<PAGE>
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant / X /
Filed by a Party other than the Registrant /___/
Check the appropriate box:
/___/ Preliminary Proxy Statement
/___/ Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ X / Definitive Proxy Statement
/ X / Definitive Additional Materials
/___/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
________________
REYNOLDS METALS COMPANY
(Name of Registrant as Specified In Its Charter)
Board of Directors of Reynolds Metals Company
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
________________
Payment of Filing Fee (Check the appropriate box):
/ X / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/___/ $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/___/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/___/ Fee paid previously with preliminary materials.
/___/ Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
REYNOLDS METALS COMPANY
6601 West Broad Street
Richmond, Virginia 23230
February 23, 1996
To Our Stockholders:
You are cordially invited to attend the 1996 Annual Meeting of
Stockholders of Reynolds Metals Company which will be held at the offices of
the Company, Reynolds Metals Building, 6601 West Broad Street, Richmond,
Virginia, on Wednesday, April 17, 1996, at 10:00 a.m., local time. All holders
of record of the Company's outstanding Common Stock and 7% PRIDES(SM),
Convertible Preferred Stock at the close of business on February 20, 1996 are
entitled to vote at the Annual Meeting.
At the Meeting, Stockholders will consider the items of business described
in the accompanying Notice of Annual Meeting and Proxy Statement. In addition,
I will present a report on the Company's business operations.
We hope you will be able to attend the Annual Meeting. If you plan to
attend, please mark the attendance box on the proxy card.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, I URGE YOU TO
COMPLETE AND RETURN PROMPTLY THE ENCLOSED PROXY CARD IN THE ACCOMPANYING
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND, YOUR HAVING SENT IN YOUR PROXY WILL NOT RESTRICT YOUR RIGHT TO VOTE IN
PERSON.
Sincerely,
Richard G. Holder
Richard G. Holder
Chairman of the Board and
Chief Executive Officer
<PAGE>
REYNOLDS METALS COMPANY
6601 West Broad Street
Richmond, Virginia 23230
--------------
NOTICE
OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 17, 1996
--------------
To the Holders of Shares of Common Stock and 7% PRIDES, Convertible Preferred
Stock:
The Annual Meeting of Stockholders of Reynolds Metals Company will be held
on Wednesday, April 17, 1996, at 10:00 a.m., local time, at the offices of the
Company, Reynolds Metals Building, 6601 West Broad Street, Richmond, Virginia,
for the following purposes:
1. To elect Directors of the Company;
2. To approve an amendment to the Company's Performance Incentive
Plan;
3. To approve the 1996 Nonqualified Stock Option Plan;
4. To ratify the selection of Ernst & Young LLP as independent
auditors of the Company for the year 1996; and
5. To transact such other business as may properly come before the
Meeting.
Stockholders of record at the close of business on February 20, 1996 are
entitled to vote at the Meeting. Holders of Common Stock will be entitled to
one vote per share. Holders of 7% PRIDES, Convertible Preferred Stock will be
entitled to 4/5 of a vote per share.
By Order of the Board of Directors,
D. MICHAEL JONES
Secretary
February 23, 1996
<PAGE>
REYNOLDS METALS COMPANY
-----------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 17, 1996
-----------
PROXY SOLICITATION AND VOTING
This Proxy Statement is furnished to holders of shares of Common Stock,
without par value (the "Common Stock"), and 7% PRIDES, Convertible Preferred
Stock (the "PRIDES"), of Reynolds Metals Company (the "Company") in connection
with the solicitation of proxies by the Board of Directors of the Company for
use at the Annual Meeting of Stockholders to be held on April 17, 1996 and at
any adjournments thereof.
Proxies may be solicited by mail, telephone, telegraph or other electronic
means and personal interview. The Company has retained Morrow & Co., Inc., 909
Third Avenue, New York, New York 10022-4799, to aid in the solicitation of
proxies. For this service, Morrow & Co., Inc. will receive a fee of $11,000,
plus reimbursement of out-of-pocket expenses. Brokers, banks and other
custodians, nominees and fiduciaries will be requested to forward soliciting
material to the beneficial owners of Common Stock and PRIDES. All costs of the
solicitation will be borne by the Company.
Holders of Common Stock and PRIDES of record at the close of business on
February 20, 1996 are entitled to vote at the Annual Meeting. On that date,
the Company had outstanding and entitled to vote at the Meeting 63,604,494
shares of Common Stock, each entitled to one vote, and 11,000,000 shares of
PRIDES, each entitled to 4/5 of a vote. Holders of shares of Common Stock and
PRIDES will vote together as one class. The presence, in person or by proxy,
of Stockholders entitled to cast at least a majority of the votes which all
Stockholders are entitled to cast will constitute a quorum. The affirmative
vote of Stockholders representing a majority of the votes cast is required for
the election of the Nominees (Item 1) and the approval of Items 2 and 3.
Abstentions will be treated as votes against an item. "Non-votes" (in which a
nominee holding shares for a beneficial owner votes on certain matters pursuant
to discretionary authority or instructions from the beneficial owner but does
not vote on other matters for which the nominee has not received instructions
from the beneficial owner and may not exercise discretionary voting authority,
the latter being termed "non-votes") will have no effect on the vote.
Any Stockholder giving a proxy has the power to revoke it at any time
before its use. If a proxy is properly signed and is not revoked by the
Stockholder, the shares it represents will be voted at the Annual Meeting in
accordance with the instructions of the Stockholder, or where no instructions
are given, such shares will be voted FOR Items 1, 2, 3 and 4.
It is anticipated that proxy materials will first be mailed to
Stockholders on or about March 4, 1996.
ITEM 1. ELECTION OF DIRECTORS
Information Concerning the Nominees
Effective April 17, 1996, the Board of Directors will consist of thirteen
persons. Unless otherwise instructed on the proxy, the shares represented by
proxies will be voted for the election of the thirteen Nominees named below as
Directors of the Company for the ensuing year. If any Nominee becomes
unavailable to serve as a Director for any reason, the shares represented by
such proxies may be voted for a substitute Nominee designated by the Board of
Directors.
All of the Nominees were elected at the 1995 Annual Meeting of
Stockholders. Robert J. Vlasic, a Director since 1987, having reached age 70,
will retire from the Board of Directors and not stand for reelection. Yale M.
Brandt, elected a Director in 1988, retired from the Company and the Board of
Directors effective September 30, 1995. Charles A. Sanders, elected a Director
in 1992, resigned from the Board of Directors effective May 31, 1995 following
his decision to step down as chairman of Glaxo, Inc. to run for the United
States Senate.
The following table sets forth the names, ages and principal occupations
of, and certain other information regarding, the Nominees:
Director
Name-Age-Principal Occupation-Other Information Since
- ----------------------------------------------- --------
PATRICIA C. BARRON (53) 1994
Vice President, Xerox Corporation, a manufacturer of office
systems and equipment, and President, Engineering Systems
Division, Xerox Corporation, since 1993. President, Office
Products Division, Xerox Corporation, 1992-1993. Director,
Corporate Information Management, Xerox Corporation, 1990-1992.
Director, Quaker Chemical Corporation and Frontier Corporation.
WILLIAM O. BOURKE (68) 1982
Retired. Chairman of the Board and Chief Executive Officer
of the Company, 1988-1992. Director, Merrill Lynch & Co., Inc.,
Premark International, Inc. and Sonat Inc.
JOHN R. HALL (63) 1985
Chairman of the Board and Chief Executive Officer, Ashland
Inc., a petroleum refiner and supplier of petroleum products,
since 1981. Director, Banc One Corporation, The Canada Life
Assurance Company, CSX Corporation, Humana Inc. and UCAR
International Inc.
ROBERT L. HINTZ (65) 1986
Chairman of the Board, R. L. Hintz & Associates, a
management services firm, since 1989. Director, The
Chesapeake Corporation, Scott & Stringfellow, Inc. and
Ashland Coal, Inc.
RICHARD G. HOLDER (64) 1984
Chairman of the Board and Chief Executive Officer of the
Company since May 1992. President and Chief Operating
Officer of the Company, 1988-1992. Director, Universal
Corporation and CPC International Inc.
WILLIAM H. JOYCE (60) 1995
Chairman of the Board and Chief Executive Officer, Union
Carbide Corporation, a manufacturer of chemicals and
plastics, since January 1996. President and Chief Executive
Officer, Union Carbide Corporation, April 1995-December 1995.
President and Chief Operating Officer, Union Carbide
Corporation, 1993-April 1995. Executive Vice President,
Operations, Union Carbide Corporation, 1992-1993. Executive
Vice President, Union Carbide Chemicals and Plastics Company
Inc., a wholly-owned subsidiary of Union Carbide Corporation,
and Vice President, Union Carbide Corporation, 1990-1992.
Director, Melville Corporation.
MYLLE BELL MANGUM (47) 1995
Executive Vice President, Strategic Management, Holiday Inn
Worldwide, a subsidiary of Bass PLC engaged in the operation
of hotels worldwide, since 1992. Director, Corporate Planning
and Development, BellSouth Corporation, 1987-1992. Director,
Holiday Inn Worldwide and Scientific-Atlanta, Inc.
D. LARRY MOORE (59) 1995
President and Chief Operating Officer, Honeywell Inc., a
global manufacturer of automation and control systems, since
April 1993. Executive Vice President and Chief Operating
Officer for Space and Aviation, Honeywell Inc., 1990-1993.
Director, Honeywell Inc., Rohr Inc. and The Geon Company.
RANDOLPH N. REYNOLDS (54) 1984
Vice Chairman of the Board of the Company since January 1994.
Executive Vice President, International of the Company,
1990-1994. President, Reynolds International, Inc., a
subsidiary of the Company, since 1980, and Chief Executive
Officer of that subsidiary since 1981. Director, First Union
Corporation.
Director
Name-Age-Principal Occupation-Other Information Since
- ----------------------------------------------- --------
JAMES M. RINGLER (50) 1994
President and Chief Operating Officer, Premark International,
Inc., a diversified manufacturer of premium brand name
products, since 1992. Executive Vice President, Premark
International, Inc., 1990-1992. Director, Premark
International, Inc. and Thiokol Corporation.
HENRY S. SAVEDGE, JR. (62) 1992
Executive Vice President and Chief Financial Officer of the
Company since May 1992. Vice President, Finance of the
Company, 1990-1992.
JEREMIAH J. SHEEHAN (57) 1994
President and Chief Operating Officer of the Company since
January 1994. Executive Vice President, Fabricated Products
of the Company, 1993-1994. Executive Vice President, Consumer
and Packaging Products of the Company, 1990-1993.
JOE B. WYATT (60) 1992
Chancellor, Vanderbilt University since 1982. Director,
Sonat Inc. and Ingram Industries, Inc.
William G. Reynolds, Jr., the brother of Randolph N. Reynolds, is a Vice
President of the Company.
Meetings and Committees of the Board
The Board of Directors held eight meetings and two executive sessions in
1995. The Board has appointed from its members six standing committees of the
Board, which met periodically during 1995. Incumbent Directors' attendance at
meetings of the Board and of standing committees on which they served averaged
over 95% during 1995. All incumbent Directors serving in 1995 attended at
least 75% of such meetings.
The Executive Committee is composed of W. O. Bourke (Chairman), R. G.
Holder, R. N. Reynolds, H. S. Savedge, Jr. and J. J. Sheehan. It has the power
to act in place of the Board of Directors during intervals between meetings of
the Board and to review and approve the compensation of Directors of the
Company. This committee met twice in 1995.
The Finance Committee is composed of H. S. Savedge, Jr. (Chairman), P. C.
Barron, W. O. Bourke, R. L. Hintz, M. B. Mangum, R. N. Reynolds, J. J. Sheehan
and R. J. Vlasic. Its principal function is to assist the Board in fulfilling
its oversight responsibilities with respect to the raising and allocation of
capital. It makes recommendations respecting long-term and short-term
financings, acquisitions, dispositions, investments and major capital
expenditures. It reviews the Company's capital budget, the status of capital
appropriations from time to time, and the Company's insurance programs. This
committee met four times in 1995.
The Audit Committee is composed of R. L. Hintz (Chairman), P. C. Barron,
J. R. Hall, M. B. Mangum, D. L. Moore and J. M. Ringler. The principal
function of the Audit Committee is to review the system of internal controls
which management and the Board of Directors have established and the audit
function of the Company's independent auditors and its Internal Auditing
Department. In this connection, the Audit Committee recommends to the Board of
Directors the firm to be engaged by the Company as its independent auditors.
It reviews, among other things, audit plans and procedures, the Company's
financial statements, the Company's policies with respect to conflicts of
interest and the prohibition of the use of corporate funds or other assets for
improper purposes, changes in accounting policies and the use of independent
auditors for nonaudit services. This committee met three times and acted once
by unanimous written consent in 1995.
The Compensation Committee is composed of J. R. Hall (Chairman), W. H.
Joyce, D. L. Moore, J. M. Ringler and J. B. Wyatt. The principal functions of
the Compensation Committee are to review and recommend to the Board, or
determine, the compensation paid to the Company's Executive Officers and to
administer designated executive compensation plans of the Company, including
the 1982, 1987 and 1992 Nonqualified Stock Option Plans and the Performance
Incentive Plan. See "Report of Compensation Committee on Executive
Compensation". This committee met four times and acted twice by unanimous
written consent in 1995.
The Committee on Directors is composed of R. J. Vlasic (Chairman), P. C.
Barron, J. R. Hall, W. H. Joyce, J. M. Ringler and J. B. Wyatt. The primary
function of the Committee on Directors is to recommend to the Board of
Directors persons to be considered for election to the Board. In making such
recommendations, the Committee on Directors will consider nominations submitted
by Stockholders. The Board of Directors has adopted a policy under which it
will not elect or nominate for election or reelection to the Board of Directors
any person who has attained age 70. An officer of the Company serving as a
member of the Board of Directors is expected to resign as a Director at the
time he ceases to be an officer, whether due to retirement or otherwise. The
Board of Directors has waived this requirement with respect to W. O. Bourke,
who retired in 1992. In addition, the policy provides that if a nonemployee
Director has a substantial change in principal employment and/or
responsibility, the Director is expected to resign effective on the last day of
the month in which the next regular meeting of the Board is held, unless before
that date the Board, based on a review and determination by the Committee on
Directors regarding whether the Director's continued service on the Board is in
the Company's best interests, approves the withdrawal of the resignation. The
Committee on Directors will consider Stockholder nominations for the 1997
Annual Meeting if submitted in writing in accordance with the procedures set
forth under "General Information - Stockholders' Proposals and Nominations".
This committee met five times in 1995.
The Pension Investment Committee is composed of J. B. Wyatt (Chairman),
W. H. Joyce, R. N. Reynolds, J. J. Sheehan and R. J. Vlasic. It oversees the
financial administration of the assets of the pension plans of the Company and
certain subsidiaries, including the selection of trustees and investment
managers for the assets of these plans and periodic review of investment
results. It also maintains a comprehensive statement of investment policy and
appoints independent auditors for each pension plan. This committee met three
times in 1995.
Board Compensation and Benefits
Directors who are not employed by the Company or any of its subsidiaries
("Outside Directors") are paid an annual retainer of $27,500 for serving as a
Director, and $3,000 for serving as committee chairman, except the chairmen of
each of the Audit Committee and Compensation Committee are paid $4,000.
Outside Directors are also paid $1,000 for each Board and committee meeting
attended, plus expenses reasonably incurred in connection with Company
business.
The Company has a Restricted Stock Plan for Outside Directors, approved by
Stockholders at the 1994 Annual Meeting. Under the plan, Outside Directors are
granted 1,000 shares of Common Stock subject to forfeiture and transfer
restrictions ("Restricted Stock") 60 days after initial election to the Board.
(Outside Directors elected to office by the Stockholders at the 1994 Annual
Meeting were each granted 1,000 shares of Restricted Stock on June 1, 1994.)
The restrictions expire as to 200 shares of Restricted Stock on the April 1
immediately following the date of grant (or, if later, the date that is the
six-month anniversary of the date of grant). Restrictions expire as to an
additional 200 shares on each successive April 1, so that by the fifth April 1
following the date of grant, restrictions on all 1,000 shares will have
expired, assuming continued service by the Outside Director throughout the
period. The plan provides for an additional grant of 1,000 shares of
Restricted Stock to be made to each Outside Director on June 1 of the year in
which the restrictions have expired as to all the shares covered by the Outside
Director's previous grant under the plan (assuming the Outside Director
continues to serve as an Outside Director on such June 1). If an Outside
Director ceases to be a member of the Board because of death or disability or
because of a Change in Control (as defined in the plan) of the Company,
restrictions on 200 shares will lapse immediately, with all other shares as to
which restrictions have not expired being forfeited. If an Outside Director
ceases to be a member of the Board for any other reason, all shares as to which
restrictions have not expired will be forfeited.
The Company has a deferred compensation plan under which a Director may
elect for each year to defer receipt of all or part of his or her retainer and
meeting fees. The deferred amounts will be paid in cash after (a) a specified
year, (b) the Director ceases to be a member of the Board of Directors or (c)
the Director reaches age 70, as the Director elects (except that clause (b)
applies in all cases where the deferred amounts are credited with additional
compensation in the form of share equivalents as described in clause (ii) in
the next sentence). Amounts deferred are credited with additional compensation
in the form (as elected by the Director) of (i) interest at an annual rate set
by the plan committee, whose members are not eligible to participate in the
plan, or (ii) a number of equivalent shares of Common Stock, together with
dividend equivalents based on the dividends paid on such shares of Common
Stock. Participants have the option to receive payment in a lump sum or in
annual installments over a two- to ten-year period.
The Company also has a retirement plan for Directors who are not active or
retired employees of the Company or a subsidiary. The annual retirement
payment is equal to the annual retainer being paid for serving as a member of
the Board at the time the Director retires as a Director. Payments will begin
when the Director attains age 65 or, if later, when he or she retires as a
Director. Payments will be made quarterly and will continue for the same
number of calendar quarters as the person served as a nonemployee Director.
All payments will cease upon the former Director's death.
In addition, the Company has a death benefit plan for Directors who are
not active or retired employees of the Company or a subsidiary. Any such
Director who serves until attaining age 65 will continue to be covered after
retirement. The amount of the death benefit is $50,000.
Other Compensation
The Company has a consulting agreement with W. O. Bourke, a Director of
the Company and former Chairman of the Board and Chief Executive Officer of the
Company, through April 30, 1997, providing for (i) payment of an annual fee of
$100,000, (ii) reimbursement of reasonable travel and other related business
expenses and (iii) making available to Mr. Bourke office space, secretarial
services and a car. For 1995, Mr. Bourke received $109,796 in consulting fees
and personal benefits.
ITEM 2. APPROVAL OF AMENDMENT TO THE PERFORMANCE INCENTIVE PLAN
The Company has a Performance Incentive Plan (the "Incentive Plan")
providing competitive variable compensation opportunities to Executive Officers
and other key employees based on achievement of annual business goals. The
Board of Directors has authorized an amendment to the Incentive Plan effective
January 1, 1996, subject to Stockholder approval, to qualify variable
compensation payable under the Incentive Plan to top executives of the Company
for the "performance-based compensation" exemption of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), so that the Company
will receive a tax deduction for amounts paid under the Incentive Plan.
Background
Section 162(m) of the Code limits the deductibility by the Company of
certain compensation in excess of $1 million paid to the Company's Chief
Executive Officer and the other four most highly compensated Executive
Officers. In 1994, the Board of Directors adopted amendments to the Company's
New Management Incentive Deferral Plan and Salary Deferral Plan for Executives
to add mandatory deferral features which take effect when annual compensation
payable to any of these five Executive Officers would not be deductible. (For
a description of these plans as amended, see "Executive Compensation - Certain
Arrangements".) The mandatory deferrals were intended to be an interim measure
for avoiding the loss of tax deductions, pending the adoption of final
regulations by the Internal Revenue Service, and expire on December 31, 1996.
The following summary of the Incentive Plan as currently in effect and of
the proposed amendment to the Incentive Plan is subject to and qualified in its
entirety by the full text of the Incentive Plan and the amendment,
respectively. Any Stockholder desiring a copy of the Incentive Plan and the
proposed amendment may obtain them by writing to Reynolds Metals Company, 6601
West Broad Street, P.O. Box 27003, Richmond, Virginia 23261-7003, Attention:
Secretary.
Current Provisions of the Incentive Plan
Purpose. The purpose of the Incentive Plan is to promote the financial
success of the Company by providing variable compensation opportunities which
are competitive with those of other major companies, supporting the Company's
goal-setting and strategic planning process and motivating key executives to
achieve annual business goals by allowing them to share in the risks and
rewards of the business.
Administration. The Incentive Plan is administered by the Compensation
Committee of the Board of Directors (the "Committee"). The Committee is
composed entirely of nonemployee Directors. No member of the Committee is
eligible to participate in the Incentive Plan.
Eligibility for Participation. Officers and other key employees of the
Company and its subsidiaries who are recommended by the Company's Chief
Executive Officer and who are approved by the Committee are eligible to
participate in the Incentive Plan during a given year. A total of 275 persons
(including all current Executive Officers) were eligible to participate in the
Incentive Plan in 1995.
Awards. Under the Incentive Plan, the Company makes variable compensation
awards which vary in amount from year to year, or are not paid at all, based on
performance. The Incentive Plan currently does not specify particular
performance measures that must be taken into account, leaving the determination
of such measures to the Committee's discretion on an annual basis. Threshold,
target and maximum award levels are established by the Committee to reward
performance based on corporate, business unit and individual goals. For a
discussion of the factors considered by the Committee in setting award levels
for 1995, see "Report of Compensation Committee on Executive Compensation --
Variable Compensation".
After the close of each year, management recommends awards for
participants (other than for the Chief Executive Officer) for that year based
on its assessment of corporate, business unit and individual performance for
the year. The Committee makes its own assessment of corporate and individual
performance in determining any award to be paid to the Chief Executive Officer.
The Committee grants awards it deems appropriate after considering management's
recommendations and the total annual cash compensation levels necessary to be
competitive with levels paid by a comparison group of comparably-sized, capital
intensive companies. In special cases of meritorious performance, after
consultation with management, the Committee may make awards to individuals not
previously designated as eligible for participation during the year. In
addition, if a participant has died during the year, an award may be made to
the participant's spouse or legal representative if the Committee so
determines.
A total of 375 persons received awards under the Incentive Plan for 1995.
Awards granted for 1995 are included in the Summary Compensation Table as
bonuses.
All awards under the Incentive Plan are paid in cash, except that if a
participant in the Incentive Plan who is subject to the Company's Stock
Ownership Guidelines for Officers does not meet the applicable minimum stock
ownership level as of year-end, the next award to the participant under the
Incentive Plan is paid part in cash and part in stock (up to one-half the value
of the award but not to exceed the participant's annual rate of base salary in
effect at the time of the award). For a description of the Company's Stock
Ownership Guidelines for Officers, see "Report of Compensation Committee on
Executive Compensation -- Stock Ownership Guidelines". The mandatory share
award provision does not apply to the extent the participant has already
elected under the Company's New Management Incentive Deferral Plan to defer a
portion of his or her award under the Incentive Plan and to have such deferred
award credited with additional income based on equivalent shares of common
stock of the Company. Also, to the extent a participant was subject to a
mandatory deferral of the payment of part or all of an award under the
Incentive Plan for 1995 or 1996 (to avoid the loss of tax deductions by the
Company under the Code), the mandatory deferral applied first to the part of
the award that was payable in cash. See "Executive Compensation -- Certain
Arrangements".
Participants may voluntarily defer receipt of their awards under the
Incentive Plan in accordance with the provisions of the Company's New
Management Incentive Deferral Plan. In addition, under a mandatory deferral
feature effective for 1995 and 1996, payment of awards under the Incentive Plan
to the Company's Chief Executive Officer or any of its other four most highly
compensated Executive Officers was automatically deferred to the extent
necessary to make each such Executive Officer's annual compensation fully
deductible. Any amounts so deferred will be paid out after the Executive
Officer's retirement in accordance with a schedule elected by the Executive
Officer. See "Executive Compensation -- Certain Arrangements".
Amendment or Termination. The Board of Directors, without Stockholder
approval, may amend, suspend or terminate the Incentive Plan at any time.
Notwithstanding the foregoing, the Board may, in any circumstance where it
deems such approval necessary or desirable, and shall, to the extent necessary
to maintain compliance with Rule 16b-3, as in effect from time to time, under
the Securities Exchange Act of 1934, require Stockholder approval as a
condition to the effectiveness of any amendment or modification of the
Incentive Plan.
Proposed Amendment to the Incentive Plan
As proposed to be amended, the Incentive Plan as described above will
continue in effect except as set forth below.
Administration. The provisions of the Incentive Plan that are the subject
of the proposed amendment will be administered solely by those members of the
Committee (at least two) who are "outside directors" for purposes of Section
162(m) of the Code. For "Top Executives" (as defined below), the Incentive
Plan must be administered in a manner consistent with the performance-based
compensation requirements of Section 162(m) of the Code.
Performance Goals. Under the proposed amendment, the following special
provisions will apply each year to awards to participants who are designated by
the Committee as "Top Executives" for that calendar year. "Top Executives" will
include the Company's Chief Executive Officer and any other Executive Officer
of the Company who may be reasonably likely to be subject to the limitations
imposed by Section 162(m) of the Code. Within 90 days of the beginning of each
calendar year, the Committee will establish in writing (i) one or more
objective performance goals that must be reached for a Top Executive to receive
an award under the Incentive Plan and (ii) the amount of the award to be paid
if the goals are achieved. The Committee may reduce (or not pay) awards, but
may not increase them. Performance goals may be based on net earnings, stock
price, profit before taxes, return on equity, return on capital, return on
assets, total return to shareholders, earnings per share or debt rating.
Performance goals may vary from Top Executive to Top Executive and from year to
year. In establishing performance goals, the Committee will establish both the
minimum performance goal (the "Minimum Goal") that must be reached for the Top
Executive to receive any award for the calendar year and the maximum
performance goal (the "Maximum Goal") that must be reached for the Top
Executive to receive the maximum award for the calendar year. Between the
Minimum Goals and the Maximum Goals, the Committee may establish a range of
intermediate performance goals with a corresponding range of awards between the
minimum and maximum award opportunity. In no event may a Top Executive's
maximum award under the Incentive Plan as proposed to be amended exceed
$2,500,000.
Other Variable Compensation. As described above, variable compensation
awards will be payable to Top Executives under the proposed amendment to the
Incentive Plan only in accordance with the achievement of the objective
performance goals established at the beginning of the year. To allow the
Committee some discretion to reward achievement of less objective but still
important goals, the Board of Directors has authorized adoption of a separate
Supplemental Incentive Plan (the "Supplemental Plan") covering Top Executives,
to be effective January 1, 1996. Under the Supplemental Plan, the Committee
will establish annual performance goals which will be different from and
independent of the objective performance goals established under the proposed
amendment to the Incentive Plan. Such goals may relate to corporate,
divisional or individual performance as appropriate. Each year the Committee
will establish a performance threshold that must be reached before any award
may be paid under the Supplemental Plan and will also establish maximum awards
that can be paid under the Supplemental Plan. No awards will be payable under
the Supplemental Plan unless the Company achieves that performance threshold.
In conjunction with the adoption of the Supplemental Plan, the Board of
Directors has also approved an amendment to the Company's New Management
Incentive Deferral Plan so that deferral elections will cover variable
compensation payable under the Supplemental Plan as well as under the Incentive
Plan. Payments under the Supplemental Plan will not qualify as
"performance-based compensation" under Section 162(m) of the Code. It is
anticipated, however, that potential payments under the Supplemental Plan will
be relatively smaller than those under the Incentive Plan. Taking this into
account, together with the Company's salary levels and the availability and use
of deferred compensation programs, it is expected that substantially all
compensation paid to Executive Officers will be deductible.
New Plan Benefits. No determination has been made as to the amount of any
awards that may be made in the future under the Incentive Plan as proposed to
be amended. Moreover, it is not possible to determine amounts which would have
been paid for the last completed fiscal year if the Incentive Plan as proposed
to be amended had been in effect, given that (i) the performance goals for a
year are established in advance based upon anticipated Company performance for
the year and (ii) the Committee has discretion to reduce or not pay awards.
Amounts actually paid under the Incentive Plan for 1995 to the Chief Executive
Officer and the other four most highly compensated Executive Officers are shown
in the bonus column of the Summary Compensation Table on page 20.
The Board of Directors recommends that Stockholders vote FOR the approval
of the amendment to the Incentive Plan. Shares represented by proxies will be
voted for approval unless instructions to the contrary are given on the proxy.
ITEM 3. APPROVAL OF THE 1996 NONQUALIFIED STOCK OPTION PLAN
The Board of Directors has authorized adoption of the Reynolds Metals
Company 1996 Nonqualified Stock Option Plan (the "1996 Plan"), subject to
Stockholder approval. If approved by Stockholders, the 1996 Plan will be
effective as of January 1, 1996.
Background
The Company has a 1992 Nonqualified Stock Option Plan (the "1992 Plan")
adopted pursuant to Stockholder approval at the 1991 Annual Meeting. No
options may be granted under the 1992 Plan after December 31, 1996. The 1996
Plan is substantially identical to the 1992 Plan except (i) the aggregate
number of shares of Common Stock which may be sold or delivered is 2,000,000
rather than 3,250,000; (ii) the 1996 Plan limits the number of options that an
optionee may be granted during the term of the 1996 Plan to 300,000 shares; and
(iii) the 1996 Plan specifically prohibits the repricing of previously granted
options and stock appreciation rights (which was theoretically possible under
the 1992 Plan but which the Company has never done).
If the 1996 Plan is approved by Stockholders, grants of stock options will
be made under it when no shares remain available for grant under the 1992 Plan.
Options previously granted under the 1992 Plan will remain exercisable in
accordance with their terms.
The following summary of the principal features of the 1996 Plan is
subject to and qualified in its entirety by the full text of the 1996 Plan.
Any Stockholder desiring a copy of the 1996 Plan may obtain it by writing to
Reynolds Metals Company, 6601 West Broad Street, P. O. Box 27003, Richmond,
Virginia 23261-7003, Attention: Secretary.
The 1996 Plan
Purpose. The purpose of the 1996 Plan is to assist the Company in
attracting and retaining able key employees by providing them with additional
incentive to contribute to the growth and success of the Company and to remain
in its employ. The options provide a long-term incentive to build the
Company's businesses and align key employees' objectives with shareholders'
interests by rewarding key employees only when shareholder value is created.
Administration. The 1996 Plan will be administered by the Compensation
Committee of the Board of Directors (the "Committee"). Each member of the
Committee must be both a disinterested person as contemplated by Rule 16b-3, as
in effect from time to time, under the Securities Exchange Act of 1934, as
amended, and an "outside director" within the meaning of Treasury Regulation
Section 1.162-27(e)(3), or any successor thereto. No member of the Committee
is eligible to participate in the 1996 Plan. Among the powers granted to the
Committee are the authority to interpret the 1996 Plan, adopt rules and
regulations for its operation, determine the employees of the Company and its
subsidiaries to receive grants and determine the number of shares and other
terms and conditions of such grants.
Eligibility for Participation. Under the 1996 Plan, stock options and
stock appreciation rights may be granted to key employees of the Company and
its subsidiaries (including Executive Officers) who, as determined by the
Committee, contribute significantly to the growth and success of the Company or
a subsidiary. Approximately 440 employees are currently expected to
participate in the 1996 Plan.
Stock Options. Each stock option granted under the 1996 Plan entitles the
optionee to purchase one share of Common Stock from the Company, and is
exercisable no earlier than one year or later than ten years from the date of
grant (the "Option Period") at an exercise price equal to the fair market value
of the underlying Common Stock on the date of grant. An optionee may exercise
an option by giving written notice to the Company specifying the number of
shares to be purchased, accompanied by payment in full of the purchase price.
If required, the optionee must also pay an amount equal to applicable
withholding taxes as soon as administratively feasible. The purchase price may
be paid to the Company (i) in cash, (ii) with the approval of the Committee, in
shares of Common Stock having a fair market value on the date of exercise equal
to the aggregate purchase price, (iii) in a combination of such stock and cash
or (iv) pursuant to the Company's broker-assisted stock option financing
program (if such program is available at the time of the option's exercise),
under which a brokerage firm makes a loan to the optionee for the payment of
the option exercise price and all applicable withholding taxes. Under such
program, the optionee may repay the loan by selling the purchased shares
immediately through the brokerage firm, or the loan may remain outstanding
until the shares are later sold or the loan is otherwise repaid by the
optionee. If the Committee approves, an optionee may pay applicable
withholding taxes in shares of Common Stock (including shares received from
exercise of the option). No stock options may be granted under the 1996 Plan
after December 31, 2000. The 1996 Plan prohibits the repricing of stock
options. See "Limitation on Repricing; Adjustments" below.
Stock Appreciation Rights. The 1996 Plan authorizes the Committee to
grant stock appreciation rights in connection with a stock option either
concurrently with the grant of such underlying option or at a later time
determined by the Committee; provided, however, that the grant of a stock
appreciation right must not otherwise change the terms of the underlying
option. Such rights permit the optionee to surrender to the Company all or any
part of the underlying option in exchange for shares of Common Stock or cash in
an amount equal to the difference between (i) the fair market value of the
Common Stock on the date of exercise and (ii) the option price. The Committee
has the sole discretion to determine whether payment of the right will be made
in shares of Common Stock, cash or a combination of the two. The Committee may
determine that an optionee who is a Director or Executive Officer may receive
cash upon exercise of a right only if the right is exercised during a limited
"window period" established pursuant to SEC rules. In this situation, the
amount received upon exercise of the right will be based on the highest fair
market value during this window period. A stock appreciation right may be
exercised only to the extent that the underlying option is exercisable. The
exercise of a stock appreciation right extinguishes the underlying stock
option, and similarly, the exercise of an option extinguishes the related stock
appreciation right. Under the 1996 Plan, 100% of the shares subject to stock
options may have stock appreciation rights attached. However, absent any
changes in the current regulatory environment, the Company does not anticipate
that stock options granted under the 1996 Plan will have stock appreciation
rights attached. The 1996 Plan also prohibits the repricing of stock
appreciation rights. See "Limitation on Repricing; Adjustments" below.
Exercise Period. Each stock option and stock appreciation right will
expire upon the earlier of (i) ten years after the date of grant of the option
or (ii) termination of employment for any reason other than death, retirement,
disability or other reason approved by the Committee. Subject to the
foregoing, the Committee has discretion to determine the period or periods
within which options and rights may be exercised.
In consideration of the granting of stock options and stock appreciation
rights, the optionee must remain in the employment of the Company or one of its
subsidiaries, at the pleasure of the Company or such subsidiary, for at least
one year after the date of grant. Grants are made without the payment of a
purchase price by an optionee. The Committee in its discretion may allow an
optionee who retires, becomes disabled or whose employment otherwise terminates
for an approved reason within one year of the date of grant to exercise at any
time during the Option Period any option or right outstanding but not yet
exercisable as of the date of termination (to the extent otherwise permitted
under the terms of the grant).
Nontransferability. Except as otherwise required by applicable law, stock
options and stock appreciation rights may not be transferred or assigned except
by will or the laws of descent and distribution on the death of the optionee.
Change in Control. In the event of a Change in Control (as defined in the
1996 Plan) of the Company, all options and stock appreciation rights already
granted under the 1996 Plan would become immediately exercisable thirty days
after the Change in Control occurs, unless the Committee determines that the
Change in Control presents no material risk of loss of options to any optionee
and directs that no such acceleration of exercisability should occur. To the
extent necessary to preserve the exemption from short-swing profit liability
under Section 16(b) of the Securities Exchange Act of 1934, as amended, the
date as of which options and rights first become exercisable by optionees who
are Executive Officers or Directors may not be so accelerated to occur earlier
than six months from the date of the respective grant.
Number of Shares. The maximum number of shares of Common Stock that may
be sold or delivered under the 1996 Plan is 2,000,000, subject to adjustments
to reflect changes in the Company's capital structure, as described below. See
"Limitation on Repricing; Adjustments". Such shares may be authorized but
unissued shares, shares reacquired by the Company or a combination of both.
Shares of Common Stock not purchased under any stock option granted under the
1996 Plan which are no longer available for purchase because of the expiration,
termination or voluntary surrender of the option and which were not issued upon
exercise of a related stock appreciation right continue to be available for the
purposes of the 1996 Plan. No optionee may be awarded options to purchase in
the aggregate more than 300,000 shares of Common Stock under the 1996 Plan,
whether or not the optionee's options expire, terminate or are voluntarily
surrendered.
Limitation on Repricing; Adjustments. The 1996 Plan prohibits the
repricing of stock options and stock appreciation rights. However, if any
stock dividend is declared upon the Common Stock or if there is any stock
split, stock distribution or other recapitalization of the Company with respect
to its Common Stock, resulting in a split-up or combination or exchange of
shares, or if any special distribution is made to the holders of the Common
Stock, the aggregate number and kind of shares which may thereafter be offered
under the 1996 Plan will be proportionately and appropriately adjusted, as the
Committee may deem appropriate. In addition, upon the occurrence of such
events, the number and kind of shares then subject to options granted to
optionees and the per share option price therefor will be proportionately and
appropriately adjusted, without any change in the aggregate purchase prices to
be paid therefor, as the Committee may deem appropriate.
Amendment or Termination. The Board of Directors may amend, modify,
suspend or terminate the 1996 Plan at any time; provided, however, without the
approval of Stockholders, no action may increase the total number of shares
that may be issued under the 1996 Plan, except as provided above under
"Limitation on Repricing; Adjustments". Notwithstanding the foregoing, the
Board of Directors may, in any circumstance where it deems such approval
necessary or desirable, and will, to the extent necessary to maintain
compliance with Rule 16b-3 under the Securities Exchange Act of 1934, as in
effect from time to time, require Stockholder approval as a condition to the
effectiveness of any amendment or modification to the 1996 Plan. No amendment,
modification, suspension or termination may, without the consent of the
optionee, impair any previously granted stock option or stock appreciation
right or deprive any optionee of shares of Common Stock previously acquired.
Federal Income Tax Consequences. The following is a brief summary of the
principal United States federal income tax consequences under current federal
income tax laws related to grants under the 1996 Plan. This summary is not
intended to be exhaustive and, among other things, does not describe state or
local tax consequences.
No tax is imposed on the optionee, and no deduction is available to the
Company, upon the grant of a stock option. When an optionee exercises a stock
option, the Company will be entitled to an income tax deduction equal to the
amount required to be reported by the optionee as income at the time such
amount is included in the optionee's income.
Optionees will, upon the exercise of a stock option paid for in cash,
recognize income for federal income tax purposes in an amount equal to the
excess of the fair market value on the exercise date of the stock received over
the price paid for it. The tax basis of the shares received by the optionee
will be their fair market value on the exercise date.
If an option is exercised by delivering Common Stock to the Company, the
number of shares equal to the number delivered will be received without
liability for federal income tax and will retain the tax basis of the shares so
delivered. The fair market value on the exercise date of the additional shares
received by the optionee will be taxable. The optionee's tax basis in such
additional shares will be their fair market value on the date of exercise.
Section 162(m) of the Code limits the deductibility by the Company of
certain compensation in excess of $1 million paid to the Company's Chief
Executive Officer and the other four most highly compensated Executive
Officers. The 1996 Plan has been designed to qualify any grant made by the
Committee under the 1996 Plan for the "performance-based compensation"
exemption of Section 162(m) of the Code. As a result, the Company will receive
a tax deduction when stock options and stock appreciation rights are exercised
under the 1996 Plan.
New Plan Benefits. The Committee has made no determinations with respect
to grants of stock options or stock appreciation rights under the 1996 Plan.
Further, since the grant of stock options and stock appreciation rights under
the 1996 Plan is entirely within the Committee's discretion, it is not possible
to determine the number of stock options that would have been granted for 1995
if the 1996 Plan had been in effect. For information concerning grants of
stock options under the 1992 Plan in 1995, see "Executive Compensation -- Stock
Option Grants in 1995".
On February 22, 1996, the last reported sale price of the Company's Common
Stock on the New York Stock Exchange Composite Transactions Tape was $52-1/2
per share.
The Board of Directors recommends that Stockholders vote FOR the approval
of the 1996 Plan. Shares represented by proxies will be voted for approval
unless instructions to the contrary are given on the proxy.
ITEM 4. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of its Audit Committee,
has selected Ernst & Young LLP as independent auditors to examine and report
upon the financial statements of the Company and its consolidated subsidiaries
for the year 1996 and is submitting this matter to Stockholders for their
ratification. Ernst & Young LLP served as the Company's independent auditors
in 1995 and in prior years. If Stockholders do not ratify the selection of
Ernst & Young LLP, other independent auditors will be considered. One or more
partners of the firm of Ernst & Young LLP will be present at the Annual Meeting
to make a statement if they desire to do so and to respond to appropriate
questions that may be asked by Stockholders.
The Board of Directors of the Company recommends that Stockholders vote
FOR the ratification of the selection of Ernst & Young LLP as independent
auditors to examine and report upon the financial statements of the Company and
its consolidated subsidiaries for the year 1996. Shares represented by proxies
will be voted for approval unless instructions to the contrary are given on the
proxy.
ITEM 5. OTHER PROPOSED ACTION
The Board of Directors is not aware that any matters other than those
stated in this Proxy Statement will come before the Annual Meeting. Should any
matters requiring the vote of Stockholders arise, it is intended that shares
represented by proxies will be voted in accordance with the discretion of the
person or persons holding the proxy.
BENEFICIAL OWNERSHIP OF SECURITIES
Principal Holders
Stockholders who were known to the Company to own beneficially more than
five percent of any class of voting securities of the Company at February 20,
1996 are set forth in the following table. Under the rules of the Securities
and Exchange Commission ("SEC"), "beneficial ownership" is deemed to include
any shares with respect to which the person, directly or indirectly, has or
shares voting and/or investment power, whether or not such shares are held for
the person's benefit.
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Ownership Percent
Title of Class (Number of Shares) of Class
-------------- ----------------------- --------
<S> <C> <C> <C>
Wellington Management Company Common Stock 10,143,759(1) 15.9%
75 State Street
Boston, Massachusetts 02109
FMR Corp. Common Stock 9,210,295(2) 14.1%(2)
82 Devonshire Street
Boston, Massachusetts 02109
Vanguard/Windsor Fund, Inc. Common Stock 6,177,800(3) 9.7%
P. O. Box 2600
Valley Forge, Pennsylvania 19482
<FN>
____________________
(1) As reported in an Amendment No. 4 dated February 9, 1996 to a Schedule 13G dated February 10, 1993
filed with the SEC. Based on the information contained in such filing, of the number of shares of
Common Stock shown as beneficially owned, Wellington Management Company, an investment advisor and
parent holding company, has shared voting power with respect to 603,052 shares, shared dispositive
power with respect to all of the shares, and sole voting and dispositive power with respect to none
of the shares. The reported shares are owned by a variety of investment advisory clients of
Wellington Management Company, including Vanguard/Windsor Fund, Inc. See footnote (3).
(2) As reported in an Amendment No. 4 dated February 14, 1996 to a Schedule 13G dated April 10, 1992
filed with the SEC. Based on the information contained in such filing, of the shares of Common
Stock shown as beneficially owned, FMR Corp., a parent holding company, has sole voting power with
respect to 378,679 shares, sole dispositive power with respect to all of the shares, and shared
voting and dispositive power with respect to none of the shares. The filing indicates that it was
filed jointly on behalf of FMR Corp., Edward C. Johnson 3d, chairman of FMR Corp., Abigail P.
Johnson, a director of FMR Corp., and Fidelity Management & Research Company, an investment advisor
and wholly-owned subsidiary of FMR Corp. The reported shares include 1,684,198 shares of Common
Stock that would result upon conversion of PRIDES. (Each share of PRIDES may be converted into .82
of a share of Common Stock.) The percentage figure assumes 1,684,198 additional shares of Common
Stock would be outstanding as a result of such conversion.
(3) As reported in an Amendment No. 3 dated February 2, 1996 to a Schedule 13G dated February 10, 1993
filed with the SEC. Based on the information contained in such filing, Vanguard/Windsor Fund,
Inc., an investment company, has sole voting and shared dispositive power with respect to all of
the reported shares, and shared voting and sole dispositive power with respect to none of the
reported shares.
</FN>
</TABLE>
<PAGE>
Directors, Nominees and Executive Officers
The following table sets forth the beneficial ownership (as defined
above), as of February 20, 1996, of the Company's voting securities by each
Director and Nominee, each of the Executive Officers named in the Summary
Compensation Table, and all Directors and Executive Officers of the Company as
a group.
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature
Of Beneficial Ownership
(Number of Shares)
---------------------------------------------------
Shared
Sole Voting Voting
and/or and/or Percent
Investment Investment of
Title of Class Power(1)(2) Power(3) Total(4) Class(5)
-------------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Directors, Nominees and
Certain Executive Officers
Patricia C. Barron Common Stock 1,500 --- 1,500
William O. Bourke Common Stock 305,600 22,230 327,830 0.5%
John R. Hall Common Stock 4,200 --- 4,200
Robert L. Hintz Common Stock 1,500 --- 1,500
Richard G. Holder Common Stock 455,950 21,244 477,194 0.8%
William H. Joyce Common Stock 3,417 --- 3,417
Mylle Bell Mangum Common Stock 1,496 --- 1,496
D. Larry Moore Common Stock 1,511 --- 1,511
Randolph N. Reynolds Common Stock 223,114 168,657 391,771 0.6%
James M. Ringler Common Stock 1,022 --- 1,022
Henry S. Savedge, Jr. Common Stock 101,393 4,260 105,653 0.2%
Jeremiah J. Sheehan Common Stock 125,610 801 126,411 0.2%
Robert J. Vlasic Common Stock 4,000 2,000 6,000
J. Wilt Wagner Common Stock 95,000 6,832 101,832 0.2%
Joe B. Wyatt Common Stock 1,500 --- 1,500
All Directors and
Executive Officers
as a group (36 in
number) Common Stock 2,141,757 942,375 3,084,132 4.9%
PRIDES(6) 200 195,000 195,200 1.8%
<FN>
__________________
(1) Reported in this column are shares held of record individually or held in the name of a bank,
broker or nominee for the person's account and other shares with respect to which Directors,
Nominees and Executive Officers (or their spouses, minor children or other relatives who share
their home) have sole voting and/or investment power, including shares held as sole trustee or
custodian for the benefit of others. Also included in this column are the following shares of the
Company's Common Stock which may be acquired within 60 days after February 20, 1996 under the
Company's 1982, 1987 and 1992 Nonqualified Stock Option Plans: W. O. Bourke, 280,000 shares; R. G.
Holder, 394,524 shares; R. N. Reynolds, 149,000 shares; H. S. Savedge, Jr., 92,750 shares; J. J.
Sheehan, 121,500 shares; J. W. Wagner, 95,000 shares; and all Directors and Executive Officers as a
group, 1,941,024 shares.
(2) Does not include equivalent shares of common stock credited to the accounts of the following
individuals under deferred compensation and benefit plans as of December 31, 1995: J. R. Hall,
2,054 shares; R. G. Holder, 1,675 shares; W. H. Joyce, 656 shares; R. N. Reynolds, 471 shares;
J. M. Ringler, 1,270 shares; H. S. Savedge, Jr., 178 shares; J. J. Sheehan, 431 shares; J. W.
Wagner, 190 shares; and all Directors and Executive Officers as a group, 9,522 shares.
(3) Reported in this column are shares with respect to which Directors, Nominees and Executive Officers
(or their spouses or minor children) share voting and/or investment power, including shares held
jointly with others or as co-trustee for the benefit of others and shares credited as of December
31, 1995 to the accounts of participants under the Company's Savings and Investment Plan for
Salaried Employees and Tax Reduction Act Stock Ownership Plan for Salaried Employees.
(4) Each Director, Nominee and Executive Officer disclaims beneficial ownership of all securities which
are not held for his or her benefit. Each of W. O. Bourke, J. R. Hall, R. G. Holder, R. N.
Reynolds and J. J. Sheehan also disclaims beneficial ownership of the following shares of Common
Stock of the Company held by his wife: Mrs. W. O. Bourke, 400 shares; Mrs. J. R. Hall, 200 shares;
Mrs. R. G. Holder (as trustee and co-trustee of trusts for the benefit of her daughters), 19,474
shares; Mrs. R. N. Reynolds, 1,846 shares; and Mrs. J. J. Sheehan, 4,110 shares. An Executive
Officer not named in the table disclaims beneficial ownership of 140 shares held by his wife as
custodian for the benefit of a son. Another Executive Officer not named in the table disclaims
beneficial ownership of 200 shares of PRIDES held by his wife. All disclaimed shares are included
in the table.
(5) Unless otherwise indicated, beneficial ownership of any named individual does not exceed 0.1% of
the outstanding shares.
(6) Each share of PRIDES may be converted into .82 of a share of Common Stock.
</FN>
</TABLE>
<PAGE>
Stock Ownership Guidelines
The Company has established Stock Ownership Guidelines for Outside
Directors under which each Outside Director is expected to own at least 1,500
shares of Company Common Stock (or its equivalent, including equivalent shares
of common stock under a deferred compensation plan). No specific period of
time is established within which the minimum level must be reached. The Board
of Directors believes it appropriate that the Committee on Directors consider
an Outside Director's failure to make reasonable progress toward meeting the
minimum level in weighing the Outside Director's renomination to the Board.
At the present time, all Outside Directors have met the goal or are, in the
judgment of the Committee on Directors, making reasonable progress toward
meeting it.
For information on Stock Ownership Guidelines for Officers, see "Report of
Compensation Committee on Executive Compensation -- Stock Ownership
Guidelines".
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Stockholders
Reynolds Metals Company
The Compensation Committee of the Board of Directors (the "Committee") has
general oversight responsibilities for compensation paid to Executive Officers.
The Company's executive compensation program is designed to help the
Company become the premier supplier and recycler of aluminum and other products
in the global markets it serves by (i) building and retaining a management team
with exceptional abilities and (ii) focusing management's attention, energy
and skill on achieving short-term business goals, securing profitable growth
and building shareholder value. The key elements of the program are base
salary, variable compensation in the form of annual awards, and stock option
awards. Variable compensation is highly leveraged against performance, with
lower payments as performance drops below preestablished goals and relatively
higher payments for superior performance. The higher the executive grade
level, the greater the proportion of compensation contingent on the
accomplishment of business objectives.
The Committee meets regularly with management and periodically with an
independent compensation consultant to review the Company's executive
compensation program. In its review, the Committee compares the total
compensation of the Company's Executive Officers to that of a comparison group
of companies. The comparison group currently consists of 28 comparably sized,
capital intensive companies about which the Company's independent consultant
has comprehensive compensation data. The group includes four of the companies
in the aluminum, metals and containers industry peer group against which the
Company's shareholder return is measured in the Performance Graphs on page 19.
Differences in size within the comparison group are adjusted by regression
analysis based on sales levels. The Committee believes the comparison group,
which is a more varied selection of companies than the industry peer group, is
a representative sample of types of companies which are the Company's most
direct competitors for executive talent. The Company targets individual
components of executive compensation against the comparison group but has no
specific target for total compensation.
Deductibility of Compensation. The Committee reviews, with the assistance
of appropriate corporate personnel, the impact of changes in regulatory
requirements on executive compensation. Section 162(m) of the Code limits the
deductibility by the Company of certain compensation in excess of $1 million
paid to the Company's Chief Executive Officer and the other four most highly
compensated Executive Officers. At the present time, mandatory deferral
features for salary and variable compensation take effect when annual
compensation payable to any of these five Executive Officers would not be
deductible. The mandatory deferrals were intended to be an interim measure for
avoiding the loss of tax deductions, pending the adoption of final regulations
by the Internal Revenue Service, and expire on December 31, 1996. An
alternative program for future years is proposed for Stockholder approval under
Item 2 above. All compensation paid to Executive Officers for 1995 was fully
deductible, due to the availability and use of voluntary deferrals under the
Company's salary and variable compensation programs. For the reasons described
under Item 2 above, it is anticipated that substantially all future
compensation paid to Executive Officers should also be fully deductible if
Stockholder approval of the proposed amendment to the Company's Performance
Incentive Plan is obtained. For purposes of the IRS regulations, the Committee
is composed entirely of "outside directors", and stock option awards under the
Company's existing plan (and under the proposed 1996 Nonqualified Stock Option
Plan) qualify as performance-based compensation not subject to the $1 million
cap.
Salaries. The Company pays salaries to Executive Officers which are
targeted to be at the size-adjusted median for the comparison group. Each year
management recommends to the Committee the salaries of all Executive Officers
other than the Chief Executive Officer. The Committee makes its own assessment
of the Chief Executive Officer's salary. In its review, the Committee
considers the Executive Officer's job responsibilities and performance, the
business outlook for the Company, the general state of the economy and pay
practices of the comparison group, including salary data provided by the
Company's independent compensation consultant. Based on its review, the
Committee makes recommendations to the Board as it deems appropriate.
For 1995, salaries paid to Executive Officers as a group were
approximately 2% above the size-adjusted median for the comparison group.
Salaries paid to Executive Officers in 1993 and 1994 had been below the
size-adjusted median for the comparison group.
Variable Compensation. The Company has a Performance Incentive Plan under
which it pays Executive Officers and other key employees awards which vary in
amount from year to year, or are not paid at all, based on performance. For a
detailed description of the current provisions of the Plan and of the Plan
as proposed to be amended, subject to Stockholder approval, see Item 2 above.
Except as noted below under "Stock Ownership Guidelines", all awards are
payable in cash.
The Plan currently does not specify particular performance measures that
must be taken into account, leaving the determination of such measures to the
Committee's discretion on an annual basis. Threshold, target and maximum award
levels are established by the Committee to reward performance based on
corporate, business unit and individual goals.
For 1995, the principal determining factor in setting variable
compensation levels was pre-tax profitability. In the first quarter of 1995,
the Committee approved a range of variable compensation payments that would
follow from achievement of varying levels of profitability. After year end,
the Committee confirmed the final payment level to be made against profit
performance based on actual results which were among the best in the Company's
history, also reviewing return on equity, return on capital and return on
assets measures in the process. The Committee then applied a "balanced
scorecard" approach, having reserved the discretion to raise or lower the
payments generated by the profitability measure by an amount equal to up to 20%
of the maximum award level based on performance against other business goals.
These goals, established at the beginning of the year, keyed into the Company's
basic values of continuous improvement, employee empowerment, customer
satisfaction, stockholder satisfaction, supplier involvement and social
responsibility. The Committee concluded that successful performance against a
number of these other business goals had been achieved, including measured
improvements in customer perceptions of quality; improvements in employee
survey results measuring trust and empowerment, communication and general job
satisfaction; and cycle time reductions in key processes. In total,
performance against the pre-tax profitability measure accounted for
approximately 90% of variable compensation payments, while successful
completion of other business goals accounted for approximately 10%.
Stock Options. The Company maintains a 1992 Nonqualified Stock Option
Plan, under which the Committee grants annually to Executive Officers and other
key employees options to purchase Common Stock of the Company. The options
provide a long-term incentive to build the Company's businesses and align
management's objectives with shareholders' interests by rewarding management
only when shareholder value is created. All options granted under the 1992
Plan are exercisable no earlier than one year or later than ten years from the
date of grant at an exercise price equal to the fair market value of the
underlying Common Stock on the date of grant. Except for required adjustments
to reflect changes in the Company's capital structure, such as stock splits,
the Company has never adjusted the price nor amended the financial terms of
outstanding options. As a result, Executive Officers cannot benefit from stock
price appreciation unless shareholders also benefit. The ten-year Performance
Graph on page 19, which compares the Company's shareholder return over the last
ten years with that of the S&P 500 Stock Index and an aluminum, metals and
containers industry peer group, corresponds to the term of the stock options.
Stock options are currently the Company's sole incentive tied to long-term
performance. The size of the option award granted to each Executive Officer is
based on a stock option grant schedule, approved by the Committee, which
allocates shares authorized for stock options under the 1992 Plan to eligible
employees based on salary grade and long-term incentive compensation data
provided by the Company's independent compensation consultant. The schedule is
used as a guide for what a typical award might be for each eligible employee,
including each Executive Officer, while actual awards may vary based on the
experience, achievements and anticipated future contributions to the Company of
each individual. (The number of options and shares currently held by an
optionee is not a factor in determining individual grants.) The schedule was
adjusted in 1994 to target awards nearer to the size-adjusted median for
long-term compensation in the comparison group of companies, using values based
on option pricing models provided by the Company's compensation consultant. As
a result of the adjustment, stock option awards to Executive Officers in 1994
averaged approximately 5% above the median and in 1995, approximately 7% above.
(In 1993, the awards had averaged approximately 20% below the median.) In
approving the schedule and the size of the awards for 1995, the Committee's
decisions were based on its own judgment exercised within the framework
described above, rather than on any particular corporate performance measure.
Chief Executive Officer Compensation. Compensation for the Company's
Chief Executive Officer is established in accordance with the executive
compensation philosophy and policies described above.
The Board of Directors meets after the close of each year in executive
session to review the performance of the Company generally, senior management
as a group and the Chief Executive Officer individually. The Chairman of the
Committee acts as "lead director" for this executive session.
Mr. Holder's salary level is generally the result of: (i) the salary
grade level assigned to his position, which takes into account knowledge and
level of responsibility; (ii) time in his current position and individual
performance; (iii) salary data provided by the Company's independent
compensation consultant; and (iv) salary budget guidelines for the year which
take into account the business outlook for the Company. By design, Mr. Holder's
salary should be at the size-adjusted median for the comparison group,
consistent with the Company's executive compensation philosophy. At Mr.
Holder's request, Mr. Holder's base salary for 1994 remained at the same level
as in 1993 and 1992. The increase granted to Mr. Holder in 1995 was intended
to partially offset the effects of the salary freeze. Even with the increase,
Mr. Holder's salary for 1995 remained 12% below the size-adjusted median for
the comparison group.
The Committee approved variable compensation to Mr. Holder for 1995 under
the Performance Incentive Plan of $975,000. In making this award, the
Committee noted Mr. Holder's effectiveness in leading the Company's performance
improvement efforts and in significantly exceeding the Company's profit goals
for 1995. Under Mr. Holder's leadership, the Company had profit before tax of
$548 million in 1995, compared to a pre-tax profit of $190 million in 1994 and
a loss of $515 million in 1993.
In addition, both the salary increase granted to Mr. Holder and his
variable compensation award reflected the Committee's assessment of strong
performance in leadership of strategic planning and implementation of the
Company's Total Quality Mission; representation of the Company to its
stakeholders; management development and succession planning; and
implementation of corporate governance initiatives.
The Committee approved a 1995 stock option grant to Mr. Holder of 65,000
shares, which was at the scheduled amount for his salary grade level.
Stock Ownership Guidelines. The Company has established Stock Ownership
Guidelines for Officers which apply to all Executive Officers. Under the
Guidelines, the following individuals are expected to own at least the
indicated amount of Company Common Stock (or its equivalent, including
equivalent shares of common stock under variable compensation and salary
deferral plans): the Chief Executive Officer--three times salary; the
President, any Vice Chairman of the Board, and any Executive Vice
President--two times salary; and any other officer or senior manager of the
Company subject to the Guidelines--one times salary. No specific period of
time is established within which the minimum level must be reached, although
each individual subject to the Guidelines is expected to meet the applicable
minimum stock ownership level as soon as reasonably practicable. To facilitate
compliance with the Guidelines, the Performance Incentive Plan provides that if
a participant in the Plan who is subject to the Guidelines does not meet the
applicable minimum stock ownership level as of year-end, the next award to the
participant under the Plan will be paid part in cash and part in stock (up to
one-half the value of the award but not to exceed the participant's annual rate
of base salary in effect at the time of the award).
J. R. Hall, J. M. Ringler and J. B. Wyatt served on the Committee
throughout 1995. W. H. Joyce and D. L. Moore joined the Committee in April
1995. T. A. Graves, Jr. and C. A. Sanders served on the Committee from January
1995 until they left the Board in April and May, 1995, respectively.
COMPENSATION COMMITTEE
John R. Hall, Chairman
William H. Joyce
D. Larry Moore
James M. Ringler
Joe B. Wyatt
February 23, 1996
Richmond, Virginia
PERFORMANCE GRAPHS
Following are two line graphs comparing the cumulative total shareholder
return on the Company's Common Stock with the cumulative total returns of the
S&P 500 Stock Index and a peer group consisting of a composite of the following
S&P published indices: (1) the Aluminum Industry (Alcoa, Alcan and the
Company); (2) the Metals Industry (ASARCO, Amax(1), Cypress Minerals, Inco,
Phelps Dodge and Freeport-McMoran Copper and Gold(2)); and (3) the Containers
Industry (Ball Corporation and Crown, Cork & Seal). In a change from prior
years, the Company has included the Containers Industry in its composite peer
group index. The Company believes this addition is appropriate to reflect the
nature of the Company's business, given that 44% of the Company's 1995 revenues
was derived from the packaging and containers market. In accordance with SEC
rules, the graphs this year compare the return on the Company's Common Stock
with both the newly selected peer group (Aluminum, Metals and Containers
Industry) and the peer group used in last year's Proxy Statement (Aluminum and
Metals Industry).
The first graph compares the returns over a five-year period; the second
compares the returns over a ten-year period, which corresponds to the term of
the stock options granted to Executive Officers during 1995. See "Executive
Compensation - Stock Option Grants in 1995". The returns of each component
company in the peer group were weighted according to the respective company's
stock market capitalization. The graphs assume that the value of the
investment in the Company's Common Stock and each index was $100 on December
31, 1990 and December 31, 1985, respectively, and that all dividends were
reinvested. Since December 31, 1990, the cumulative total shareholder return
on the Company's Common Stock was 14%; since December 31, 1985, the return was
287%.
[FN]
- -------------
(1) Amax was deleted from the published Metals Industry Index effective
upon the merger of Amax with Cyprus Minerals in 1993.
(2) Freeport-McMoran Copper and Gold was added to the published Metals
Industry Index in 1995.
[/FN]
<TABLE>
COMPARISON OF CUMULATIVE TOTAL RETURN
COMPANY, S&P 500, AND PEER GROUP COMPARISONS
<CAPTION>
Measurement Period Company S&P 500 Aluminum & Aluminum,
(Fiscal Year Covered) Metals Metals &
Industry Containers
Industry
<S> <C> <C> <C> <C>
Measurement Pt-12/31/90 $100 $100 $100 $100
FYE 12/31/91 $100 $130 $110 $116
FYE 12/31/92 $ 99 $140 $115 $125
FYE 12/31/93 $ 87 $155 $122 $132
FYE 12/31/94 $ 96 $157 $147 $154
FYE 12/31/95 $114 $215 $172 $179
</TABLE>
<TABLE>
COMPARISON OF CUMULATIVE TOTAL RETURN
COMPANY, S&P 500, AND PEER GROUP COMPARISONS
<CAPTION>
Measurement Period Company S&P 500 Aluminum & Aluminum,
(Fiscal Year Covered) Metals Metals &
Industry Containers
Industry
<S> <C> <C> <C> <C>
Measurement Pt-12/31/85 $100 $100 $100 $100
FYE 12/31/86 $108 $119 $ 94 $120
FYE 12/31/87 $261 $125 $152 $185
FYE 12/31/88 $301 $146 $192 $234
FYE 12/31/89 $310 $192 $227 $275
FYE 12/31/90 $340 $186 $209 $255
FYE 12/31/91 $338 $242 $229 $297
FYE 12/31/92 $337 $261 $240 $319
FYE 12/31/93 $296 $287 $254 $338
FYE 12/31/94 $326 $291 $306 $394
FYE 12/31/95 $387 $400 $359 $458
</TABLE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth for each of the last three fiscal years the
total annual and long-term compensation of the Company's Chief Executive
Officer and its other four most highly compensated Executive Officers who were
serving as Executive Officers at December 31, 1995:
<PAGE>
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
----------------------------------------- -------------
Awards
-------------
Other All
Annual Securities Other
Compen- Underlying Compen-
Name and Salary Bonus sation Options/SARs sation
Principal Position Year ($) ($)(1) ($)(2) (#)(3) ($)(4)
- ------------------------- ---- -------- -------- ------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Richard G. Holder,
Chairman of the Board and 1995 $700,000 $975,000 $ 738 65,000 shs. $100,199
Chief Executive Officer, 1994 575,000 400,000 3,858 65,000 shs. 25,056
Reynolds Metals Company 1993 575,000 -0- -0- 80,000 shs. 25,516
Jeremiah J. Sheehan,
President and Chief 1995 $423,750 $510,000 $494 30,000 shs. $20,284
Operating Officer, 1994 348,750 205,000 375 30,000 shs. 23,718
Reynolds Metals Company 1993 280,000 -0- -0- 19,000 shs. 8,820
Randolph N. Reynolds,
Vice Chairman of the 1995 $383,333 $425,000 $ -0- 25,000 shs. $17,675
Board, Reynolds Metals 1994 347,083 160,000 3,038 25,000 shs. 16,713
Company; President and 1993 315,000 -0- -0- 19,000 shs. 12,457
Chief Executive Officer,
Reynolds International, Inc.
Henry S. Savedge, Jr.,
Executive Vice President 1995 $325,000 $350,000 $ -0- 20,000 shs. $40,505
and Chief Financial Officer, 1994 265,000 145,000 -0- 22,500 shs. 10,951
Reynolds Metals Company 1993 262,083 -0- -0- 20,000 shs. 10,868
J. Wilt Wagner,
Executive Vice President, 1995 $325,000 $350,000 $1,007 22,500 shs. $38,293
Raw Materials, Metals and 1994 265,000 145,000 527 22,500 shs. 10,951
Industrial Products, 1993 230,000 -0- -0- 19,000 shs. 9,917
Reynolds Metals Company
<FN>
- ---------------
(1) Amounts shown in this column are cash awards granted under the Company's Performance Incentive Plan.
(2) Amounts shown in this column represent tax reimbursements for certain travel expenses.
(3) Option awards were granted under the Company's 1992 Nonqualified Stock Option Plan. See the section
below entitled "Stock Option Grants in 1995". None of the options has stock appreciation rights
attached.
(4) Amounts shown in this column for 1995 include the following:
(a) Company contributions to the Company's Savings and Investment Plan for Salaried Employees
(the "Savings Plan") in the amount of $4,501 for R. G. Holder; $4,501 for J. J. Sheehan; $4,500 for
R. N. Reynolds; $4,503 for H. S. Savedge, Jr.; and $4,503 for J. W. Wagner.
(b) Amounts credited as Company contributions under the Company's Benefit Restoration Plan for
the Savings Plan in the amount of $16,500 for R. G. Holder; $8,213 for J. J. Sheehan; $7,000 for
R. N. Reynolds; $5,247 for H. S. Savedge, Jr.; and $5,247 for J. W. Wagner.
(c) Amounts paid under the Company's Financial Counseling Assistance Plan for Officers in the
amount of $10,500 for R. G. Holder; $7,570 for J. J. Sheehan; $6,175 for R. N. Reynolds; $4,325 for
H. S. Savedge, Jr.; and $1,975 for J. W. Wagner.
(d) The present value costs of the Company's contribution toward 1995 premiums for split-dollar
life insurance, above the term coverage level provided generally to salaried employees, in the
amount of $68,698 for R. G. Holder; $26,430 for H. S. Savedge, Jr.; and $26,568 for J. W. Wagner.
(The split-dollar life insurance policies for Messrs. Sheehan and Reynolds had not yet been issued
as of December 31, 1995.) In 1995, the Company substituted a split-dollar life insurance program for
Executive Officers and certain other senior managers of the Company for the group term life insurance
program under which they were previously covered. The Company pays all premiums in excess of what
the covered executive pays and retains a collateral interest equal to this amount, which it will
recover when the insured executive reaches age 65 (or, if later, after 15 policy years). The covered
executive owns the policy and pays premiums equal to the cost of individual term insurance.
</FN>
</TABLE>
<PAGE>
Stock Option Grants in 1995
The following table sets forth information with respect to stock options
granted by the Company to each of the five named Executive Officers during 1995
and the grant-date present value of such options. The grant-date present value
is a theoretical value which is not necessarily indicative of the ultimate
value of the options to the Executive Officers. Ultimately, value is dependent
on the amount, if any, by which the market price of the Common Stock at any
point in time exceeds the exercise price. (See footnote (4) to the table.)
<PAGE>
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------
% of
Number of Total
Securities Options Exercise
Underlying Granted to or Base
Options Employees Price Per Expiration Grant-Date
Name Granted(1) in 1995(2) Share(3) Date Present Value(4)
---- ---------- ---------- --------- --------- -----------------
<S> <C> <C> <C> <C> <C>
R. G. Holder 65,000 8.6% $51.50 2/17/05 $1,374,750
J. J. Sheehan 30,000 4.0 51.50 2/17/05 634,500
R. N. Reynolds 25,000 3.3 51.50 2/17/05 528,750
H. S. Savedge, Jr. 20,000 2.6 51.50 2/17/05 423,000
J. W. Wagner 22,500 3.0 51.50 2/17/05 475,875
<FN>
- -----------------
(1) All options were granted under the Company's 1992 Nonqualified Stock Option Plan (the "1992 Plan"),
approved by Stockholders at the 1991 Annual Meeting. Each option entitles the optionee to purchase
one share of Common Stock from the Company, and is exercisable no earlier than one year or later
than ten years from the date of grant at an exercise price equal to the fair market value of the
underlying Common Stock on the date of grant. The options granted in 1995 became exercisable on
February 17, 1996. None of the options has stock appreciation rights attached. If there is a
Change in Control (as defined in the 1992 Plan) of the Company, the 1992 Plan provides that all
options already granted thereunder will become immediately exercisable thirty days after the Change
in Control occurs, unless the Compensation Committee determines that the Change in Control presents
no material risk of loss of options to any optionee and directs that no such acceleration of
exercisability should occur. To the extent necessary to preserve the exemption from short-swing
profit liability under Section 16(b) of the Securities Exchange Act of 1934, the date as of which
options first become exercisable by optionees who are Executive Officers or Directors may not be
accelerated to occur earlier than six months from the date of the respective grant.
(2) In 1995, 444 persons were granted options under the 1992 Plan, covering an aggregate of 755,400
shares of Common Stock, which constituted approximately 60% of the shares available for options
under the 1992 Plan.
(3) The exercise price may be paid by the optionee in cash, in shares of Common Stock valued at fair
market value on the date of exercise, in a combination of such stock or cash, or pursuant to the
Company's broker-assisted stock option financing program under which a brokerage firm makes a loan
to the optionee for the payment of the option exercise price and all applicable withholding taxes.
The optionee may repay the loan by selling the purchased shares immediately through the brokerage
firm, or the loan may remain outstanding until the shares are later sold or the loan is otherwise
repaid by the optionee.
(4) THE VALUES SHOWN ARE PURELY THEORETICAL. The options had no immediate value on the date of grant
and will have no value until one year after the grant and then only to the extent that the market
price of the Common Stock exceeds the exercise price. The values shown are based on the
Black-Scholes option pricing model, a complex mathematical formula used to value publicly-traded
options. The following assumptions were used to calculate the values under the Black-Scholes
formula: (i) an expected volatility rate of .257 with respect to the Common Stock based on the
average weekly price change of the Common Stock for the six months before the date of grant; (ii) a
risk-free rate of return of 7.4% based on the 10-year Treasury bond yield on the date of grant;
(iii) a dividend yield of 1.9% based on the annual dividend on the date of the grant of $1.00 per
share; and (iv) an option term of ten years, an option exercise price of $51.50 per share and an
exercise date of February 17, 2005. The Black-Scholes formula does not take into account, and the
values shown in the table were not adjusted for, two important aspects of options awarded under the
1992 Plan. First, the formula assumes that a liquid market exists for the options; however,
options awarded under the 1992 Plan may not be transferred. Second, it assumes that the options
may be exercised immediately; however, options awarded under the 1992 Plan may not be exercised
earlier than one year from the date of grant.
The values assigned to the reported options are provided solely to comply with SEC rules. No
prediction is made as to possible future appreciation, if any, of the Company's stock price. See
page 10 for a recent price of the Common Stock.
</TABLE>
<PAGE>
Aggregated Option Exercises in 1995 and
Option Values at December 31, 1995
The table below sets forth information with respect to options exercised
by each of the five named Executive Officers during 1995 and the number and
value of unexercised options held at the end of 1995:
<PAGE>
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Number of December 31, 1995 December 31, 1995
Shares ---------------- ---------------------
Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized(1) Unexercisable Unexercisable(2)
---- ----------- ----------- ---------------- ---------------------
<S> <C> <C> <C> <C>
R. G. Holder 8,374 $341,241 334,626 / 65,000 $3,125,987 / $349,375
J. J. Sheehan -0- -0- 91,500 / 30,000 628,000 / 161,250
R. N. Reynolds 16,000 444,000 124,000 / 25,000 763,625 / 134,375
H. S. Savedge, Jr. -0- -0- 72,750 / 20,000 568,125 / 107,500
J. W. Wagner -0- -0- 72,500 / 22,500 541,750 / 120,938
<FN>
- --------------
(1) Based on the difference between the option exercise price and the closing
price of the Company's Common Stock on the date of exercise as reported on
the New York Stock Exchange Composite Transactions Tape.
(2) Based on the difference between the option exercise price and the
closing price of $56-7/8 per share of the Company's Common Stock on
December 29, 1995 as reported on the New York Stock Exchange Composite
Transactions Tape.
</FN>
</TABLE>
<PAGE>
Pension Plan Table
The following table sets forth the total estimated annual benefits payable
under the Company's defined benefit pension plan, called the New Retirement
Program for Salaried Employees (the "New Retirement Program"), and benefit
restoration plans upon retirement to persons in specified final average
earnings and years-of-benefit-service classifications. The amounts shown are
based on the Social Security Act in effect for retirement in 1996. Such
amounts are not necessarily indicative of amounts that are or may actually
become payable.
<PAGE>
<TABLE>
<CAPTION>
Years of Benefit Service at Retirement (1)
- ------------------------------------------------------------------------------------------------------------------
Final Average
Earnings 5 10 15 20 25 30 35 40
- -------------- - -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 150,000 $ 12,750 $ 25,501 $ 38,251 $ 51,002 $ 63,753 $ 70,503 $ 77,254 $ 84,004
300,000 26,250 52,501 78,751 105,002 131,253 145,503 159,754 174,004
450,000 39,750 79,501 119,251 159,002 198,753 220,503 242,254 264,004
600,000 53,250 106,501 159,751 213,002 266,253 295,503 324,754 354,004
750,000 66,750 133,501 200,251 267,002 333,753 370,503 407,254 444,004
900,000 80,250 160,501 240,751 321,002 401,253 445,503 489,754 534,004
1,050,000 93,750 187,501 281,251 375,002 468,753 520,503 572,254 624,004
1,200,000 107,250 214,501 321,751 429,002 536,253 595,503 654,754 714,004
1,350,000 120,750 241,501 362,251 483,002 603,753 670,503 737,254 804,004
1,500,000 134,250 268,501 402,751 537,002 671,253 745,503 819,754 894,004
1,650,000 147,750 295,501 443,251 591,002 738,753 820,503 902,254 984,004
1,800,000 161,250 322,501 483,751 645,002 806,253 895,503 984,754 1,074,004
1,950,000 174,750 349,501 524,251 699,002 873,753 970,503 1,067,254 1,164,004
2,100,000 188,250 376,501 564,751 753,002 941,253 1,045,503 1,149,754 1,254,004
<FN>
- ------------------
(1) Benefits are computed as if paid on the basis of a straight life annuity, assuming retirement at age 65.
</FN>
</TABLE>
<PAGE>
The table below sets forth information relating to the New Retirement
Program with respect to the five Executive Officers named in the Summary
Compensation Table, assuming retirement (and eligibility for retirement) at
January 1, 1996:
<TABLE>
<CAPTION>
Final Average Years of Benefit
Earnings Service Completed
------------- -----------------
<S> <C> <C>
R. G. Holder $917,000 37
J. J. Sheehan(1) 415,000 8
R. N. Reynolds 511,000 27
H. S. Savedge, Jr. 326,000 36
J. W. Wagner 325,400 32
<FN>
- -----------
(1) The Company has agreed to pay J. J. Sheehan (a) certain early retirement
benefits equivalent to those he would have received from a prior employer,
if his employment with the Company is involuntarily terminated before age
65, and (b) upon his death, surviving spouse benefits equal to one-half of
any amounts payable under clause (a).
</FN>
</TABLE>
The New Retirement Program provides participants an annual benefit upon
retirement determined pursuant to a formula which takes into account final
average earnings, years of benefit service (as defined in the New Retirement
Program), and Social Security benefits. For purposes of the New Retirement
Program, a participant's final average earnings include base salary in effect,
plus profit sharing and bonus awards, in the five consecutive calendar years
for which the average is highest during the fifteen calendar years preceding
retirement. (See the Summary Compensation Table for salary and bonus
information for the five named Executive Officers for the years 1993-1995.)
Benefits calculated pursuant to the formula are reduced by an amount based upon
both (a) the primary Social Security benefit estimated to be payable upon
retirement or, if later, at age 65 and (b) years of benefit service.
Regulations issued in 1991 to implement the Tax Reform Act of 1986
and subsequent legislation may require the Company to make changes in the
benefit formula from time to time. Benefits payable under the New Retirement
Program are directly offset by benefits payable to participants from the
Company's Retirement Program for Salaried Employees, which was terminated
effective August 22, 1983.
The Internal Revenue Code and the Tax Reform Act of 1986 prescribe
limits on compensation that may be taken into account to calculate benefits
and the actual benefits payable under tax-qualified defined benefit plans.
The Company has nonqualified benefit restoration plans providing for the
payment from general funds of amounts otherwise payable under the New
Retirement Program but for these limitations.
Certain Arrangements
The Company has entered into severance agreements with key executives
designated by the Compensation Committee, including the five Executive
Officers named in the Summary Compensation Table. Each agreement provides
that termination compensation will be paid if the executive's employment is
terminated without Cause (as defined in the agreement) by the Company or
terminated by the executive in certain circumstances, in either case within
two years after a Change in Control (as defined in the agreement).
Termination compensation includes (a) a cash payment equal to three times the
sum of (i) annual base salary at the time of termination plus (ii) the
highest cash variable compensation award paid to the executive for any
previous year, (b) a cash settlement of stock options granted under the
Company's stock option plans but not yet exercisable at the date of
termination, and (c) a cash payment to give retirement benefits equal to
those payable had the executive (i) been vested (if not already vested at the
time of termination) and (ii) worked for the Company three additional years.
In addition, each agreement provides for continuation of medical, life and
disability benefits for three years, ownership of the car assigned to the
executive at the time of termination and making the executive whole for any
applicable excise taxes as a result of payment of the termination
compensation.
The Company has a New Management Incentive Deferral Plan (the "New
Deferral Plan") under which officers, including the five Executive Officers
named in the Summary Compensation Table, and other key employees who are
recommended by the Chief Executive Officer may defer receipt of up to 85% of
variable compensation, if any, otherwise payable under the Company's
Performance Incentive Plan and, effective January 1, 1996, the Company's
Supplemental Incentive Plan for services performed each year. Deferred
compensation is credited with additional income in the form of (i) interest
computed at a rate determined by the Compensation Committee for that year's
deferrals or (ii) in the case of mandatory deferrals described below or if
elected by a participant who is subject to the Company's Stock Ownership
Guidelines for Officers, a number of equivalent shares of common stock of the
Company. Deferrals must be for a period of at least five years, except in
the case of retirement. Payments will be made in a lump sum or in 5 or 10
annual installments, as elected by the participant. The New Deferral Plan
also contains a mandatory deferral feature effective for 1995 and 1996
providing that when annual compensation payable to the Company's Chief
Executive Officer or any of its other four most highly compensated Executive
Officers would not be deductible under the Internal Revenue Code in a given
year, payment of variable compensation will automatically be deferred to the
extent necessary to make the Executive Officer's annual compensation fully
deductible. Any amounts so deferred will be paid out after the Executive
Officer's retirement in accordance with a schedule elected by the Executive
Officer. To the extent that variable compensation would have been paid in
the form of shares of stock under the Performance Incentive Plan but for the
above-described mandatory deferral provisions, the deferred compensation will
be credited with additional income based on equivalent shares of common stock
of the Company. In addition, before the beginning of the calendar year, a
participant who anticipates being subject to a mandatory deferral may
voluntarily elect to have any amounts subject to a mandatory deferral earn
additional income based on equivalent shares of common stock of the Company.
The New Deferral Plan allows the Compensation Committee to accelerate payments
to all participants if it determines that a major challenge to the control of
the Company exists or if other extraordinary circumstances make such
acceleration in the best interest of the Company as determined by the
Committee.
The Company also maintains a Management Incentive Deferral Plan (the
"Deferral Plan"). The Deferral Plan is essentially identical to the New
Deferral Plan except that the Deferral Plan (i) provides for deferrals of up
to 50% of variable compensation, (ii) applies only to variable compensation
deferred under the Performance Incentive Plan, (iii) permits payments in
either a lump sum or in 5, 10, 15 or 20 annual installments, as the
participant elects, and (iv) contains no mandatory deferral provisions. As a
result of adoption of the New Deferral Plan, no further deferrals are being
made under the Deferral Plan, although amounts already deferred will continue
to accrue interest and will be paid out under the terms of the Deferral Plan.
The Company also has a Salary Deferral Plan for Executives (the "Salary
Deferral Plan") under which eligible employees whose annual base salary exceeds
the compensation that can be taken into account for qualified pension plan
purposes under the Internal Revenue Code may irrevocably elect to defer a
specified percentage of each year's base salary to the extent the salary
exceeds the statutory limit. Deferrals may be in 5% increments, up to a
maximum of 90% of salary in excess of the statutory limit. Deferred amounts
are credited with phantom earnings equal to what would be earned if the
deferred amounts were actually invested in any of the investment funds
available under the Company's Savings and Investment Plan for Salaried
Employees. Deferrals are not paid out until the participant terminates
employment and are paid in cash. Payments will begin in the first, second,
third or fourth January following the year in which the participant
terminates employment and may be in the form of either a lump sum or five
annual installments, in each case as the participant elects. The Salary
Deferral Plan also contains a mandatory deferral feature effective for 1995
and 1996 to take effect when annual compensation payable to the Company's
Chief Executive Officer or any of its other four most highly compensated
Executive Officers would not be deductible under the Internal Revenue Code
in a given year in spite of any mandatory deferral that has already been
implemented under the New Deferral Plan. In this situation, payment of
salary will automatically be deferred to the extent necessary to make the
Executive Officer's annual compensation fully deductible. The Salary
Deferral Plan also allows the Compensation Committee to accelerate payments
to all participants if it determines that a major challenge to the control of
the Company exists or if other extraordinary circumstances make such
acceleration in the best interest of the Company as determined by the
Committee.
As described in footnote (1) to the table in the section entitled
"Stock Option Grants in 1995", the 1992 Plan provides that under certain
circumstances the exercisability of stock options granted to optionees,
including the five Executive Officers named in the Summary Compensation
Table, may be accelerated in the event of a Change in Control of the
Company.
GENERAL INFORMATION
Annual Report
The Annual Report of the Company containing audited financial statements
for the year 1995 is being mailed to each Stockholder with this Proxy
Statement.
Stockholders' Proposals and Nominations
Stockholders may present proposals which are proper subjects for
consideration at the 1997 Annual Meeting of Stockholders to the Company for
inclusion in its proxy materials relating to that meeting. These proposals
should be submitted in writing as specified by SEC rules to: Reynolds Metals
Company, 6601 West Broad Street, P.O. Box 27003, Richmond, Virginia
23261-7003, Attention: Secretary. They must be received by October 25, 1996
in order to be included in the proxy materials for the 1997 Annual Meeting.
Stockholder nominations for Directors will be considered by the
Committee on Directors if submitted in writing to the Committee on Directors,
c/o Secretary, Reynolds Metals Company, 6601 West Broad Street, P.O. Box
27003, Richmond, Virginia 23261-7003. Nominations must include the
information specified in clauses (ii) through (v) in the following paragraph.
The Company's By-Laws require that Stockholders furnish written notice
to the Company of any business to be conducted at an annual meeting which is
not included in the Company's proxy materials or is not brought before the
meeting by or at the direction of the Board of Directors or the officer
presiding over the meeting. Such notice must contain the following
information: (i) a full description of each item of business proposed to be
brought before the meeting; (ii) the name and address of the person proposing
such business (or nominating a Nominee for Director); (iii) the class and
number of shares held of record, held beneficially and represented by proxy
by such person as of the record date for the meeting (if publicly available)
and as of the date of such notice; (iv) if any item of such business involves
a nomination for Director, all information regarding each such Nominee that
would be required to be set forth in a definitive proxy statement filed with
the SEC pursuant to SEC rules, and the written consent of each such Nominee;
and (v) all other information that would be required to be filed with the SEC
if, with respect to such business, the person were a participant in a
solicitation subject to Section 14 of the Securities Exchange Act of 1934.
Notice of business to be brought before the 1997 Annual Meeting must be
received by the Secretary of the Company at the above address not later
than January 24, 1997.
A copy of the By-Law provisions referred to above may be obtained,
without charge, upon written request to the Secretary.
D. MICHAEL JONES
Secretary
February 23, 1996
Richmond, Virginia
<PAGE>
Notice of
Annual Meeting
of Stockholders
April 17, 1996
and
Proxy Statement
(Reynolds logo)
<PAGE>
APPENDIX A
[FORMS OF PROXY CARDS]
REYNOLDS METALS COMPANY
Proxy Solicited by the Board of Directors
for Annual Meeting of Stockholders
April 17, 1996
The undersigned appoints Richard G. Holder and D. Michael Jones, and
each of them, proxies, with full power of substitution, to vote the shares of
Common Stock of Reynolds Metals Company which the undersigned is entitled to
vote at the Annual Meeting of Stockholders of the Company to be held at
Reynolds Metals Company Building, 6601 West Broad Street, Richmond, Virginia,
on Wednesday, April 17, 1996 at 10:00 A.M. (local time), and at any
adjournments thereof. The undersigned hereby confer(s) upon the proxies and
each of them authority to vote for a substitute Nominee or substitute
Nominees designated by the Board of Directors with respect to the election of
Directors if any Nominee is unavailable to serve for any reason if elected.
For participants in the Company's Savings and Investment Plan for
Salaried Employees, Tax Reduction Act Stock Ownership Plan for Salaried
Employees, Savings Plan for Hourly Employees and/or Employees Savings Plan,
this card also provides voting instructions to the respective trustees under
such plans for the undersigned's allocable portion, if any, of the total
number of shares of Common Stock of the Company held by such plans as
indicated on the reverse side. (Note: The number of plan shares indicated
on the reverse side may not be the same as the number of shares shown on the
undersigned's last account statement(s) from the plans due to the use of
different valuation dates and/or accounting methods.) These voting
instructions are solicited and will be carried out in accordance with the
applicable provisions of such plans.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY. THE
SHARES REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE WITH ANY CHOICE
SPECIFIED BY THE STOCKHOLDER; WHERE THERE IS NO CHOICE, SUCH SHARES WILL BE
VOTED IN FAVOR OF ITEMS 1, 2, 3 AND 4.
(continued and to be SIGNED on the Reverse Side)
- ----------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
Please mark your
votes as indicated ___
in this example /X /
___
The Board of Directors recommends a vote FOR Items 1, 2, 3 and 4.
Item 1 - Election of Directors:
FOR all Nominees - Patricia C. Barron, William O.
Nominees WITHHOLD Bourke, John R. Hall, Robert L. Hintz,
(except as AUTHORITY Richard G. Holder, William H. Joyce, Mylle
withheld in to Vote Bell Mangum, D. Larry Moore, Randolph N.
the space for all Reynolds, James M. Ringler, Henry S. Savedge,
provided) Nominees Jr., Jeremiah J. Sheehan, Joe B. Wyatt
___ ___
/___/ /___/ (To withhold authority to vote for any
individual Nominee, write that Nominee's name
in the space provided below.)
_____________________________________________
Item 2 Item 3
Approval of Amendment to Approval of the 1996 Nonqualified
the Performance Incentive Stock Option Plan
Plan
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
___ ___ ___ ___ ___ ___
/___/ /___/ /___/ /___/ /___/ /___/
Item 4 Item 5
Ratification of Selection In their discretion the proxies are
of Ernst & Young LLP as authorized to vote upon such other
Independent Auditors matters as may properly come before
the Meeting.
FOR AGAINST ABSTAIN
___ ___ ___ ___
/___/ /___/ /___/ I WILL ATTEND ANNUAL MEETING /___/
Date: _____________________________
___________________________________
Signature(s) of Stockholder(s)
___________________________________
Please mark, date and sign as your name
appears [to the left] [above] and return
in the enclosed envelope. If signing as
attorney, executor, administrator, trustee,
guardian or in another representative
capacity, please give your full title as such.
- ---------------------------------------------------------------------------
FOLD AND DETACH HERE
Dear Stockholder:
Enclosed are materials relating to the Company's 1996 Annual Meeting of
Stockholders. The notice of the Meeting and Proxy Statement describe the
formal business to be transacted at the Meeting.
Your vote is important to us. Whether or not you expect to attend the
Meeting, please complete, sign and return promptly the attached proxy card in
the accompanying envelope, which requires no postage if mailed in the United
States.
If you plan to attend the Meeting, please also mark the attendance box
on the proxy card.
REYNOLDS METALS COMPANY
<PAGE>
REYNOLDS METALS COMPANY
Proxy Solicited by the Board of Directors
for Annual Meeting of Stockholders
April 17, 1996
The undersigned appoints Richard G. Holder and D. Michael Jones, and
each of them, proxies, with full power of substitution, to vote the shares of
7% PRIDES(SM), Convertible Preferred Stock of Reynolds Metals Company which
the undersigned is entitled to vote at the Annual Meeting of Stockholders of
the Company to be held at Reynolds Metals Company Building, 6601 West Broad
Street, Richmond, Virginia, on Wednesday, April 17, 1996 at 10:00 A.M. (local
time), and at any adjournments thereof. The undersigned hereby confer(s)
upon the proxies and each of them authority to vote for a substitute Nominee
or substitute Nominees designated by the Board of Directors with respect to
the election of Directors if any Nominee is unavailable to serve for any
reason if elected.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY. THE
SHARES REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE WITH ANY CHOICE
SPECIFIED BY THE STOCKHOLDER; WHERE THERE IS NO CHOICE, SUCH SHARES WILL BE
VOTED IN FAVOR OF ITEMS 1, 2, 3 AND 4.
(continued and to be SIGNED on the Reverse Side)
<PAGE>
Please mark your
votes as indicated ___
in this example /X /
___
The Board of Directors recommends a vote FOR Items 1, 2, 3 and 4.
Item 1 - Election of Directors:
FOR all Nominees - Patricia C. Barron, William O.
Nominees WITHHOLD Bourke, John R. Hall, Robert L. Hintz,
(except as AUTHORITY Richard G. Holder, William H. Joyce, Mylle
withheld in to Vote Bell Mangum, D. Larry Moore, Randolph N.
the space for all Reynolds, James M. Ringler, Henry S. Savedge,
provided) Nominees Jr., Jeremiah J. Sheehan, Joe B. Wyatt
___ ___ (To withhold authority to vote for any
/___/ /___/ individual Nominee, write that Nominee's
name in the space provided below.)
__________________________________________
Item 2 Item 3
Approval of Amendment to the Approval of the 1996 Nonqualified Stock
Performance Incentive Plan Option Plan
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
___ ___ ___ ___ ___ ___
/___/ /___/ /___/ /___/ /___/ /___/
Item 4 Item 5
Ratification of Selection of In their discretion the proxies are
Ernst & Young LLP as authorized to vote upon such other
Independent Auditors matters as may properly come before
the Meeting.
FOR AGAINST ABSTAIN
___ ___ ___
/___/ /___/ /___/ ___
I WILL ATTEND ANNUAL MEETING /___/
Date: ________________________________
______________________________________
Signature(s) of Stockholder(s)
______________________________________
Please mark, date and sign as your name
appears [to the left] [above] and
return in the enclosed envelope. If signing
as attorney, executor, administrator,
trustee, guardian or in another representative
capacity, please give your full title as such.
- --------------------------------------------------------------------------
FOLD AND DETACH HERE
Dear Stockholder:
Enclosed are materials relating to the Company's 1996 Annual Meeting of
Stockholders. The notice of the Meeting and Proxy Statement describe the
formal business to be transacted at the Meeting.
Your vote is important to us. Whether or not you expect to attend the
Meeting, please complete, sign and return promptly the attached proxy card in
the accompanying envelope, which requires no postage if mailed in the United
States.
If you plan to attend the Meeting, please also mark the attendance box
on the proxy card.
REYNOLDS METALS COMPANY
<PAGE>
APPENDIX B
REYNOLDS METALS COMPANY
Performance Incentive Plan
As Amended and Restated
Effective January 1, 1996
TABLE OF CONTENTS
Page
1. PURPOSE 1
2. ADMINISTRATION 1
3. PARTICIPATION 2
4. TARGET AWARD LEVELS 2
5. PERFORMANCE GOALS 2
6. DETERMINATION OF AWARDS 3
7. COMMUNICATION 3
8. PAYMENT OF AWARDS 3
9. COMPANY STOCK 6
10. EFFECTIVE DATE OF PLAN 7
1. PURPOSE
The purpose of the Performance Incentive Plan (the "Plan") is to
promote the financial success of Reynolds Metals Company (the
"Company") by:
(a) providing compensation opportunities which are competitive with
those of other major companies;
(b) supporting the Company's goal-setting and strategic planning
process; and
(c) motivating key executives to achieve annual business goals by
allowing them to share in the risks and rewards of the business.
2. ADMINISTRATION
(a) The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors (the "Board"). No member
of the Committee shall be eligible to participate in the Plan.
(b) The Committee shall have the power and authority to adopt, amend
and rescind any administrative guidelines, rules, regulations,
and procedures deemed appropriate to the administration of the
Plan, and to interpret and rule on any questions relating to any
provision of the Plan.
(c) The decisions of the Committee shall be final, conclusive and
binding on all parties, including the Company and participating
employees.
(d) The Board may from time to time amend, suspend or terminate the
Plan, in whole or in part. Notwithstanding the foregoing, the
Board may, in any circumstance where it deems such approval
necessary or desirable, and shall, to the extent necessary to
maintain compliance with Rule 16b-3 under the Securities Exchange
Act of 1934 as in effect from time to time, require stockholder
approval as a condition to the effectiveness of any amendment or
modification of the Plan.
3. PARTICIPATION
Company officers and other key employees of the Company and its
subsidiaries who are recommended by the Chief Executive Officer of the
Company and who are approved by the Committee shall be eligible for
participation in the Plan during a Plan year.
4. TARGET AWARD LEVELS
After consultation with management, the Committee may designate target
award levels to be earned by participants for a given Plan year. Such
target awards may vary by management level.
5. PERFORMANCE GOALS
To the fullest extent possible, management shall establish performance
goals for participants to help it determine the awards it will
recommend for the Plan year. Such goals may relate to corporate
performance, divisional performance, and individual performance as
appropriate to the purpose of the Plan and the positions and
responsibilities of the participants.
6. DETERMINATION OF AWARDS
As soon as practicable following the close of each Plan year, the
Committee shall, after consultation with management, determine the
award earned by each participant for the Plan year. In special cases
of meritorious performance, after consultation with management, the
Committee may make awards to individuals who were not previously
designated as eligible for participation during the Plan year. If a
participant has died during the Plan year, an award may be made to the
participant's spouse or legal representative if the Committee so
determines.
7. COMMUNICATION
Participants shall be advised in writing of their participation in the
Plan and of any performance goals applicable to their awards.
8. PAYMENT OF AWARDS
Awards shall be payable in cash as soon after the close of the Plan
year as feasible; provided, however, that payment of part or all of
any award may be deferred in accordance with the terms of any
incentive deferral plan maintained from time to time by the Company.
(c) Any other provision of the Plan to the contrary notwithstanding,
except as otherwise determined by the Committee in accordance
with Paragraph 6(a) of the Company's Stock Ownership Guidelines
for Officers (the "Guidelines"), the following provisions shall
apply to the payment of an award to any participant who is
subject to the Guidelines and who had not met the applicable
minimum stock ownership level of the Guidelines as of the
December 31 immediately preceding the date of payment of an award
under the Plan.
The award to any such participant shall be paid part in cash and
part in the form of shares of Common Stock of the Company
("Shares"). The number of Shares issued under this provision
shall be equal to the number of Shares that would have been
necessary to bring the participant into compliance with the
Guidelines as of the December 31 immediately preceding the date
of payment of the award; provided, however, that in no event
shall more than half of the value of a participant's award be
paid in the form of Shares; and provided, further, that the part
of the award for any participant that is payable in Shares shall
not exceed the annual rate of base salary in effect for the
participant at the time of the award. The remainder of the
participant's award shall be paid in cash. Awards of Shares
shall be made without payment of a purchase price.
Any payment in accordance with this subsection (c) shall be
subject to the following terms and conditions:
(i) An award shall be converted into Shares by dividing (y) the
cash value of the part of the award to be paid in Shares by
(z) the arithmetic average of the high and low sales prices
of the Shares as reported on New York Stock Exchange
Composite Transactions on the date preceding the date on
which the award is paid. Any fractional Share shall be paid
in cash.
(ii) The mandatory share award provisions of this subsection (c)
shall not apply to the extent the participant has already
elected under the Company's New Management Incentive
Deferral Plan (y) to defer a portion of his or her award
under the Plan and (z) to have such deferred award be
credited with additional income based on shares of phantom
stock of the Company.
(iii) Except to the extent a participant has elected to have a
deferred award be credited with additional income based on
shares of phantom stock of the Company, any voluntary
deferral of the payment of part or all of an award under the
Plan shall apply only to the part of the award that is
payable in cash after the application of this subsection
(c); provided, however, that any such voluntary deferral
shall be reduced as necessary to ensure the payment of all
applicable payroll taxes.
(iv) To the extent a participant is subject to a mandatory
deferral of the payment of part or all of an award under the
Plan, the mandatory deferral shall apply first to the part
of the award that is payable in cash. To the extent the
award that would be paid in Shares remains subject to the
mandatory deferral, the payment that would otherwise be made
in the form of Shares shall instead be deferred under the
Company's New Management Incentive Deferral Plan to earn
income based on shares of phantom stock of the Company.
9. COMPANY STOCK
Shares reserved for issuance under the Plan may be authorized but
unissued shares, shares reacquired by the Company, or a combination of
both, as the Board may from time to time determine. If any stock
dividend is declared upon the Shares, or if there is any stock split,
stock distribution, or other recapitalization of the Company with
respect to the Shares, resulting in a split-up or combination or
exchange of shares, the Shares reserved for issuance under the Plan
shall be proportionately and appropriately adjusted.
10. EFFECTIVE DATE OF PLAN
The Plan as originally adopted was effective for the fiscal year
commencing January 1, 1983 and continued in effect thereafter as
amended from time to time. This amended and restated Plan shall be
effective January 1, 1996, subject to stockholder approval at the 1995
Annual Meeting, and shall continue in effect, as amended from time to
time, until it is terminated by the Board.
Executed and adopted this 21st day of April, 1995, pursuant to
action taken by the Board of Directors of Reynolds Metals Company at its
meeting on November 18, 1994, and approved by the Stockholders of Reynolds
Metals Company at the 1995 Annual Meeting.
REYNOLDS METALS COMPANY
By: Donald T. Cowles
Executive Vice President, Human
Resources and External Affairs
<PAGE>
APPENDIX C
REYNOLDS METALS COMPANY
PERFORMANCE INCENTIVE PLAN
The Reynolds Metals Company Performance Incentive Plan is hereby
amended effective January 1, 1996, by adding a new Paragraph 11 to read as
follows:
11. SPECIAL PROVISIONS FOR TOP EXECUTIVES
Anything herein to the contrary notwithstanding, effective with the
1996 calendar year, the following provisions shall apply each calendar
year to awards to participants who are designated by the Committee as
"Top Executives" for that calendar year. Top Executives shall be
eligible for awards only under this Paragraph 11.
(a) The provisions of this Paragraph 11, including the
designation of Top Executives each year, shall be administered
solely by those members of the Committee (at least two) who are
"outside directors" for purposes of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"). For the Top
Executives, the Plan shall be administered in a manner consistent
with the performance-based compensation requirements of Section
162(m)(4) of the Code.
(b) No later than ninety days after the beginning of each
calendar year, the Committee shall establish in writing (i) one or
more Performance Goals (as defined below) that must be reached in
order for a Top Executive to receive an award under the Plan for
the calendar year and (ii) the amount of the award to be paid upon
attainment of these goals. The Committee shall have the discretion
later to revise the amount to be paid upon the attainment of these
goals solely for the purpose of reducing or eliminating the amount
of the award otherwise payable upon attainment of these goals.
(c) In establishing Performance Goals, the Committee shall
establish both the minimum Performance Goal(s) (the "Minimum
Goals") that must be reached in order for the Top Executive to
receive any award for the calendar year and the maximum Performance
Goal(s) (the "Maximum Goals") that must be reached in order for the
Top Executive to receive the maximum award for the calendar year.
Between the Minimum Goals and the Maximum Goals, the Committee may
establish a range of intermediate Performance Goals with a
corresponding range of awards between the minimum and maximum award
opportunity. In no event may a Top Executive's maximum award
hereunder for any calendar year exceed $2,500,000.
(d) A "Performance Goal" is an objective performance goal
established in writing by the Committee; it may be based on net
earnings, stock price, profit before taxes, return on equity,
return on capital, return on assets, total return to shareholders,
earnings per share, or debt rating. Performance Goals may be
absolute in their terms or measured against or in relationship to
other companies comparably or otherwise situated. Performance
Goals may be particular to a Top Executive or the division,
department, branch, line of business, subsidiary or other unit in
which the Top Executive works or with respect to which the Top
Executive has responsibility and\or may be based on the
performance of the Company generally. Performance Goals may vary
from Top Executive to Top Executive and from calendar year to
calendar year.
(e) The amount payable to a Top Executive shall be based upon
the achievement of the Performance Goals, as certified in writing
by the Committee after the end of each calendar year. If the
Committee believes that factors outside the Performance Goals
should also be taken into account in determining the amount of the
award, the Committee shall have the discretion to reduce, but not
increase, the amount payable to a Top Executive based on these
outside factors. No payment shall be made unless the Minimum
Goals are achieved.
(f) Awards under this Paragraph 11 shall be paid out in
accordance with the provisions of Paragraph 8.
<PAGE>
APPENDIX D
REYNOLDS METALS COMPANY
1996 NONQUALIFIED STOCK OPTION PLAN
Effective January 1, 1996
ARTICLE I
DEFINITIONS
1.01 "Board" shall mean the Board of Directors of the Company.
1.02 "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
1.03 "Committee" shall mean the Committee established under Section 3.01
to administer the Plan.
1.04 "Company" shall mean Reynolds Metals Company, a Delaware corporation.
1.05 "Company Stock" shall mean Common Stock of the Company and such other
stock and securities as may be substituted therefor pursuant to Section 6.02.
1.06 "Eligible Employee" shall mean any regular salaried employee of the
Company or a Subsidiary who satisfies all of the requirements of Section 2.02.
1.07 "Fair Market Value" shall mean, with respect to Company Stock, the
closing price of Company Stock (a) as reported on New York Stock
Exchange-Composite Transactions (or other appropriate reporting vehicle as
determined by the Committee) for a specified date or, (b) if no such
report for Company Stock is available for such date, the closing price of
Company Stock as reported for the next preceding day on which Company Stock was
traded and for which such report is available.
1.08 "Grantee" shall mean any person who has been granted a stock option,
either with or without related stock appreciation rights, under the Plan.
1.09 "Option Period" shall mean the period of time provided pursuant to
Section 4.04 within which a stock option may be exercised.
1.10 "Plan" shall mean the Reynolds Metals Company 1996 Nonqualified Stock
Option Plan, as amended from time to time.
1.11 "Stockholder Approval" shall mean approval by the affirmative vote of
the stockholders of the Company present in person or by proxy and entitled to
vote, representing a majority of the votes cast at a meeting duly called for
that purpose and at which a quorum shall be present.
1.12 "Subsidiary" shall mean any corporation now or hereafter in existence
in which the Company owns, directly or indirectly, a voting stock interest of
more than fifty percent (50%).
ARTICLE II
PARTICIPATION
2.01 Purpose. The purpose of the Plan is to further the growth and
success of the Company and its Subsidiaries by providing key employees with
additional incentive to contribute to such growth and success and by aiding the
Company in attracting and retaining key employees.
2.02 Eligibility. Key employees of the Company and its Subsidiaries
(including officers and employees who may be members of the Board) who, in the
sole opinion of the Committee, contribute significantly to the growth and
success of the Company or a Subsidiary shall be eligible for options to
purchase Company Stock and related stock appreciation rights under the Plan.
From among all such Eligible Employees, the Committee shall determine from time
to time those Eligible Employees to whom options and related stock appreciation
rights, if any, shall be granted. No Eligible Employee shall have any right
whatsoever to receive options or stock appreciation rights unless so determined
by the Committee.
2.03 No Employment Rights. The Plan shall not be construed as conferring
any rights upon any person for a continuation of employment, nor shall it
interfere with the rights of the Company or any Subsidiary to terminate the
employment of any person or to take any other action affecting such person.
ARTICLE III
COMMITTEE
3.01 Administration. The Plan shall be administered by a Committee of at
least three (3) persons, all of whom shall be members of the Board, appointed
from time to time by the Board. The Board shall appoint one member of the
Committee to act as Chairman. Vacancies shall be filled in the same manner as
original appointments. The Committee shall hold meetings upon such notice and
at such place or places, and at such time or times as it may from time to time
determine. A majority of the members of the Committee at the time in office
shall constitute a quorum for the transaction of business, and the acts of a
majority of the members participating in any meeting at which a quorum is
present shall be the acts of the Committee. The Committee may act without a
meeting if a consent in writing setting forth the action so taken shall be
signed by all of the members of the Committee and filed with the minutes of the
Committee. As of the time that the Committee exercises its discretion in
administering the Plan, all of the members of the Committee shall be
"disinterested persons" as contemplated by Rule l6b-3, as in effect at such
time, under the Securities Exchange Act of 1934, as amended.
3.02 Authority of Committee. Subject to the provisions of the Plan, the
Committee shall have full and final authority to determine:
(a) the persons to whom options shall be granted,
(b) the number of shares to be included in each option,
(c) the price at which the shares included in each option may be
purchased,
(d) the period or periods of time within which each option may be
exercised, and
(e) the stock appreciation rights, if any, related to each option.
In no case, however, shall a Grantee be awarded options to purchase in the
aggregate more than three hundred thousand (300,000) shares of Company Stock
under the Plan. Nothing contained in this Plan shall be construed to give any
person the right to be granted an option or stock appreciation right. The
Committee is empowered, in its discretion, (i) to modify, extend or renew any
option or stock appreciation right theretofore granted, subject to the
limitations set forth in Articles IV and V, and (ii) to adopt such rules and
regulations and take such other action as it shall deem necessary or proper
for the administration of the Plan; provided, however, that except to the
extent provided under Section 6.02, the Committee shall not have the power to
reprice options or stock appreciation rights that have been granted previously
under the Plan. The Committee shall also have authority to interpret the Plan,
and the decision of the Committee on any questions concerning the
interpretation of the Plan shall be final and conclusive. The Committee may
consult with counsel, who may be counsel for the Company, and shall not incur
any liability for any action taken in good faith in reliance upon the advice of
counsel.
ARTICLE IV
TERMS OF OPTIONS
4.01 General. Grants of options shall be made without the payment
of a purchase price by any Grantee. Each option granted under the Plan shall
be evidenced by a stock option agreement between the Company and the Grantee
which shall contain the terms and conditions required by this Article IV, and
such other terms and conditions, not inconsistent herewith, as the Committee
may deem appropriate in each case.
4.02 Option Price. The price at which each share of Company Stock
covered by an option may be purchased shall be determined in each case by the
Committee and set forth in each stock option agreement. In no event shall such
price be less than one hundred percent (100%) of the Fair Market Value of
Company Stock on the date the option is granted.
4.03 Period for Exercise. Each stock option agreement shall state
the period or periods of time within which the option may be exercised by the
Grantee, in whole or in part, which shall be the period or periods of time as
may be determined by the Committee, provided that:
(a) No option may be exercised within one (l) year from the date the
option is granted;
(b) No Option Period may exceed ten (l0) years from the date the
option is granted;
(c) If the Grantee's employment by the Company and its Subsidiaries
terminates because of the Grantee's retirement or disability, or for any
other reason with the approval of the Committee, any option outstanding
and exercisable as of the date of termination (and, in the Committee's
sole discretion, any option outstanding but not yet exercisable as of such
date) may be exercised by the Grantee following the date of termination
(to the extent permitted by Section 4.03(a) and in accordance with the
terms of the stock option agreement);
(d) If the Grantee dies during the Option Period either while in the
employ of the Company or a Subsidiary or following the date of termination
of employment as described in subsection (c) above, any option otherwise
outstanding and exercisable as of the date of death may be exercised
following such death in accordance with the terms of the stock option
agreement, by the person or persons entitled to do so under the Grantee's
last will and testament, or if the Grantee shall fail to make testamentary
disposition of his or her option or shall die intestate, by the person or
persons entitled to receive said option under the intestate laws; and
(e) If the Grantee's employment by the Company and its Subsidiaries
terminates for reasons other than death, retirement, disability, or other
reasons approved by the Committee pursuant to subsection (c) above, then
any outstanding option shall be deemed terminated immediately and shall
not thereafter be exercisable by the Grantee.
4.04 Exercise of Option. Subject to Section 4.03, each option may
be exercised in whole or in part from time to time as specified in the
stock option agreement. Each Grantee may exercise an option by giving written
notice of the exercise to the Company, specifying the number of shares to be
purchased, accompanied by payment in full of the purchase price therefor; if
required, the Grantee shall also pay an amount equal to the applicable
withholding taxes as soon as administratively feasible. The purchase
price may be paid in cash, by check, or, with the approval of the Committee,
in shares of Company Stock having at the time the option is exercised an
aggregate Fair Market Value equal to the purchase price of the shares acquired
pursuant to the exercise of the option, or a combination thereof. Likewise,
the applicable withholding taxes may be paid in cash, by check, or, with the
approval of the Committee, in shares of Company Stock (including shares
received from the exercise of the option) having at the time the option is
exercised an aggregate Fair Market Value equal to such withholding taxes, or a
combination thereof. A Grantee may also exercise an option by way of the
Company's broker-assisted stock option exercise program, provided such program
is available to the Grantee at the time of the option's exercise. An option
shall become nonexercisable and shall be treated as voluntarily surrendered to
the extent that the related stock appreciation right is exercised. No Grantee
shall be under any obligation to exercise any option granted hereunder. The
Grantee may exercise the option or not in his or her sole discretion.
4.05 Date Option Granted. For purposes of the Plan, a stock option
shall be considered as having been granted on the date on which the Committee
authorized the grant of the option, except where the Committee has designated a
later date, in which event the later date shall constitute the date of grant
of the option; provided, however, that in either case notice of the grant of
the option shall be given to the employee within a reasonable time.
4.06 No Incentive Stock Options. No option granted under the Plan
shall be treated as an incentive stock option for purposes of Sections 421 and
422A of the Code or any comparable section or sections of future legislation
amending, modifying, supplementing or superseding those sections.
ARTICLE V
STOCK APPRECIATION RIGHTS
5.01 General. Each stock appreciation right granted under the Plan
shall be evidenced by a stock appreciation right agreement between the Company
and the Grantee which shall contain the terms and conditions required by this
Article V, and such other terms and conditions, not inconsistent herewith,
as the Committee may deem appropriate in each case. Each stock appreciation
right shall relate to a specific option granted under the Plan and shall be
granted to the Grantee either concurrently with the grant of such option or at
such later time as may be determined by the Committee; provided, however,
that the grant of a stock appreciation right shall not otherwise change the
terms of the underlying option. A stock appreciation right shall entitle a
Grantee to receive a number of shares of Company Stock (without payment to the
Company, except for applicable withholding taxes), cash, or shares and
cash, as determined by the Committee in accordance with this Article.
5.02 Number of Shares or Amount of Cash. Unless otherwise
determined by the Committee, in its sole discretion, and provided in the
stock appreciation right agreement, the number of shares which shall be issued
pursuant to the exercise of a right shall be determined by dividing:
(a) that portion, as elected by the Grantee in the notice of
exercise, of the total number of shares of Company Stock (i) which the
Grantee is eligible to purchase as of the exercise date under the related
option and (ii) as to which stock appreciation rights have been granted,
but not exercised, multiplied by the amount (if any) by which the Fair
Market Value of Company Stock on the exercise date exceeds the price per
share at which the related option could have been exercised on the
exercise date, by
(b) the Fair Market Value of Company Stock on the exercise date;
provided, however, that fractional shares shall not be issued and in lieu
thereof a cash adjustment equal to the same fraction of the Fair Market
Value on the exercise date shall be paid. In lieu of issuing Company
Stock on the exercise of a right, the Committee in its sole discretion may
elect to pay the cash equivalent of the Fair Market Value on the exercise
date of any or all the shares of Company Stock which would otherwise be
issuable upon exercise of the right. The Committee may require that in
order to be paid cash upon the exercise of a stock appreciation right,
certain Grantees must exercise the right during a limited window period
following the public release of the Company's quarterly or annual earnings
report, as established pursuant to Securities and Exchange Commission
rules. If this restriction applies to a Grantee when he or she exercises
a stock appreciation right for cash, the amount received upon exercise of
the right shall be based on the highest Fair Market Value during the
limited window period.
5.03 Exercise. Each stock appreciation right may be exercised in
whole or in part from time to time, to the extent that the option to which it
relates shall be exercisable and to the extent permitted by its stock
appreciation right agreement; provided, however, that no stock appreciation
right may be exercised until the expiration of six (6) months from the date of
its grant. Each Grantee may exercise a stock appreciation right by giving
written notice to the Company, specifying the number of shares as to which such
right is being exercised, accompanied by an amount equal to the applicable
withholding taxes, if necessary. The date the Company receives the written
notice is herein referred to as the "exercise date." No Grantee shall be under
any obligation to exercise any stock appreciation right granted hereunder. The
Grantee may exercise the right or not in his or her sole discretion. A stock
appreciation right shall become nonexercisable and shall be forfeited to the
extent that the related option is exercised.
ARTICLE VI
COMPANY STOCK
6.01 Number of Shares. The aggregate number of shares of Company
Stock that may be sold or delivered under the Plan shall not exceed two million
(2,000,000) shares. Shares of Company Stock sold or delivered under the Plan
may be authorized but unissued shares, shares reacquired by the Company, or a
combination of both, as the Board may from time to time determine. Shares of
Company Stock not purchased under any option granted under the Plan which are
no longer available for purchase thereunder by virtue of the total or partial
expiration, termination or voluntary surrender of the option and which were not
issued upon exercise of a related stock appreciation right shall continue to be
otherwise available for the purposes of the Plan. Notwithstanding the above,
however, upon surrender of any portion of an option in connection with the
exercise of the related stock appreciation right, the number of shares of
Company Stock subject to the surrendered portion of the option (in lieu of the
number of shares, if any, issued pursuant to the exercise of the related stock
appreciation rights) shall be charged against the maximum number of shares
of Company Stock issuable under the Plan, and such number of shares of Company
Stock shall not be available for future options and/or stock appreciation
rights.
6.02 Recapitalization. If any stock dividend is declared upon the
Company Stock, or if there is any stock split, stock distribution, or other
recapitalization of the Company with respect to its Company Stock, resulting in
a split-up or combination or exchange of shares, or if any special distribution
is made to holders of Company Stock, the aggregate number and kind of shares
which may thereafter be offered under the Plan shall be proportionately and
appropriately adjusted and the number and kind of shares then subject to
options granted under the Plan and the per share option price therefor shall be
proportionately and appropriately adjusted, without any change in the aggregate
purchase prices to be paid therefor, all as the Committee may deem appropriate.
Such adjusted option price and number and kinds of shares also shall be used to
determine the amount payable by the Company upon the exercise of any stock
appreciation rights associated with any such option as set forth in Article V
hereof. In the event the Company is merged or consolidated with or into
another corporation, or substantially all of its assets are sold to another
corporation, appropriate provisions will be made for the protection and
continuation of any outstanding options and stock appreciation rights by the
substitution, on an equitable basis, of appropriate stock or other securities
of the surviving or purchasing or new parent corporation.
ARTICLE VII
GENERAL
7.01 Nontransferability. No option or stock appreciation right
granted under the Plan shall be transferable or assignable by the Grantee
except by last will and testament or the laws of descent and distribution.
During the Grantee's lifetime, options and stock appreciation rights shall be
exercisable only by the Grantee or by the Grantee's guardian or legal
representative.
7.02 General Restriction. Each option and each stock appreciation
right shall be subject to the requirement that if at any time the Board or the
Committee shall determine, in its discretion, that the listing, registration,
or qualification of securities upon any securities exchange or under any
state or federal or other applicable law, or the consent or approval of any
government regulatory body, is necessary or desirable as a condition of, or in
connection with, the granting of such option or right or the issue or purchase
of securities thereunder, such option or right may not be exercised in whole or
in part unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Board or the Committee.
7.03 No Rights as Stockholder. The holder of an option or stock
appreciation right shall not have any rights of a stockholder with respect to
the shares subject to the option or right until such shares shall have been
delivered to him or her.
7.04 Effective Date and Duration of Plan. The Plan shall become
effective January 1, 1996, subject to Stockholder Approval. No stock options
shall be granted under the Plan after December 31, 2000.
7.05 Amendments. The Board may from time to time amend, modify,
suspend or terminate the Plan; provided, however, that no such action shall (a)
impair without the Grantee's consent any option or stock appreciation right
theretofore granted under the Plan or deprive any Grantee of any shares of
Company Stock which he or she may have acquired through or as a result of the
Plan or (b) be made without Stockholder Approval where such change would
increase the total number of shares that may be issued under the Plan (other
than as provided in Section 6.02). Notwithstanding the foregoing, the
Board may, in any circumstance where it deems such approval necessary or
desirable, and shall, to the extent necessary to maintain compliance with Rule
16b-3 under the Securities Exchange Act of 1934 as in effect from time to time,
require Stockholder Approval as a condition to the effectiveness of any
amendment or modification of the Plan.
7.06 Construction. Except as otherwise required by applicable
federal laws, the Plan shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Virginia.
7.07 Change in Control. (a) Anything herein to the contrary
notwithstanding, if there is a Change in Control of the Company (as defined in
subsection (b) below), all options and stock appreciation rights already
granted hereunder shall become immediately exercisable thirty (30) days after
the Change in Control occurs; provided, however, that at any time during the
thirty day period, the Committee may direct that no such acceleration of
exercisability should occur because the Committee determines that the Change in
Control presents no material risk of loss of options to any grantee; and
further provided that to the extent necessary to be exempt from Section 16(b)
of the Securities Exchange Act of 1934, as amended, the date as of which
options and stock appreciation rights first become exercisable pursuant to this
Section 7.07 by grantees who are officers or directors of the Company may in no
event be earlier than six (6) months from the date the option or stock
appreciation right is granted.
(b) For purposes of this Section 7.07, a "Change in Control" shall mean
the occurrence of any of the following dates or events:
(i) a Stock Acquisition Date (as defined below);
(ii) a Distribution Date (as defined below);
(iii) Continuing Directors (as defined below) ceasing to be a majority of
the Board of Directors of the Company; or
(iv) any other event which a disinterested majority of the Continuing
Directors determines to be a Change in Control for purposes of this Plan.
"Stock Acquisition Date," "Distribution Date" and "Continuing Directors" shall
have the meanings given them in the Rights Agreement dated November 23, 1987
between the Company and The Chase Manhattan Bank, N.A., as initially executed.
