.
Stockholder Return Pool. Where the three-year total return to
stockholders is equal to or exceeds the total return of the AMEX Market Value
Index, the Stockholder Return Pool is 7.5% of aggregate executive officer
base salary. In all other cases, the Stockholder Return Pool is zero.
One-half of the Operating Income Pool is awarded to executive officers, as
a percentage of their base salaries, if the actual-to-budget operating income
is at least 90%. One-half of the EPS Pool is awarded to executive officers,
as a percentage of their base salaries, if the average growth in earnings per
share is at least 9%. One-half of the Stockholder Return Pool is awarded to
executive officers, as a percentage of their base salaries, if the total
return to stockholders of the Company exceeds the total return of the AMEX
Market Value Index. With respect to the balance of each of the pools, The
Committee has the discretion to award to any participant an amount relating
to each of the Operating Income Pool, EPS Pool, and/or the Stockholder Return
Pool ranging in value from zero to one-half of the award such participant
would otherwise receive. Any amounts not so awarded may, at the discretion
of the Committee, be reallocated to any other participant based upon the
Committee's evaluation of the participant's individual performance relative
to written objectives and other factors.
If the actual-to-budget operating income is at least 60%, but less than
90%, the Committee has the discretion to award to any participant an amount
relating to the Operating Income Pool ranging in value from zero to the full
amount of the award such participant would otherwise receive. If the average
growth in earnings per share is at least 6%, but less than 9%, the Committee
has the discretion to award to any participant an amount relating to the EPS
Pool ranging in value from zero to the full amount of the award such
participant would otherwise receive.
The aggregate amount of incentive compensation awards for any fiscal year
under the Executive Officer Plan and other incentive compensation plans is
limited to 5% of Landauer's operating income for such fiscal year.
Recognizing that extraordinary positive or negative non-operating events can
and do occur, the Committee may elect to make adjustments to the incentive
compensation calculations to reflect the impact of those events. During
fiscal 1999 the Committee considered the impact of the non-cash charge for
impairment in value of assets in its decision to award incentive compensation
for executive officers.
The recommended base salary and incentive compensation award for the
President is determined each year by the Committee based upon overall
financial performance of Landauer and the performance of the President
relative to corporate objectives and other factors under the terms of the
Executive Officer Plan.
Mr. Latta's base salary and incentive compensation for fiscal 1999 was
determined at $301,250. The increase in Mr. Latta's base salary related to
the level of responsibility and accountability of the Chief Executive Officer
to which he was promoted, as well as external factors such as inflation and
base salary levels in comparable companies. The amount of incentive
compensation awarded to Mr. Latta was determined based on performance
relative to budgeted operating income, growth in earnings per share, the
total return to stockholders relative to the Amex Market Value Index and
individual performance relative to stated objectives under the terms of the
Executive Officer Plan. Mr. Latta achieved substantially all of the personal
objectives established by the board of directors during fiscal 1999.
In 1993, the tax laws were amended to limit the deduction a publicly-held
company is allowed for compensation paid to the chief executive officer and
the four most highly compensated executive officers other than the chief
executive officer. Generally, amounts paid in excess of $1 million to a
covered executive, other than performance-based compensation, cannot be
deducted. In order to constitute performance-based compensation, the
performance measures must be approved by stockholders. No executive officer
has earned over $1 million in any fiscal year of Landauer.
MEMBERS OF THE COMPENSATION COMMITTEE:
Robert J. Cronin, Chairman
Richard R. Risk
Michael D. Winfield
<PAGE>
PERFORMANCE GRAPH
The following graph reflects a comparison of the cumulative total
return (change in stock price plus reinvested dividends) assuming $100
invested in Landauer's common stock, in the American Stock Exchange ("AMEX")
Index, and in an industry index represented by a group of testing
laboratories during the period from September 30, 1994 through September 30,
1999. The comparisons in the following table are historical and are not
intended to forecast or be indicative of possible future performance of
Landauer's common stock.
Value of Investment at September 30,
- ---------------------------------------
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
Landauer, Inc. $ 100 $ 123 $ 136 $ 180 $ 195 $202
AMEX Index 100 119 125 157 141 181
Industry Index 100 134 179 141 92 109
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the 1988 transfer of the personnel dosimetry
business, Landauer entered into a Liability Assumption and Sharing Agreement
with Tech/Ops, Inc. (Tech/Ops) providing for, among other things, (i)
assumption by Landauer of all determinable and contingent liabilities and
obligations of Tech/Ops relating to the personnel dosimetry and radon
detection business, (ii) assumption by the other former subsidiary of
Tech/Ops of all determinable and contingent liabilities and obligations of
Tech/Ops relating to its electronic controller business, (iii) joint and
several assumption by Landauer and the other former subsidiary of all
contingent liabilities of Tech/Ops and (iv) the allocation of other
liabilities jointly and severally assumed to the business in which they
relate or, if they relate to neither business, in ratios reflective of
relative profit contributions of the respective businesses for the five years
ended September 30, 1987. Under the terms of this agreement, no expense was
charged to operations of Landauer for the fiscal year.
SELECTION OF AUDITORS
The stockholders will be asked at the annual meeting to approve the
selection of auditors for the fiscal year ending September 30, 2000. Arthur
Andersen LLP, 33 West Monroe Street, Chicago, Illinois, has served as
auditors for Landauer and its predecessor Tech/Ops, Inc. since the latter was
formed, and it will be recommended to the stockholders that such firm be
selected again. The audit committee comprised of Richard R. Risk, Paul B.
Rosenberg, and Thomas M. Fulton, has approved this recommendation.
Representatives of Arthur Andersen LLP are expected to be present at the
meeting with an opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions.
If a quorum is present, in order to approve the selection of Arthur
Andersen LLP as Landauer's auditors for the fiscal year ending September 30,
2000, a majority of the shares present in person or by proxy at the annual
meeting and entitled to vote on such proposal must vote in favor of it.
Accordingly, abstentions will have the same effect as votes against and non-
votes will reduce the number of shares considered present and entitled to
vote on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE SELECTION OF ARTHUR
ANDERSEN LLP AS AUDITORS OF LANDAUER FOR THE FISCAL YEAR ENDING SEPTEMBER 30,
2000.
APPROVAL OF 2000 INCENTIVE COMPENSATION PLAN
FOR EXECUTIVE OFFICERS
The stockholders will be asked at the annual meeting to approve the
adoption of the 2000 Incentive Compensation Plan for Executive Officers
("2000 Executive Officer Plan") to become effective for fiscal 2000. As
discussed in the Compensation Committee Report included in this proxy
statement, amounts paid in excess of $1 million to Landauer's executive
officers, other than performance-based compensation, generally cannot be
deducted for tax purposes. In order to constitute performance-based
compensation, the performance measures must be approved by stockholders.
Although no executive officer of Landauer has earned over $1 million in any
fiscal year, Landauer has determined to seek stockholder approval of the 2000
Executive Officer Plan in order to ensure that any qualifying compensation
which may be paid pursuant to the Plan may be deducted by Landauer for tax
law purposes.
The 2000 Executive Officer Plan will cover executive officers who are
elected by the board of directors to such offices. The Plan establishes an
incentive pool which is related to aggregate executive officer base salary
and performance of Landauer relative to (i) budgeted operating income and
(ii) achievement of budgeted revenues.
The target incentive compensation award, as a percentage of individual
executive officer base salary, is 50% for the Chief Executive Officer and 40%
for Vice Presidents. The actual size of the incentive compensation pool
available for award varies based upon actual financial performance for
operating income and revenue achievement.
Operating Income Component. At 100% actual-to-budget operating income
the aggregate executive officer incentive compensation pool is equal to 100%
of the sum of the target awards for each executive officer. At 90% actual-
to-budget operating income the pool available for incentive compensation is
zero. At 110% actual-to-budget operating income the aggregate executive
officer incentive compensation pool is equal to 150% of the sum of the target
awards for each executive officer.
Revenue Achievement Component. Revenue achievement, as measured by
percent actual-to-budget revenues, serves to modify the award based upon
operating income. At revenue achievement levels above 98% and below 102% no
adjustment is required. At 96% revenue achievement the aggregate amount of
the executive officer incentive compensation pool determined on the basis of
operating income is reduced by 20%. At 94% revenue achievement the reduction
is 40%. The sole increase in the aggregate amount of the pool occurs where
revenue achievement is above 102% at which level the percent of target bonus
to be paid is increased by 20 percentage points.
The amount of tentative incentive award for any executive officer is
determined by multiplying the executive's base salary times the actual
incentive award percentage. The actual incentive award percentage is the
target award percentage (50% or 40%) multiplied by the percentage of target
award determined by the operating income and revenue achievement components.
Two-thirds of the tentative incentive award is payable to the executive
officer based solely on financial performance. With respect to the balance
remaining in the pool for the fiscal year, the compensation committee will
have the discretion to award any executive officer an amount ranging from
zero to one-third of the award such executive officer would otherwise
receive. Any amounts not so awarded may, at the discretion of the committee,
be reallocated to any other executive officer based upon the committee's
evaluation of the individual performance of the executive officer relative to
written objectives and other factors.
The aggregate amount of incentive compensation awards for any fiscal
year under the Executive Officer Plan and any other incentive compensation
plan available to other managers of the Company is limited to 6% of
Landauer's operating income for such fiscal year.
The 2000 Executive Officer Plan supersedes participation in any other
incentive compensation plan available to other senior managers of Landauer.
The board of directors may amend the Executive Officer Plan as it shall deem
advisable, subject to any requirement of stockholder approval required by
applicable law, including the Internal Revenue Code of 1986.
The following table sets forth the amount of incentive awards which the
indicated persons and group would receive in respect of Landauer's 2000
fiscal year if for fiscal 2000 the percent of target award equaled 100% based
upon operating income and revenue achievement and was awarded to the
individual participants in proportion to their individual base
salaries.<PAGE>
Incentive Compensation Plan for Executive Officers
Target Incentive
Award Compensation
Name Position Percentage Amount
- ------ ------- ---------- -----------
Brent A. Latta President &
Chief Executive Officer 50% $ 132,500
Mark D. Rahmel Vice President - Marketing 40% 57,600
James M.
O'Connell Vice President, Treasurer,
Secretary & Chief
Financial Officer 40% 67,200
Dr. R. Craig Yoder Vice President -
Operations 40% 68,800
---------
Executive Officers as a group (four persons) $ 326,100
==========
The full text of the 2000 Executive Officer Plan is shown in Exhibit
A beginning on Page A-1.
If a quorum is present, in order to approve the proposal to approve the
Executive Officer Plan, a majority of the shares present in person or by
proxy at the annual meeting and entitled to vote on such proposal must vote
in favor of it. Accordingly, abstentions will have the same effect as votes
against and non-votes will reduce the number of shares considered present and
entitled to vote on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 2000
INCENTIVE COMPENSATION PLAN.
STOCKHOLDER PROPOSALS
Proposals intended to be presented by security holders at the annual
meeting of stockholders scheduled for February 7, 2001 must be received by
Landauer in order to be considered for inclusion in Landauer's proxy
statement and form of proxy relating to that meeting not later than August
31, 2000. Such proposals may be included in next year's proxy statement if
they comply with certain rules and regulations of the Securities and Exchange
Commission.
Under Landauer's by-laws, nominations for directorships to be acted on
at the 2001 annual meeting may be made only pursuant to written notice
received at Landauer's principal office on or after November 24, 2000 and on
or before December 19, 2000. In addition, at the 2001 annual meeting the
proxy holders appointed by Landauer may exercise discretionary authority when
voting on a stockholder proposal other than a nomination for directorship if
(1) the proposal is received by Landauer after November 12, 2000, (2) the
proposal is properly presented at the 2001 annual meeting and (3) the
proposal is not included in Landauer's proxy statement for the 2001 annual
meeting. If (1) a stockholder proposal other than a nomination for
directorship is received by Landauer on or prior to November 12, 2000, (2)
the proposal is properly presented at the 2001 annual meeting and (3) the
proposal is not included in Landauer's proxy statement for the 2001 meeting,
then the proxy holders appointed by Landauer, may exercise discretionary
authority to vote on the proposal if in the proxy statement for the 2001
meeting Landauer advises stockholders on the nature of the proposal and how
the proxy holders appointed by Landauer intend to vote on the proposal,
unless the stockholder submitting the proposal satisfies certain requirements
of the Securities and Exchange Commission, including the mailing of a
separate proxy statement to stockholders.
All stockholder proposals should be directed to the Secretary of Landauer.
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
Landauer's officers and directors and persons who beneficially own more than
ten percent of Landauer's common stock ("Reporting Persons") to file reports
of beneficial ownership and changes in such ownership with the Securities and
Exchange Commission ("SEC"). Reporting Persons are required by SEC
regulation to furnish Landauer with copies of all Section 16(a) reports they
file.
Based solely on a review of the Form 3, 4, and 5 filings received from,
or filed by Landauer on behalf of, directors and executive officers since the
beginning of fiscal year 1999, Landauer is not aware of any failure to file
on a timely basis any Form 3, 4 or 5 during fiscal year 1999 except (i) one
Form 5 for Messrs. Cronin, Eppen, Fulton, Risk and Winfield reporting the
automatic initial grant of stock options to such directors under the 1997
Non-Employee Directors Stock Option; (ii) one Form 4 for each of Mr. Fulton,
Mr. Latta and Dr. Yoder reporting the exercise of options; (iii) one Form 4
for each of Dr. Eppen, Mr. Winfield and Mr. Risk reporting the purchase of
shares; and (iv) one Form 5 for Messrs. Latta, O'Connell and Rahmel and Dr.
Yoder reporting the grant of options in November, 1998. In each instance, the
required forms were not filed on a timely basis.
MISCELLANEOUS
Landauer's 1999 Annual Report to Stockholders (which includes a copy of
Landauer's Annual Report on Form 10-K for the fiscal year ended September 30,
1999) accompanies this proxy statement.
The board of directors does not know of any business which will come
before the meeting except the matters described in the notice. If other
business is properly presented for consideration at the meeting, it is
intended that the proxies will be voted by the persons named therein in
accordance with their judgment on such matters.
In the event that a quorum is not present when the meeting is convened,
it is intended to vote the proxies in favor of adjourning the meeting from
time-to-time until a quorum is obtained.
James M. O'Connell
Vice President, Treasurer, Secretary
and Chief Financial Officer
December 27, 1999
EXHIBIT A
LANDAUER, INC. 2000
INCENTIVE COMPENSATION PLAN FOR EXECUTIVE OFFICERS
1. PURPOSE OF THE PLAN. The Landauer, Inc. 2000 Incentive Compensation
Plan for Executive Officers (the "Plan") is designed to provide cash
incentive awards to executive officers as a motivational tool to achieve the
Company's overall growth and profitability goals as a team; to reward
executive officers for their individual and combined performance, and to
ensure that the Company's compensation structure for executive officers is
competitive and supports the attraction and retention of capable executive
officers. The Plan is effective beginning in fiscal 2000.
2. PARTICIPATION IN THE PLAN. Only those employees who are designated by
the Board of Directors as executive officers of the Company in writing from
time to time are eligible to participate in the Plan.
3. ADMINISTRATION. The Plan shall be administered by the Compensation
Committee (the "Committee") designated by the Board of Directors of the
Company. Each member of the Committee shall be an "outside director" under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
and the rules and regulations promulgated thereunder. The Committee shall,
subject to the terms of the Plan, have the authority to interpret the Plan
and establish rules and regulations for the administration of the Plan. All
such interpretations, rules and regulations shall be conclusive and binding
on all parties.
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present,
or acts approved in writing by a majority of the Committee without a meeting,
shall be the acts of the Committee.
4. BASIS OF PLAN. Under the Plan, incentive awards may be paid each fiscal
year based on the financial performance of the Company in terms of (i) Actual
Incentive Operating Income as measured against Forecast Incentive Operating
Income for the most recently completed fiscal year (as described in Section
6) subject to modification by (ii) Actual Revenue Achievement as measured
against Forecast Revenue for the most recently completed fiscal year (as
described in Section 7).
The amount of incentive compensation expense included in periodic financial
statements will be based on the Plan and management's expectations about
actual performance for the year. This will serve to match the expense of the
Plan with projected performance and will not impact the final amount of
incentive compensation awards due to participants.
Recognizing that extraordinary positive or negative non-operating events
can and do occur, the Committee may elect to make adjustments to the
incentive compensation calculations, that in their judgment reasonably
reflect the impact of such events.
5. CERTAIN DEFINITIONS. (a) COVERED COMPENSATION for a fiscal year is the
annual base salary for such year of a participant and AGGREGATE COVERED
COMPENSATION for a fiscal year is the sum of the Covered Compensation for
such year of the participants in such fiscal year. A participant's base
salary for a fiscal year shall be such participant's base salary as
determined by the Committee during the first ninety days of the fiscal year.
(b) The TARGET INCENTIVE PERCENTAGES for a fiscal year are the applicable
percentages of Covered Compensation for each executive officer used to
determine the Target Incentive Pool. Unless otherwise determined by the
Committee, the Target Incentive Percentages shall be 50% for the President
and C.E.O. and 40% for other executive officers.
(c) The TARGET INCENTIVE POOL for a fiscal year is the sum of the products
of the Covered Compensation for each executive officer for such fiscal year
multiplied by the applicable Target Incentive Percentage. Notwithstanding
any other provision of the Plan, the Target Incentive Pool for a fiscal year
shall be calculated using the aggregate of the Covered Compensation of each
person who actually receives an incentive award under the Plan with respect
to such fiscal year and by excluding the Covered Compensation of each person
who does not actually receive an incentive award under the Plan.
6. OPERATING INCOME. (a) ACTUAL INCENTIVE OPERATING INCOME and FORECAST
INCENTIVE OPERATING INCOME for a fiscal year are, respectively, the amounts
of operating income as shown on the Company's audited and forecast annual
financial statements, plus any expense related to incentive compensation
during such year under the Plan, the Incentive Compensation Plan for non-
executive officers and any other incentive compensation plan of the Company
designated by the Committee. Operating income for this purpose is determined
in accordance with generally accepted accounting principles applied in
accordance with the requirements of the Securities and Exchange Commission
and will include the Company's pro rata share of the income from Nagase-
Landauer, Ltd.
(b) The OPERATING INCOME PERFORMANCE FACTOR for a fiscal year is based on
the ratio of Actual Incentive Operating Income to Forecast Incentive
Operating Income as shown in the Business Plan for such year, and is computed
as follows:
Where the ratio of Actual Incentive Operating Income to Forecast
Incentive Operating Income is less than 0.90, the Operating Income
Performance Factor is zero.
Where the ratio of Actual Incentive Operating Income to Forecast
Incentive Operating Income ranges in value from 0.90 to 1.00, the Operating
Income Performance Factor ranges in value from zero to 1.00. For each 0.01
increment in the ratio above 0.90, the Operating Income Performance Factor
increases ratably by 0.10 up to a value of 1.00
Where the ratio of Actual Incentive Operating Income to Forecast
Incentive Operating Income is greater than 1.00, the Operating Income
Performance Factor is 1.00 plus 0.05 for each 0.01 increment in the ratio
above 1.00.
Any value falling within the ranges where a computation is
required will be interpolated.
(c) Subject to the limitations set forth in Section 8(e), the ACTUAL
INCENTIVE POOL for a fiscal year shall be the product determined by
multiplying 100% of the Target Incentive Pool by the PERCENT OF TARGET BONUS
TO BE PAID.
7. REVENUE ACHIEVEMENT. (a) Actual Revenues and Forecast Revenues for
a fiscal year are, respectively, the amounts of net revenues as shown in the
Company's audited and forecast financial statements.
(b) The REVENUE ACHIEVEMENT PERFORMANCE FACTOR for a fiscal year is
based on the ratio of ACTUAL REVENUES to FORECAST REVENUES as shown in the
Business Plan for such year and is computed as follows:
Where the ratio of Actual Revenues to Forecast Revenues is less
than 0.88. the Revenue Achievement Performance Factor is zero.
Where the ratio of Actual Revenues to Forecast Revenues ranges in
value from 0.88 and 0.98 the Revenue Achievement Performance Factor ranges in
value from zero to 1.00. For each 0.01 increment in the ratio above 0.88,
the Revenue Achievement Performance Factor increases ratably by 0.10 up to a
value of 1.00. Any value falling within the range of 0.88 to 0.98 where a
computation is required will be interpolated.
When the ratio of Actual Revenue to Forecast Revenue falls
between 0.98 and 1.02, the Revenue Achievement Performance Factor is 1.00.
Where the ratio of Actual Revenue to Forecast Revenue is greater
than 1.02 the Revenue Achievement Performance Factor is equal to 1.00 and the
Operating Income Performance Factor is increased by 0.20.
(c) The Operating Income Performance Factor and Revenue Achievement
Performance Factor computed in Section 6 and 7 result in a matrix which is
shown below:
ANNUAL INCENTIVE PLAN MATRIX
Percent of Target Bonus to be Paid
RATIO OF
ACTUAL
REVENUES TO
FORECAST RATIO OF ACTUAL INCENTIVE OPERATING INCOME
REVENUES TO FORECAST INCENTIVE OPERATING INCOME
0.90 0.95 1.00 1.05 1.10 1.15 1.20
---- ---- ---- ---- ---- ---- ----
0.88 0% 0% 0% 0% 0% 0% 0%
0.90 0% 10% 20% 25% 30% 35% 40%
0.92 0% 20% 40% 50% 60% 70% 80%
0.94 0% 30% 60% 75% 90% 105% 120%
0.96 0% 40% 80% 100% 120% 140% 160%
0.98 - 1.02 0% 50% 100% 125% 150% 175% 200%
> 1.02 0% 70% 120% 145% 170% 195% 200%
(d) In no event shall the Percent of Target Bonus to be Paid exceed
200%.
8. The ACTUAL INCENTIVE PERFORMANCE FACTOR for a fiscal year shall be
the product of the Operating Income Performance Factor multiplied by the
Revenue Achievement Performance Factor (increased by 0.20 where the ratio of
Actual Revenues to Forecast Revenues exceeds 1.02). The result of this
calculation shall be multiplied by 100% to determine THE PERCENT OF TARGET
BONUS TO BE PAID.
9. COMPUTATION AND DISTRIBUTION OF INCENTIVE PLAN AWARDS. (a) As soon
as practicable after the end of each fiscal year, the Company's controller or
other person designated by the Committee shall, on behalf of the Committee,
determine the amount of the Actual Incentive Pool for such fiscal year in
accordance with the provisions of the Plan after certification of the annual
financial statements. This determination will be certified by the Company's
independent auditors and will be subject to the review and approval of the
Committee.
(b) A participant's tentative individual award for such a fiscal year
relating to the Actual Incentive Pool shall be the product determined by
multiplying such participant's Actual Participation Percentage by the amount
of the Participants covered compensation for such fiscal year. Subject to
Section 5(c), a participant's ACTUAL PARTICIPATION PERCENTAGE shall be the
applicable Target Incentive Percentage multiplied by the Percent of Target
Bonus to be Paid.
(c) An individual participant's actual incentive award is comprised of
two components. The first component is paid automatically and is equal to
two-thirds of the tentative individual award with respect to the Actual
Incentive Pool.
The second component is equal to one-third of the tentative individual
award with respect to the Actual Incentive Pool; provided, however, that the
Committee shall have the discretion, with respect to any participant, to
reduce this amount to zero based upon the Committee's evaluation of the
participant's individual performance relative to written objectives and other
relevant factors. The recommended amount for this component of the incentive
award is determined solely at the discretion of the Committee.
The sum of the these components represents the total individual incentive
award for a participant for the applicable fiscal year.
The sum of the amounts awarded under the Plan shall not exceed the amount
of the Actual Incentive Pool determined under the Plan for that level of
financial performance.
(d) Upon approval by the Committee, the distribution of individual
incentive awards will be made to a participant only in the event that the
participant is an active full-time employee of the Company as of the
distribution date, which date shall not be later than the later of (i) 90
days after the end of the Company's fiscal year and (ii) the date which is
60 days after certification of the Company's annual financial statements.
Any right of any participant to any amount under the Plan shall be null and
void if such participant is not an active full-time employee of the Company
as of such distribution date.
(e) In no event may the Actual Incentive Pool and any similar pool(s)
under any other incentive compensation plan (including the Incentive
Compensation Plan for non-executive officers) exceed in the aggregate for any
fiscal year 6% of the operating income of the Company for such fiscal year.
9. EFFECTIVE DATE OF PLAN. The Plan shall be submitted to the
stockholders of the Company for approval and, if approved, shall become
effective as of October 1, 1999. In the event that the Plan is not approved
by the stockholders of the Company at the 2000 Annual Meeting of
Stockholders, the Plan and any unvested awards hereunder shall be null and
void. The Plan may be terminated by the Board at any time. Termination of
the Plan shall not affect the terms or conditions of any award relating to
a fiscal year which ended prior to termination of the Plan.
10. AMENDMENTS. The Board may amend the Plan as it shall deem advisable,
subject to any requirement of stockholder approval required by applicable
law, including Section 162(m) of the Code. No amendment may impair the
rights of a participant without the consent of such participant.
11. NON-TRANSFERABILITY. No award hereunder shall be transferable other
than by will or the laws of descent and distribution. Except as permitted by
the preceding sentence, no award hereunder shall be sold, transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether
by operation of law or otherwise) or be subject to execution, attachment or
similar process. Upon any attempt to so sell, transfer, assign, pledge,
hypothecate, encumber or otherwise dispose of any award hereunder, such award
and all rights thereunder shall immediately become null and void.
12. TAX WITHHOLDING. The Company shall have the right to require, prior
to the payment of any cash pursuant to an award hereunder, payment by the
participant of any Federal, state, local or other taxes which may be required
to be withheld or paid in connection with such award.
13. UNFUNDED PLAN. This Plan shall be unfunded. No person shall have
any rights greater than those of a general creditor of the Company.
14. NO RIGHT OF EMPLOYMENT. Neither the Plan nor any award hereunder
shall confer upon any person any right to continued employment by the Company
or any affiliate of the Company or affect in any manner the right of the
Company or any affiliate of the Company to terminate the employment of any
person at any time without liability hereunder.
15. DESIGNATION OF BENEFICIARY. Each participant may file with the
Committee a written designation of one or more persons as such participant's
beneficiary or beneficiaries (both primary and contingent) in the event of
the participant's death.
Each beneficiary designation shall become effective only when filed in
writing with the Committee during the participant's lifetime on a form
prescribed by the Committee. The spouse of a married participant domiciled
in a community property jurisdiction shall join in any designation of a
beneficiary other than such spouse. The filing with the Committee of a new
beneficiary designation shall cancel all previously filed beneficiary
designations.
16. GOVERNING LAW. The Plan, each award hereunder and the related
Agreement, and all determinations made and actions taken pursuant thereto,
to the extent not governed by the Code or the laws of the United States,
shall be governed by the laws of the State of Illinois and construed in
accordance therewith without giving effect to principles of conflicts of
laws.
