<PAGE> 1
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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
American Standard Companies Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 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> 2
LOGO
American Standard Companies Inc.
Notice of Annual Meeting
of Stockholders and
Proxy Statement
May 2, 1996
Embassy Suites Hotel
121 Centennial Avenue
Piscataway, New Jersey
<PAGE> 3
LOGO Corporate Headquarters
- ------------------------------
One Centennial Avenue
P.O. Box 6820
Piscataway, NJ 08855-6820
Phone 908.980.6000
EMMANUEL A. KAMPOURIS
Chairman, President and
Chief Executive Officer
March 28, 1996
Dear Stockholder:
The Annual Meeting of Stockholders of American Standard Companies Inc. will
be held on Thursday, May 2, 1996, at 10:00 A.M. (EDT), at the Embassy Suites
Hotel, Embassy Ballroom, 121 Centennial Avenue, Piscataway, New Jersey. We hope
that many of our stockholders will be able to attend.
This meeting is our second meeting of stockholders since becoming a public
company in February 1995. Your attendance at this meeting will provide you the
opportunity to meet with our directors and senior management and hear their
report on your Company's recent performance and vision for its future. We will
also consider the items of business set forth in the attached formal notice of
meeting and proxy statement. Our 1995 Annual Report accompanies this proxy
statement.
If you find you are unable to attend in person, we urge you to participate
in the meeting by voting your stock by proxy. You can do so conveniently by
filling out and returning the enclosed proxy card.
Sincerely,
/s/ EMMANUEL A. KAMPOURIS
EMMANUEL A. KAMPOURIS
Chairman, President and
Chief Executive Officer
American Standard Companies Inc.
- --------------------------------------------------------------------------------
Air Conditioning: Trane(R), American Standard(R), Plumbing: American
Standard(R), Ideal Standard(R), Standard(R), Automotive: WABCO(R)
<PAGE> 4
AMERICAN STANDARD COMPANIES INC.
NOTICE OF 1996 ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
To The Stockholders of
AMERICAN STANDARD COMPANIES INC.:
The Annual Meeting of Stockholders of American Standard Companies Inc. (the
"Company") will be held at the Embassy Suites Hotel, Embassy Ballroom, 121
Centennial Avenue, Piscataway, New Jersey, on Thursday, May 2, 1996, at 10:00
A.M. (EDT) to consider and act upon the following:
1. The election of three Class I Directors with terms expiring at the
1999 Annual Meeting of Stockholders;
2. Approval of the Company's 1996-1998 Supplemental Incentive
Compensation Plan;
3. Ratification of the appointment of Ernst & Young LLP as independent
Certified Public Accountants for the year 1996; and
4. Such other business as may properly come before the meeting.
Stockholders of record of the Company's Common Stock as of the close of
business on March 11, 1996 are entitled to notice of, and to vote at, the Annual
Meeting. A complete list of such stockholders will be open to the examination of
any stockholder during ordinary business hours, for a period of ten days prior
to the Annual Meeting, at the offices of the Company at One Centennial Avenue,
Piscataway, New Jersey. On the date of the Annual Meeting, the list of
stockholders will be available at the place of the Annual Meeting.
In order to assure a quorum, it is important that stockholders who do not
expect to attend the meeting fill in, date and sign the enclosed proxy card and
promptly return it in the enclosed envelope, to which no postage need be affixed
if mailed in the United States.
By order of the Board of Directors,
/s/ RICHARD A. KALAHER
RICHARD A. KALAHER
Vice President, General Counsel
and Secretary
Piscataway, New Jersey
March 28, 1996
<PAGE> 5
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of American Standard Companies Inc., a
Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders of the Company to be held on May 2, 1996 and at any adjournments
thereof. The mailing of this Proxy Statement and proxy card is to commence on or
about March 28, 1996. The 1995 Annual Report of the Company has been sent to all
stockholders together with this Proxy Statement. The time and place of the
Annual Meeting is set forth in the Notice that accompanies this Proxy Statement.
GENERAL
Holders of the Company's common stock, par value $.01 per share (the
"Common Stock"), are entitled to one vote per share on the matters to be
considered at this Annual Meeting. Only stockholders of record at the close of
business on March 11, 1996 will be entitled to vote. At such time, 77,032,003
shares of Common Stock were outstanding and entitled to vote. The holders of
record of a majority of the Common Stock outstanding on March 11, 1996 will
constitute a quorum.
All shares represented by properly executed proxy cards received in time
for the meeting will be voted in accordance with the choices indicated or, if no
choice is indicated, will be voted in accordance with the recommendations of the
Board of Directors. Unless contrary instructions are given, the persons
designated as proxy holders in the proxy card will vote for the slate of
director nominees proposed by the Board of Directors, for approval of the
Company's 1996-1998 Supplemental Incentive Compensation Plan and for
ratification of the appointment of Ernst & Young LLP as the Company's
independent accountants for the year 1996. Stockholders may strike out the names
of proxy holders designated by the Board of Directors on the proxy card and
substitute the name of any other person whom they wish to represent them at the
meeting. A stockholder may revoke any proxy by attending the meeting and voting
in person or by filing an instrument in writing revoking the proxy or by filing
another duly executed proxy card bearing a later date with the Secretary of the
Company.
The Company bears the cost of this solicitation. Proxies may be solicited
by mail, telephone, by other means of electronic transmission or personally by
Directors, officers and regular employees of the Company. The Company will
reimburse persons holding stock in their names or in the names of their nominees
for expenses of forwarding proxy material to their principals.
The mailing address of the Company's principal executive office is P.O. Box
6820, One Centennial Avenue, Piscataway, New Jersey 08855-6820.
2
<PAGE> 6
STOCK OWNERSHIP
Set forth below is the number of shares of Common Stock, the only
outstanding voting stock of the Company, beneficially owned as of March 7, 1996
by each director and nominee, each of the executive officers named in the
Summary Compensation Table included elsewhere herein (the "Named Officers"), all
directors and executive officers of the Company as a group, and each 5% holder.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED CLASS
---------------------------------------------------------------------- ------------ ----------
<S> <C> <C>
Kelso ASI Partners, L.P.(a)........................................... 20,838,656 27.2%
Joseph S. Schuchert(a)(e)............................................. 21,349,835 27.8%
Frank T. Nickell(a)(e)................................................ 21,044,277 27.4%
George E. Matelich(a)(e).............................................. 20,898,703 27.2%
Thomas R. Wall IV(a)(e)............................................... 20,883,730 27.2%
The TCW Group, Inc.(b)................................................ 4,859,622 6.4%
Emmanuel A. Kampouris(c)(d)........................................... 701,283 *
George H. Kerckhove(c)(d)............................................. 310,516 *
Horst Hinrichs(c)(d).................................................. 221,857 *
Fred A. Allardyce(c)(d)............................................... 340,941 *
William A. Klug(c)(d)................................................. 256,688 *
Steven E. Anderson(c)................................................. 5,819 *
Shigeru Mizushima(c).................................................. 6,579 *
Roger W. Parsons(c)................................................... 5,819 *
J. Danforth Quayle(c)................................................. 5,819 *
David M. Roderick(c).................................................. 5,819 *
John Rutledge(c)...................................................... 5,819 *
American-Standard Employee Stock Ownership Plan (the "ESOP")(d)....... 10,706,689 13.9%
All current directors and executive officers of the Company as a group
(35 persons, including the foregoing)(d)(f)......................... 24,028,733 31.3%
</TABLE>
- ---------------
* Less than one percent.
(a) The business address for such persons is c/o Kelso & Company, L.P.
("Kelso"), 21st Floor, 350 Park Avenue, New York, N.Y. 10022.
(b) In a Schedule 13G dated February 12, 1996, The TCW Group, Inc., a Nevada
corporation and a parent holding company ("TCW"), 865 South Figueroa
Street, Los Angeles, California 90017, and Robert Day, 200 Park Avenue,
Suite 2200, New York, New York, 10160, who may be deemed to control TCW,
reported sole voting and dispositive power over these shares that are held
directly by three California corporations which are subsidiaries of TCW,
including Trust Company of the West, a bank as defined in Section 3(a)(6)
of the Securities Exchange Act of 1934, and TCW Asset Management Company
and TCW Funds Management, Inc., both Investment Advisors registered under
Section 203 of the Investment Advisors Act of 1940.
(c) Mr. Kampouris is Chairman, President and Chief Executive Officer (a Named
Officer) and a director of the Company. Messrs. Hinrichs and Kerckhove are
Named Officers and directors of the Company. Messrs. Allardyce and Klug are
Named Officers of the Company and Messrs. Anderson, Mizushima, Parsons,
Quayle, Roderick and Rutledge are directors of the Company.
(d) The business address for the ESOP is c/o American Standard Inc., P.O. Box
6820, One Centennial Avenue, Piscataway, New Jersey 08855-6820. Fidelity
Management Trust Company is the trustee of the ESOP. Its business address
is 400 Puritan Way, Mail Zone-M3F, Marlborough, Massachusetts 01752-3070.
As of March 1, 1996, all of the shares held in the ESOP were allocated to
ESOP participants, including 205,970 shares allocated to all executive
officers of the Company as a group. The number of shares shown for
executive officers in the table above includes shares allocated to their
accounts in the ESOP. Shares in the ESOP are voted by the ESOP trustee in
accordance with the instructions of participants and where no participant
instructions are received, shares are voted by the ESOP trustee in the same
proportion as the shares for which instructions are received. Until
termination of employment, a participant cannot dispose of shares in his
ESOP account. The shares allocated to the Named Officers' ESOP accounts as
of March 7,
3
<PAGE> 7
1996 are as follows: Mr. Kampouris, 11,683 shares; Mr. Kerckhove, 11,350
shares; Mr. Hinrichs, 12,191 shares; Mr. Allardyce, 12,125 shares; and Mr.
Klug, 12,022 shares.
The number of shares shown for Named Officers and all current directors and
executive officers as a group includes currently exercisable options to
purchase shares of Common Stock as follows: Mr. Kampouris, 200,000; Mr.
Kerckhove, 56,666; Mr. Hinrichs, 56,666; Mr. Allardyce, 56,666; Mr. Klug,
41,666; and all executive officers, 1,091,657.
The number of shares shown for Named Officers in the table above does not
reflect shares of Common Stock issued as part of payouts under the
Long-Term Incentive Compensation Plan ("LTIP") and held in trust under a
trust agreement. Shares in the trust are voted by the trustee as directed
pursuant to the terms of the LTIP. Until termination of employment, a
beneficiary of the trust cannot dispose of shares credited to his account.
Shares of Common Stock in the Named Officers' accounts in the trust are as
follows: Mr. Kampouris, 13,742 shares; Mr. Kerckhove, 6,283 shares; Mr.
Hinrichs, 5,545 shares; Mr. Allardyce, 3,834 shares; and Mr. Klug, 4,323
shares. The shares in the trust accounts for all executive officers as a
group total 68,150 shares.
Also not included above are 53,762 shares of Common Stock held in a similar
grantor's trust for the account of certain executive officers earned under
an employee incentive plan prior to their becoming officers.
(e) Messrs. Schuchert and Nickell, each a director of the Company, and Messrs.
Matelich and Wall may be deemed to share beneficial ownership of shares
owned of record by Kelso ASI Partners, L.P. ("ASI Partners") by virtue of
their status as general partners of Kelso American Standard Partners, L.P.,
the general partner of ASI Partners. Messrs. Schuchert, Nickell, Matelich
and Wall share investment and voting power with respect to securities owned
by ASI Partners. Messrs. Schuchert, Nickell, Matelich and Wall disclaim
beneficial ownership of such securities.
(f) Of such 24,028,733 shares, 20,838,656 shares represent shares of Common
Stock owned by ASI Partners in which Messrs. Schuchert and Nickell, each a
director of the Company, may be deemed to share beneficial ownership by
virtue of their status as general partners of Kelso American Standard
Partners, L.P., the general partner of ASI Partners. Messrs. Schuchert and
Nickell disclaim beneficial ownership of such securities.
An affiliate of Kelso is the holder of all the outstanding shares (1,000)
of the non-voting Series A Preferred Stock of American Standard Inc. (the
principal subsidiary of the Company).
OWNERSHIP AND TRANSACTIONS REPORTS
Under Section 16 of the Securities Exchange Act of 1934, the Company's
directors, certain of its officers, and beneficial owners of more than 10% of
the outstanding Common Stock are required to file reports with the Securities
and Exchange Commission and the New York Stock Exchange concerning their
ownership of and transactions in Common Stock; such persons are also required to
furnish the Company with copies of such reports. Based solely upon the reports
and related information furnished to the Company, the Company believes that all
such filing requirements were complied with in a timely manner during and with
respect to 1995.
1. ELECTION OF DIRECTORS
The Board of Directors of the Company consists of eleven directors. The
Company's Restated Certificate of Incorporation provides for the Board to be
divided into three classes, as nearly equal in number as possible, each class to
serve for a three-year term, provided that: (i) the initial term of the Class I
Directors expires at the 1996 annual meeting of stockholders, (ii) the initial
term of the Class II Directors will expire at the 1997 annual meeting of
stockholders, and (iii) the initial term of the Class III Directors will expire
at the 1998 annual meeting of stockholders. Accordingly, at the Annual Meeting,
the stockholders will vote to elect three Class I Directors for a term expiring
in 1999. All directors are elected for their terms and until their successors
are duly elected and qualified.
The Board of Directors has no reason to believe that any of the nominees
set forth below will not serve if elected, but if any of them should become
unavailable to serve as a director, and if the Board designates a
4
<PAGE> 8
substitute nominee, the persons named in the proxy card as proxy holders, unless
otherwise instructed, will vote for the substitute nominee designated by the
Board.
Directors will be elected by a plurality of the votes cast at the Annual
Meeting, provided a quorum is present. Abstentions (including broker non-votes)
will have no effect on the outcome of the vote.
Pursuant to an Amended and Restated Stockholders Agreement among the
Company, ASI Partners and certain executive officers and other management
personnel of the Company who own shares of Common Stock, ASI Partners and
directors not affiliated with ASI Partners are entitled to designate a certain
number of director nominees, depending on ASI Partners' ownership of shares of
the Common Stock. For so long as ASI Partners and its Affiliates own at least
20% of the outstanding Common Stock, four nominees shall be designees of ASI
Partners and seven nominees shall be designees of the directors not affiliated
with ASI Partners (at least three of which nominees will not be Affiliates of
ASI Partners or officers of the Company); and for so long as ASI Partners and
its Affiliates own less than 20% but at least 10% of the outstanding Common
Stock, one nominee shall be the designee of ASI Partners and ten nominees shall
be designees of the directors not affiliated with ASI Partners. As of the date
of this Proxy Statement, ASI Partners owns approximately 27% of the outstanding
Common Stock and is entitled to designate four director nominees, and directors
not affiliated with ASI Partners may designate seven director nominees. The
Amended and Restated Stockholders Agreement does not obligate any of the parties
thereto to vote its Common Stock in favor of the nominated directors. The
Restated Certificate of Incorporation and Amended By-Laws of the Company contain
provisions intended to implement the aforementioned provisions of the Amended
and Restated Stockholders Agreement. Because ASI Partners' stock ownership level
at the 1995 annual meeting entitled it to, and it did, designate seven of the
Directors elected at that meeting, six of whom continue to serve as Class II and
III Directors, ASI Partners is not entitled to designate, and has not
designated, any nominees for election as Class I Directors at the Annual
Meeting.
DIRECTORS(1)
NOMINEES
NOMINEES FOR ELECTION AS CLASS I DIRECTORS -- TERMS EXPIRING AT 1999 ANNUAL
MEETING
HORST HINRICHS -- AGE 63
Mr. Hinrichs was elected Senior Vice President, Automotive Products, of the
Company and American Standard Inc., in December 1990. Prior thereto he served as
Vice President and Group Executive, Automotive Products, from 1987 to 1990. Mr.
Hinrichs has served as a director of the Company since March 1991.
GEORGE H. KERCKHOVE -- AGE 58
Mr. Kerckhove was elected Senior Vice President, Plumbing Products, of the
Company and American Standard Inc., in June 1990. Prior thereto he was Vice
President and Group Executive of European Plumbing Products from 1988 until June
1990. Mr. Kerckhove has served as a director of the Company since September
1990.
DAVID M. RODERICK -- AGE 71
Mr. Roderick joined the Board of Earle M. Jorgensen Company (a Kelso
affiliate engaged in the fabrication and sale of steel products) and was elected
its Chairman in 1994. He joined USX Corporation (formerly United States Steel
Corporation) in 1959, becoming Chairman of the Board and Chief Executive Officer
in 1979, retiring from the latter position in 1989 and from the USX Board in
1994. He is also a director of Kelso & Companies, Inc., Presbyterian University
Hospital and General Medical Corporation. He is also
- ---------------
1 All the directors of the Company are also directors of American Standard Inc.
Ages of directors are given as of March 1, 1996
5
<PAGE> 9
Chairman Emeritus of the U.S. Korea Business Council. Mr. Roderick has served as
a director of the Company since June 1994.
DIRECTORS CONTINUING IN OFFICE
CLASS II DIRECTORS -- TERMS EXPIRING AT 1997 ANNUAL MEETING
SHIGERU MIZUSHIMA* -- AGE 52
Mr. Mizushima has been President and Chief Operating Officer of Daido Hoxan
Inc. since the merger in April 1993 of Hoxan Corporation with Daido Sanso
Company (a subsidiary of Air Products and Chemicals Inc.). Prior thereto Mr.
Mizushima was President of Hoxan Corporation, a position he held since 1984. He
is also a director of Daido Hoxan Inc. Daido Hoxan Inc. is the second largest
supplier of industrial gases in Japan and is a non-exclusive distributor of
American Standard Inc. plumbing products in Japan. Mr. Mizushima has served as a
director of the Company since July 1988.
FRANK T. NICKELL* -- AGE 48
Mr. Nickell has been President and a director of Kelso & Companies, Inc.,
since March 1989. Kelso & Companies, Inc. is the general partner of Kelso &
Company, L.P. From 1984 to 1989 Mr. Nickell was a general partner of Kelso &
Company, L.P. He is also a director of The Bear Stearns Companies Inc., CCA
Holdings Corp., Earle M. Jorgensen Company, Harris Specialty Chemicals, Inc.,
King Broadcasting Company and Tyler Refrigeration Corporation. Mr. Nickell has
served as a director of the Company since May 1988.
J. DANFORTH QUAYLE* -- AGE 49
Mr. Quayle served as Vice President of the United States from January 1989
to January 1993. Since leaving that office Mr. Quayle served as Chairman of
Circle Investors, Inc. (an investment planning and consulting firm) and, until
1995, FX Strategic Advisors, Inc. (an international trade consulting firm). He
is a Director of Central Newspapers, Inc., Amtran Inc. and U.S. Filter
Corporation. Mr. Quayle has served as a director of the Company since September
1993.
JOHN RUTLEDGE* -- AGE 47
Dr. Rutledge has been Chairman of Rutledge & Company, Inc., a merchant
banking firm, since January 1991. He is the founder and Chairman of Claremont
Economics Institute, an economic research firm established in 1975. He is also a
director of Earle M. Jorgensen Company, Lazard Freres Funds, Medical Specialties
Group, United Refrigerated Services, Inc., General Medical Corporation,
Fluidrive, Inc. and Utendahl Capital Partners and is a special advisor to Kelso
& Companies, Inc. Dr. Rutledge has served as a director of the Company since
March 1993.
CLASS III DIRECTORS -- TERMS EXPIRING AT 1998 ANNUAL MEETING
STEVEN E. ANDERSON -- AGE 53
Mr. Anderson served as National Partner in Charge -- Industries of KPMG
Peat Marwick and a member of the firm's Management Committee from November 1990
until he retired in June 1994. Prior thereto his responsibilities have included
Partner in Charge of the Boston Audit Department and Managing Partner of the
Seattle office. He became a partner of the firm in 1977, having joined the firm
in 1967. He is a member of the AICPA. Mr. Anderson has served as a director of
the Company since September 1994.
EMMANUEL A. KAMPOURIS* -- AGE 61
Mr. Kampouris was elected Chairman in December 1993 and President and Chief
Executive Officer of the Company and American Standard Inc. in February 1989.
Prior thereto he was Senior Vice President, Building Products, from 1984 to
February 1989. He is also a director of Daido Hoxan Inc. Mr. Kampouris has
served as a director of the Company since July 1988.
- ---------------
* Asterisk denotes Directors designated by ASI Partners pursuant to the Amended
and Restated Stockholders Agreement.
6
<PAGE> 10
ROGER W. PARSONS -- AGE 54
Mr. Parsons is Group Managing Director of Rea Brothers Group PLC ("Rea
Brothers Group"), which he joined in 1988 after a career in banking. Rea
Brothers Group is a U.K. holding company of subsidiaries engaged in the
investment banking business. He also holds directorships in several subsidiaries
of Rea Brothers Group. Mr. Parsons has served as a director of the Company since
March 1994.
JOSEPH S. SCHUCHERT* -- AGE 67
Mr. Schuchert has been Chairman, Chief Executive Officer and a director of
Kelso & Companies, Inc., since March 1989. Kelso & Companies, Inc. is the
general partner of Kelso & Company, LP. From 1984 to 1989 Mr. Schuchert was
managing general partner of Kelso & Company, L.P. He is also a director of Earle
M. Jorgensen Company. Mr. Schuchert has served as a director of the Company
since May 1988.
On December 23, 1992, Kelso & Companies, Inc. and its Chief Executive
Officer, Mr. Schuchert, without admitting or denying the findings contained
therein, consented to an administrative order in respect of a Securities and
Exchange Commission (the "Commission") inquiry relating to the 1990 acquisition
of a portfolio company by an affiliate of Kelso & Companies, Inc. The order
found that the tender offer filing by such affiliate in connection with the
acquisition did not comply fully with the Commission's tender offer reporting
requirements, and required Kelso & Companies, Inc. and Mr. Schuchert to comply
with these requirements in the future.
DIRECTORS' FEES AND OTHER ARRANGEMENTS
Each outside director is paid a fee of $6,750 per calendar quarter and in
addition receives a fee of $1,000 for attendance at each meeting of the Board or
committee of the Board of either the Company or of American Standard Inc.,
except that no separate fees are paid for attendance at meetings of the Board or
committee of the Board of American Standard Inc. that are held on the same day
the Board or corresponding committee of the Board of the Company meets. The only
directors currently eligible for directors' fees are those who are neither
employees of the Company, American Standard Inc. or Kelso. They are Messrs.
Anderson, Mizushima, Parsons, Quayle, Roderick and Rutledge. All directors are
reimbursed for reasonable expenses incurred to attend meetings.
A Supplemental Compensation Plan for Outside Directors ("Supplemental
Compensation Plan") was adopted in June 1989 and amended in March 1996. Prior to
the 1996 amendment, directors were credited with units representing shares of
Common Stock at the date of their election to the Board and paid the value of
such units at the end of their directorships. Under the Supplemental
Compensation Plan, as amended, a plan account is established for each
participating director consisting of shares of restricted Common Stock of the
Company equal in number to the units awarded to each director under the
Supplemental Compensation Plan prior to the 1996 amendment thereof. Directors'
restricted Common Stock may be voted by the director owning such stock but may
not be sold until the director is no longer serving on the Board and, in any
event, no sooner than at least two years after receipt. The plan account for Mr.
Mizushima, who became a director prior to January 1, 1993, consists of 6,579
restricted shares and for those participating directors who became Board members
subsequent to January 1, 1993, the plan accounts consist of 5,819 restricted
shares each. Persons becoming Board members for the first time after March 1996
will be granted restricted shares of Common Stock equivalent in value to
$100,000, calculated at the per-share closing price of Common Stock on the last
day such stock is traded on the New York Stock Exchange immediately preceding
the date of such Board member's election. When a participating director ceases
to be a member of the Board, he or his beneficiary will receive the shares of
Common Stock in his plan account. If a participating director is removed for
cause, his entire interest in the Plan is forfeited. Employee directors and
Messrs. Nickell and Schuchert do not participate in the Supplemental
Compensation Plan.
- ---------------
* Asterisk denotes Directors designated by ASI Partners pursuant to the Amended
and Restated Stockholders Agreement.
7
<PAGE> 11
COMMITTEES OF THE BOARD
The Board has standing Executive, Audit and Management Development and
Nominating Committees.
Members of the Executive Committee are Messrs. Kampouris (Chairman),
Hinrichs, Kerckhove and Schuchert.
Members of the Audit Committee are Messrs. Parsons (Chairman), Anderson and
Quayle.
Members of the Management Development and Nominating Committee are Messrs.
Schuchert (Chairman), Anderson, Parsons and Quayle.
The Executive Committee functions when the Board is not in session. It may
declare dividends and authorize the issuance of stock, as well as exercise all
other powers and authority of the Board of Directors in the management of the
business and affairs of the Company. It may not, however, amend the Company's
Restated Certificate of Incorporation or Amended By-Laws, adopt agreements of
merger or consolidation or propose the sale or other disposition of
substantially all of the Company's assets or the dissolution of the Company. The
Executive Committee did not meet in 1995.
The Audit Committee reviews the following: the scope of internal and
independent audits; the Company's annual financial statements and Annual Report
on Form 10-K; the adequacy of internal controls and recommendations regarding
improvements; significant changes in accounting policies; business conduct and
conflicts of interest. In addition, the Committee recommends the engagement of
independent public accountants, subject to stockholder ratification, and reviews
their performance and the reasonableness of their fees. The Committee also
reviews major litigation and the investment performance and funding of the
Company's retirement plans. The Audit Committee met four times in 1995.
The Management Development and Nominating Committee functions both as a
compensation and as a nominating committee. It reviews and makes recommendations
with respect to officers' salaries and employee benefits and administers certain
employee benefit and compensation plans of the Company, including the Company's
incentive compensation and stock incentive plans. It also evaluates the quality
of management and management improvement programs and techniques. This Committee
also considers and makes recommendations to the Board for candidates for
directors proposed by stockholders. Pursuant to the Company's Amended By-Laws,
nominations by stockholders must be made by written notice, mailed by certified
mail, to the Secretary of the Company, and received no later than 50 days prior
to the date of the annual meeting. If less than 50 days' advance notice of a
meeting of stockholders is given to the stockholders, nominations must be made
or delivered not later than the close of business on the seventh day following
the day on which the written notice of such meeting was mailed. Nominations must
be accompanied by information and background of the proposed nominee, including
such information as is required by the Company's Amended By-Laws and the proxy
rules under the Securities Exchange Act of 1934. The Management Development and
Nominating Committee met six times in 1995.
The Board of Directors had eight meetings in 1995. All directors attended
75% or more of the combined total of meetings of the Board of Directors and its
respective committees held in 1995 during the period in which they served as
Directors or committee members except for Mr. Nickell.
8
<PAGE> 12
EXECUTIVE COMPENSATION
Set forth below is information concerning the annual and long-term
compensation (based on the appropriate foreign exchange rates, where applicable)
for services in all capacities to the Company for 1995, 1994 and 1993 of those
persons who were during 1995 the chief executive officer and the other four most
highly compensated executive officers of the Company (herein collectively, the
"Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------------ LONG-TERM COMPENSATION
OTHER
ANNUAL ------------------------ ALL OTHER
NAME AND COMPEN- LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) SATION(3) OPTIONS(#) PAYOUTS(4) SATION(5)
- -------------------------------- ---- --------- ---------- ------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Emmanuel A. Kampouris........... 1995 $600,000 $1,200,000 $ 219,373 600,000 $1,937,575 $230,915
Chairman, President & 1994 600,000 850,000 731,996 -- 919,913 146,073
Chief Executive Officer 1993 562,500 600,000 337,500 -- 966,710 131,564
George H. Kerckhove............. 1995 $362,500 $ 140,000 $ 6,069 170,000 $ 881,555 $ 28,271
Senior Vice President 1994 350,000 157,000 339,000 -- 437,142 29,261
1993 334,500 141,000 169,500 -- 464,059 33,016
Horst Hinrichs.................. 1995 $361,044 $ 200,000 $ 3,870 170,000 $ 896,677 $ 21,350
Senior Vice President 1994 342,394 175,000 270,000 -- 406,676 20,838
1993 292,211 127,000 135,000 -- 399,548 30,912
Fred A. Allardyce............... 1995 $290,000 $ 130,000 $ 25,574 170,000 $ 640,200 $ 42,589
Vice President & Chief 1994 285,000 127,000 348,011 -- 298,220 22,427
Financial Officer 1993 250,000 96,000 169,500 -- 286,713 28,430
William A. Klug................. 1995 $250,000 $ 120,000 $ 8,099 125,000 $ 581,728 $ 28,877
Vice President 1994 233,000 100,000 240,000 -- 288,465 30,945
1993 233,000 81,000 120,000 -- 60,110 34,030
</TABLE>
- ---------------
(1) Includes amounts deferred by each of the Named Officers under the Savings
Plan of American Standard Inc. and Participating Subsidiary Companies (the
"Savings Plan").
(2) Represents annual bonus earned for the year reported but paid in the
subsequent year. Annual bonuses may be deferred at the election of the
recipient.
(3) The amount shown in 1995 for Mr. Kampouris includes allocation of $64,127 of
tax consultant fees. Amounts shown for 1994 include payments under the
Company's 1988 Management Investors' Bonus Plan, which, following an
acceleration of payments due in 1995, was terminated. The two payments in
1994 were each at the rate of $.60 per share of Common Stock (giving effect
to the 2.5 to 1 stock split effected in December 1994) owned by Named
Officers, that had been previously acquired by them through stock offerings
in 1988.
(4) Amounts for 1995 represent estimates of payments to be made under (a) the
LTIP on the basis of an estimated achievement of 97% of the 1993-1995
performance goal, and (b) the 1994-1995 Supplemental Incentive Compensation
Plan, on the basis of an achievement of 100% of the applicable performance
goals. Amounts for 1994 represent cash payments for the achievement of 96%
of the 1992-1994 performance goal. Amounts for 1993 represent payments for
the achievement of 105% of the 1991-1993 performance goal with payments
(95.1% cash; 4.9% in shares of the Company's Common Stock) made partly in
1993 and partly in 1994. The shares were distributed to a grantor's trust
for the accounts of the Named Officers. LTIP payouts may be deferred at the
election of the recipient.
9
<PAGE> 13
(5) Included in All Other Compensation for 1995 was the following:
<TABLE>
<CAPTION>
PREMIUMS FOR ESOP
TERM LIFE ALLOCATIONS*
INSURANCE $
------------ ------------
<S> <C> <C>
Emmanuel A. Kampouris............................... $217,153 $ 13,762
George H. Kerckhove................................. 14,509 13,762
Horst Hinrichs...................................... 6,913 13,762
Fred A. Allardyce................................... 28,827 13,762
William A. Klug..................................... 15,114 13,762
</TABLE>
* Includes matching contributions related to contributions made by Named
Officers to the Savings Plan.
Stock Options. The following table sets forth information concerning stock
options granted in 1995, including the potential realizable value of each grant
assuming that the market value of the Company's Common Stock appreciates from
the date of grant to the expiration of the option at annualized rates of (a) 5%
and (b) 10%, in each case compounded annually over the term of the option. These
assumed rates of appreciation have been specified by the Securities and Exchange
Commission for illustrative purposes only and are not intended to predict future
prices of the Company's Common Stock, which will depend upon various factors,
including market conditions and the Company's future performance and prospects.
For example, the option granted to Mr. Kampouris in 1995 would produce the
pretax gain in 2005 of $19,122,000 shown in the table only if the market price
of the Common Stock rises to nearly $52 per share by the time the option is
exercised. Based on the number and market price of the shares outstanding at
year-end 1995, such an increase in the price of the Common Stock would produce a
corresponding aggregate pretax gain of more than $2.4 billion for the Company's
stockholders. All of the options listed below have exercise prices equal to the
fair market value of the Common Stock at the date of grant. One-third of the
granted options become exercisable annually in installments beginning one year
after the date of grant, subject to acceleration in the event of the death,
disability or retirement of the optionee, or a change in control of the Company.
1995 OPTION GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
NO. OF % OF TOTAL ASSUMED ANNUAL RATES OF STOCK
SHARES OPTIONS PRICE APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE TERM
OPTIONS EMPLOYES PRICE EXPIRATION -----------------------------
NAME GRANTED IN 1995* ($/SHARE) DATE 5% 10%
- --------------------------- ---------- ---------- --------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Emmanuel A. Kampouris...... 600,000 12.0 20.00 2/2/05 $ 7,548,000 $ 19,122,000
George H. Kerckhove........ 170,000 3.4 20.00 2/2/05 2,138,600 5,417,900
Horst Hinrichs............. 170,000 3.4 20.00 2/2/05 2,138,600 5,417,900
Fred A. Allardyce.......... 170,000 3.4 20.00 2/2/05 2,138,600 5,417,900
William A. Klug............ 125,000 2.5 20.00 2/2/05 1,572,500 3,983,750
</TABLE>
- ---------------
* In 1995, options were granted covering 5,006,000 shares of Common Stock.
10
<PAGE> 14
The following table sets forth information concerning the aggregate number
of options held and the value of unexercised "in-the-money" options held at
December 31, 1995 (the difference between the aggregate exercise price of all
such options held and the market value of the shares covered by such options at
December 31, 1995). No options held by the Named Officers were exercisable in
1995.
1995 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
OPTION VALUES AT 12/31/95
------------------------------------
NUMBER OF VALUE OF
SHARES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
12/31/95 12/31/95
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------- ----------------- --------------
<S> <C> <C>
Emmanuel A. Kampouris......................................... 0/600,000 0/$ 4,800,000
George H. Kerckhove........................................... 0/170,000 0/$ 1,360,000
Horst Hinrichs................................................ 0/170,000 0/$ 1,360,000
Fred A. Allardyce............................................. 0/170,000 0/$ 1,360,000
William A. Klug............................................... 0/125,000 0/$ 1,000,000
</TABLE>
LONG-TERM INCENTIVE COMPENSATION PLAN AWARDS IN 1995
1995-1997 AND 1996-1998 LONG-TERM INCENTIVE COMPENSATION PERFORMANCE PERIODS
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
NUMBER OF PERFORMANCE OR UNDER NON-STOCK-PRICE-
SHARES OTHER PERIOD BASED PLANS
UNITS OR UNTIL MATURATION ---------------------------------------
NAME OTHER RIGHTS OR PAYOUT THRESHOLD TARGET MAXIMUM
- --------------------------- ------------ ---------------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Emmanuel A. Kampouris...... (a) 1/95-12/97 $ 561,994 $1,123,889 $2,247,777
(a) 1/96-12/98 590,278 1,180,555 2,361,111
George H. Kerckhove........ (a) 1/95-12/97 241,150 482,300 964,600
(a) 1/96-12/98 243,750 487,500 975,000
Horst Hinrichs............. (a) 1/95-12/97 238,540 477,079 954,158
(a) 1/96-12/98 238,540 477,079 954,158
Fred A. Allardyce.......... (a) 1/95-12/97 181,333 362,667 725,334
(a) 1/96-12/98 185,333 370,667 741,334
William A. Klug............ (a) 1/95-12/97 150,000 300,000 600,000
(a) 1/96-12/98 150,000 300,000 600,000
</TABLE>
- ---------------
(a) Awards are denominated in dollars (based on December 31, 1995 foreign
exchange rates, where applicable).
The above table shows the contingent target awards, based on current salary
levels, established in 1995 for each Named Officer with respect to the 1995-1997
and 1996-1998 LTIP performance periods. Ordinarily the Company makes contingent
LTIP awards each year with respect to one LTIP performance period. In 1995,
however, the Management Development and Nominating Committee chose to establish
awards for both the 1995-1997 and 1996-1998 LTIP performance periods in
conjunction with the adoption of the 1996-1998 Supplemental Incentive
Compensation Plan (described in the following section of this Proxy Statement),
which provides the opportunity for incentive compensation to be earned by
certain key employees of the Company, in addition to executive officers, based
on performance goals independent of LTIP awards.
The targets set for both the 1995-1997 and 1996-1998 LTIP performance
periods are based on the achievement by the end of each performance period of
predetermined company-wide levels of inventory turnover rates and a percentage
of earnings (before interest and taxes) to sales. The thresholds reflect 50% of
the target awards; if the threshold level of inventory turnover or percentage of
earnings to sales for a
11
<PAGE> 15
performance period is not achieved, no payout is made with respect to that
performance period. The maximum payout for each performance period is twice the
target award and may be realized by achievement of inventory turnover at a
substantially increased rate or by a combination of an increase in inventory
turnover and/or percentage of earnings to sales above the threshold performance
levels.
Contingent awards are based on a participant's average annual base salary
during his participation in the performance period, subject to prorated
adjustment to reflect the duration of participation in the period. At the end of
a performance period a payment in cash, notes or in Common Stock of the Company
or a combination of any of them, is made on the basis of the achievement of the
goal. Termination of employment may result in forfeiture or proration of the
award, depending on the nature of the termination. A plan participant may defer
payment of his award. Payment of awards will not be made or will be deferred if
an event of default under American Standard Inc.'s loan agreements or debt
indentures has occurred or will occur as a result of such payment.
Shares of Common Stock distributable to plan participants are generally
delivered to a grantor's trust for their benefit. Distribution of a
participant's account is made on the termination of his employment with the
Company, or earlier at the discretion of the Management Development and
Nominating Committee. Cash payments may be deferred if an event of default under
American Standard Inc.'s loan agreements or debt indentures has occurred or will
occur as a result of such payment. Until distribution, assets of the trust are
subject to the claims of creditors of the Company or American Standard Inc.
Shares of Common Stock held by the trust are voted by the trustee in accordance
with the terms of the trust agreement.
1996-1998 SUPPLEMENTAL INCENTIVE COMPENSATION PLAN AWARDS IN 1995
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK-PRICE-
PERFORMANCE OR BASED PLANS
OTHER PERIOD -------------------------
NUMBER OF SHARES UNTIL MATURATION A B
NAME UNITS OR OTHER RIGHTS OR PAYOUT THRESHOLD MAXIMUM
- ------------------------------------ --------------------- ---------------- ----------- -----------
<S> <C> <C> <C> <C>
Emmanuel A. Kampouris............... (a) 1/96-12/98 $ 295,139 $ 2,361,111
George H. Kerckhove................. (a) 1/96-12/98 $ 121,875 $ 975,000
Horst Hinrichs...................... (a) 1/96-12/98 $ 119,270 $ 954,158
Fred A. Allardyce................... (a) 1/96-12/98 $ 92,667 $ 741,334
William A. Klug..................... (a) 1/96-12/98 $ 75,000 $ 600,000
All executive officers as a
group(27)......................... (a) 1/96-12/98 $ 2,002,724 $16,021,790
All non-executive officers as a
group............................. (a) 1/96-12/98 $13,019,800 $26,039,600
</TABLE>
- ---------------
(a) Awards are denominated in dollars.
Subject to approval by the stockholders of the Company at the Annual
Meeting, the Board of Directors of the Company has approved the adoption of the
1996-1998 Supplemental Incentive Compensation Plan (the "Supplemental Incentive
Plan"). The above table reflects estimated threshold and maximum payouts (based
on December 31, 1995 foreign exchange rates where applicable) to Named Officers
under the Supplemental Incentive Plan, contingent on the achievement of a
pre-determined threshold of management reporting operating earnings (before
interest and taxes) of American Standard Inc. in 1998 ("1998 OEBIT"). If the
threshold is reached, each Named Officer will receive under the Supplemental
Incentive Plan a supplemental payment equal to 50% of his LTIP payout for the
1996-1998 performance period ("1998 LTIP payout"). If such threshold of 1998
OEBIT is exceeded by 5%, each Named Officer will instead receive a supplemental
payment equal to 75% of his 1998 LTIP payout, and if the threshold is exceeded
by 16.7% or more each Named Officer will instead receive 100% of his 1998 LTIP
payout. Subject to meeting the target conditions, Column A represents the
estimated threshold amounts payable to Named Officers and other plan
participants, and Column B represents the estimated maximum amounts payable
under the Supplemental Incentive Plan. In addition, the Supplemental Incentive
Plan requires a participant's continued employment (except in cases of death,
disability or retirement) until December 31, 1998 and a minimum period of
employment during the term of the plan in order to be eligible to receive an
award. The awards, if any, are
12
<PAGE> 16
payable 50% in Common Stock and 50% in cash for executive officers and
non-officer executives, and 100% in cash to management participants.
RETIREMENT PLANS
TERMINATED PLAN
As a result of the change of control of American Standard Inc. in 1988, the
retirement plan of American Standard Inc. covering its U.S. salaried employees
was terminated as of June 30, 1988. Thereafter, the accrued benefits of all
participants through that date, all of which vested, are provided through
annuities purchased with the assets of the terminated plan (the "Terminated
Plan"). There were no further benefit accruals under the Terminated Plan after
June 30, 1988.
The annual retirement annuities that are payable to Named Officers,
assuming retirement at age 65 and no election of a joint and survivor option and
after giving effect to an offset for Social Security benefits, are as follows:
Mr. Kampouris, $90,662; Mr. Kerckhove, $109,828; Mr. Hinrichs, $72,945; Mr.
Allardyce, $25,764; and Mr. Klug, $73,866.
SUPPLEMENTAL RETIREMENT PLAN
American Standard Inc. currently maintains a supplemental retirement plan
(the "Supplemental Retirement Plan") for most of its executive officers,
including all of the Named Officers, with benefits payable in the form of a
single lump sum settlement that supplements, on the basis of a formula, their
annual retirement benefits (if any) under the Terminated Plan.
The table below shows the annualized target Supplemental Retirement Plan
benefit payable to a participant for life from normal retirement date (age 65)
based on years of service and covered compensation. Upon retirement, a
participant in the Supplemental Retirement Plan will receive a single lump sum
payment equal to the present value of the applicable annual amount reflected in
the table below over the life expectancy of the retiree, after taking into
account all of the offsets described below. If a participant dies after his
Supplemental Retirement Plan benefit vests but before he receives such benefit,
his spouse is entitled to Plan benefits, but in a reduced amount.
<TABLE>
<CAPTION>
HIGHEST
3-YEAR
AVERAGE YEARS OF SERVICE
ANNUAL -----------------------------------------------------
COMPENSATION 10 20 30 40
- ------------ -------- ---------- ---------- ----------
<C> <S> <C> <C> <C> <C>
$ 250,000 ................................ $100,000 $ 125,000 $ 150,000 $ 150,000
500,000 ................................ $200,000 $ 250,000 $ 300,000 $ 300,000
750,000 ................................ $300,000 $ 375,000 $ 450,000 $ 450,000
1,000,000 ................................ $400,000 $ 500,000 $ 600,000 $ 600,000
1,250,000 ................................ $500,000 $ 625,000 $ 750,000 $ 750,000
1,500,000 ................................ $600,000 $ 750,000 $ 900,000 $ 900,000
1,750,000 ................................ $700,000 $ 875,000 $1,050,000 $1,050,000
2,000,000 ................................ $800,000 $1,000,000 $1,200,000 $1,200,000
</TABLE>
The Supplemental Retirement Plan benefits are based on credited years of
service and average annual compensation for the highest three calendar years of
the final ten calendar years of employment (not exceeding 60 percent of average
annual compensation for such years of service) and are reduced by an offset
consisting of certain other retirement benefits, including amounts payable under
the Terminated Plan, two times the value of the cumulative basic Company
contributions to the executive officer's ESOP account, and Social Security
benefits. Benefits under the Supplemental Retirement Plan are vested after five
years of service or employment continuation through age 65. Compensation used in
determining Supplemental Retirement Plan benefits (covered compensation)
includes only salary and bonus reflected in the Summary Compensation Table
above. No covered compensation of any Named Officer differs by more than 10%
from the salary and bonus set forth in the Summary Compensation Table.
13
<PAGE> 17
As of December 31, 1995 the years of credited service under the
Supplemental Retirement Plan for the Named Officers are as follows: Mr.
Kampouris, 30 years; Mr. Kerckhove, 34 years; Mr. Hinrichs, 37 years; Mr.
Allardyce, 19 years; and Mr. Klug, 34 years.
Minimum accrued annual benefits have been established under the
Supplemental Retirement Plan for certain Named Officers which, after giving
effect to offsets, are estimated as follows: Mr. Kampouris, $427,000; Mr.
Kerckhove, $37,000; Mr. Hinrichs, $143,000; and Mr. Klug, $93,000.
CORPORATE OFFICERS SEVERANCE PLAN
A severance plan for executive officers (the "Officers Severance Plan") was
established in 1991. The Officers Severance Plan provides that any participant
whose employment is involuntarily terminated by American Standard Inc. without
"Cause" (as defined in the Officers Severance Plan) or who leaves American
Standard Inc. for "Good Reason" (as defined in the Officers Severance Plan)
shall be paid an amount equal to the sum of two (three, in the case of the Chief
Executive Officer) times such participant's annual base salary at the rate in
effect at the time of termination, a proration of the then Annual Incentive Plan
target award (described below), and one (two, in the case of the Chief Executive
Officer) times such target award. In addition, group life, accident and
disability insurance coverages, as well as group medical coverage, will be
continued for up to 24 months (36 months, in the case of the Chief Executive
Officer) following such officer's termination. The Named Officers are
participants in the Officers Severance Plan.
MANAGEMENT DEVELOPMENT AND NOMINATING COMMITTEE REPORT
ON COMPENSATION OF EXECUTIVE OFFICERS OF THE COMPANY
The Company's compensation program for its executive officers is
administered and reviewed by the Management Development and Nominating Committee
(the "Committee") of the Board of Directors. This program, and each of its
components, was developed with the assistance of outside consultants. The
Committee periodically reviews the Company's compensation program in light of
appropriate competitive practices in the United States.
COMPENSATION PHILOSOPHY
In determining the compensation payable to the Company's executive
officers, it is the basic philosophy of the Committee that the total annual
compensation for these individuals should be at a level which is competitive
with the marketplace in companies of similar size for positions of similar scope
and responsibility. In determining the appropriateness of compensation levels,
the Committee annually reviews the Company's compensation policies and
nationally recognized compensation surveys, principally Hewitt Associates
Management Compensation Services Project 777 which is a comparison of fixed and
variable annual compensation based upon a corporation's sales.
The key elements of the total annual compensation for executive officers
consist of fixed compensation in the form of base salary, and variable
compensation in the forms of annual incentive compensation, stock options and
other long-term incentive awards. It is the Committee's objective that a
significant portion of an executive's total annual compensation be contingent
upon the attainment of one or more performance objectives.
COMPONENTS OF EXECUTIVE COMPENSATION
BASE SALARY
The Committee establishes each officer's base salary by comparison to
competitive market levels for the executive's position and responsibilities,
based on the above-referenced compensation surveys. In keeping with its
objective that a significant portion of an executive's compensation be variable
and performance-related in nature, base salaries are generally set below the
average of competitive marketplace rates for each position. While some
exceptions exist, for the most part base salaries for executive officers
(including the Chief Executive Officer) were below the average base salary
reported for similar positions in the above-referenced compensation surveys.
14
<PAGE> 18
ANNUAL INCENTIVE COMPENSATION
Annual bonuses are based upon various factors, including corporate,
operating unit and individual performance during the preceding calendar year.
For executive officers other than the Chief Executive Officer, the Committee
establishes target awards based on a percentage of salary for each participant,
the total of which determines an initial pool available for bonus payments for
the year. (As is described in greater detail below, the annual bonus paid to the
Chief Executive Officer is determined at the discretion of the Committee
following the end of the fiscal year.) An operating plan is established annually
which sets goals for overall corporate performance relating to earnings (before
interest and taxes) and cash flow. At year end, corporate performance is
compared to these goals to determine the percentage of the established goals
attained. This percentage is then applied to the initial bonus pool to determine
the amount available for annual bonuses. The actual bonus amount paid to each
participant, including the executive officers, from this available pool is based
upon management's and the Committee's subjective evaluation of individual
performance criteria and operating group performance, where appropriate.
For 1995, corporate performance was below the levels of operating
performance targeted in the operating plan. Accordingly, the amount credited by
the Committee to the bonus pool for distribution as annual bonuses for 1995 was
below targeted levels.
LONG-TERM INCENTIVE COMPENSATION AWARDS
Executive officers of the Company also participate in the Company's
Long-Term Incentive Compensation Plan ("LTIP") and 1994-1995 Supplemental
Incentive Compensation Plan which provide such individuals with additional
incentive compensation based upon the achievement of various corporate
performance goals.
Incentive payments, the amounts of which have not yet been determined, will
be awarded to executive officers with respect to fiscal year 1995 under the
Company's LTIP for the 1993-1995 performance period based upon the achievement
of company-wide goals relating to inventory turnover rates and operating
earnings margin (as a percent of sales). The target amount ranges from 120% to
170% of an executive's average base salary during the participation period,
based upon the individual's position. If a minimum threshold level of
performance is not reached, no payments are made for the performance period. A
maximum payment of twice the target award may be made for performance
substantially above target levels. The final achievement level has not yet been
determined. The Company expects that actual performance will result in payments
above the minimum levels, but below target levels.
Contingent awards were similarly established in 1994 and 1995 for
executives pursuant to the LTIP for the 1994-1996, 1995-1997 and 1996-1998
performance periods.
Effective May 1, 1994 the Company implemented the Supplemental Incentive
Compensation Plan under which executive officers were granted awards contingent
on the Company's achievement of a certain pre-determined threshold of management
reporting operating earnings (before interest and taxes), and threshold targets
established for the LTIP 1993-1995 performance period. Because the Company has
achieved 100% of the earnings target under the Supplemental Incentive
Compensation Plan, payments equal to the actual award under the LTIP 1993-1995
performance period will be made to executive officers. The payment of these
awards is 50% in Common Stock and 50% in cash.
Effective January 1, 1996, the Company implemented the 1996-1998
Supplemental Incentive Compensation Plan under which executive officers were
granted awards contingent on the Company's achievement of certain targets. No
payments will be made under the 1996-1998 Supplemental Incentive Compensation
Plan unless the threshold targets established for the LTIP 1996-1998 performance
period are achieved. If those targets are met, payments equal to 50% of the
actual award under the LTIP performance period will be made if a certain
pre-determined threshold of management reporting operating earnings (before
interest and taxes), exclusive of any significant business acquisitions, is
reached. The amount of such payments will be adjusted upward to reflect
performance exceeding the threshold up to a maximum amount equal to the maximum
amount payable under the 1996-1998 LTIP performance period. The payment of these
awards is generally contingent upon continued employment, and will be made, if
at all, 50% in Common Stock and 50% in cash.
15
<PAGE> 19
Additionally, the Company has established an equity based compensation plan
under which the Committee may award stock options, restricted stock and other
performance based awards to executive officers beginning in fiscal year 1995. In
connection with the initial public offering of the Company's Common Stock in
1995 (the "IPO"), the Committee, after consultation with outside compensation
consultants regarding incentive compensation practices in public offerings,
determined to grant to executive officers options to purchase shares of Common
Stock based on the officer's position and the Committee's subjective
determination of the officer's expected contribution to the success of the
Company.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
BASE SALARY
Consistent with the above stated policies, Mr. Kampouris' base salary for
1995 was 21% below the average base salary payable for chief executive officers
for companies having comparable sales. Mr. Kampouris received no increase in
base salary during 1995, and has received only one increase in base salary (in
1993) since becoming the Chief Executive Officer of the Company in 1989.
ANNUAL INCENTIVE COMPENSATION
Consistent with past practices for paying compensation to the Company's
Chief Executive Officer, Mr. Kampouris received a bonus for 1995 services of
$1,200,000, which was determined based on the Committee's subjective
determination of his performance and that of the Company during 1995.
LONG-TERM INCENTIVE COMPENSATION
It is expected that Mr. Kampouris will receive long term incentive payments
under the LTIP and the Supplemental Incentive Compensation Plan for the
performance period ended in 1995 based on the same factors and considerations
that apply to executive officers generally.
In 1995, the Committee established contingent awards for Mr. Kampouris
under the 1996-1998 Supplemental Incentive Compensation Plan and for the
1995-1997 and 1996-1998 LTIP performance periods on the same terms and
conditions as outlined above. Based on Mr. Kampouris' position, the Committee
set the target amount of his award at the maximum percentage of the target
range. As indicated above, the target award for Mr. Kampouris with respect to
the Supplemental Incentive Compensation Plan is based on the award, if any,
actually made for the 1996-1998 LTIP performance period.
Consistent with the above stated policies, the Committee awarded Mr.
Kampouris an option to purchase 600,000 shares of Common Stock in connection
with the IPO.
COMPLIANCE WITH SECTION 162(M)
Section 162(m) of the Internal Revenue Code 1986, as amended, generally
denies a publicly traded company a Federal income tax deduction for compensation
in excess of $1 million paid to certain of its executive officers except to the
extent that such compensation is paid pursuant to a shareholder approved plan
upon the attainment of objective performance criteria. The proposed regulations
under Section 162(m) generally provide an exemption from the provisions of
Section 162(m) for a period following a Company's transition to a public company
with respect to compensation paid under pre-existing plans. Therefore,
compensation payable pursuant to those plans in existence at the time the
Company went public was not subject to Section 162(m) in 1995 and is not
expected to be subject to Section 162(m) in 1996. As Section 162(m) will apply
to any newly established plans, the Company is currently seeking shareholder
approval of the 1996-1998 Supplemental Incentive Compensation Plan in order to
ensure that any compensation paid thereunder will be deductible. The Committee
believes that tax deductibility of compensation is an important factor, but not
the sole factor, to be considered in setting executive compensation policy.
Accordingly, the Committee generally intends to take such reasonable steps as
are required to avoid the loss of a tax deduction due to Section 162(m), but
reserves the right to pay amounts which are not deductible in appropriate
circumstances.
Joseph S. Schuchert, Chairman
Steven E. Anderson
Roger W. Parsons
J. Danforth Quayle
16
<PAGE> 20
PERFORMANCE GRAPH
Performance Comparison. The following graph and table compare the
cumulative total stockholder return on the Company's Common Stock from February
3, 1995, the date of the initial public offering of the Common Stock, through
December 31, 1995 with the Standard & Poor's 500 Stock Index and the Standard &
Poor's Manufacturing (Diversified Industrials) Index (neither of which include
the Company), using data supplied by the Compustat Services unit of Standard &
Poor's Corporation. The comparisons reflected in the graph and table, however,
are not intended to forecast the future performance of the Common Stock and may
not be indicative of such future performance. The graph and table assume an
investment of $100 in the Common Stock and each index on February 3, 1995 and
the reinvestment of all dividends.
<TABLE>
<CAPTION>
American S&P Manu-
Standard facturing
Measurement Period Companies S&P 500 In- (Diversifie d
(Fiscal Year Covered) Inc. dex Industrials)
<S> <C> <C> <C>
Indexed Returns 3Feb95 100 100 100
Indexed Returns Dec95 140.88 131.43 134.63
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Schuchert, a director of the Company and American Standard Inc., is a
member of the Management Development and Nominating Committee of the Company's
Board of Directors. He is Chairman and Chief Executive Officer of Kelso &
Companies, Inc. (the general partner of Kelso) and a general partner of Kelso
American Standard Partners, L.P., the general partner of ASI Partners.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Mr. Nickell, also a director of the Company and American Standard Inc., is
President of Kelso & Companies, Inc. (the general partner of Kelso) and a
general partner of Kelso American Standard Partners, L.P., the general partner
of ASI Partners.
Pursuant to a Consulting Agreement between the Company and Kelso, as
amended December 2, 1994, the Company reimburses Kelso for expenses incurred in
the performance of certain consulting services requested by the Company.
In order to facilitate the initial public offering of the Company's Common
Stock, which was completed in the first quarter of 1995, Kelso has agreed to (i)
provide, and cause ASI Partners, any Affiliate (as defined in such agreement) of
Kelso or any investment fund which Kelso controls and which owns Common Stock of
the Company to provide, advance notice to, and consult with, the Company a
reasonable time prior to the
17
<PAGE> 21
disposition of shares of Common Stock of the Company (other than in non-block
trades on any stock exchange or NASDAQ and other than to an Affiliate, pursuant
to a public offering or pursuant to the right of first offer contained in the
Amended and Restated Stockholders Agreement), (ii) use, and cause ASI Partners,
any Affiliate of Kelso or any investment fund which Kelso controls and which
owns Common Stock of the Company to use, reasonable efforts (consistent with
fiduciary duties to their respective investors) in connection with any sale by
it or them of Common Stock of the Company not to cause any undue fluctuations in
the public markets for the Common Stock of the Company, (iii) except as
permitted by the Amended and Restated Stockholders Agreement, cause ASI
Partners, any Affiliate of Kelso and any investment fund controlled by Kelso
which owns Common Stock of the Company, not to initiate, propose or support any
solicitation for the approval of any stockholder proposal not supported by the
Board of Directors, (iv) not sell or otherwise dispose of, except in connection
with a public offering, or allow ASI Partners, any Affiliate of Kelso, or any
investment fund which Kelso controls and which owns Common Stock of the Company
to sell or otherwise dispose of, more than 15% of the Common Stock of the
Company then outstanding without first offering to the Company (or its designee)
the right to purchase such shares for the same price, and (v) provide advance
notice to the Company of any proposed acquisition of any additional shares of
Common Stock of the Company or any assets of the Company by ASI Partners, any
Affiliate of Kelso or any investment fund which Kelso controls and which owns
Common Stock of the Company and, if objected to by a majority of the members of
the Board of Directors not affiliated with Kelso, not to acquire, and cause ASI
Partners, any Affiliate of Kelso and any investment fund which Kelso controls
not to acquire, additional shares of Common Stock of the Company or any assets
of the Company.
The Amended and Restated Stockholders Agreement allows ASI Partners to
designate nominees for election to the Board of Directors, as described above
under the caption "ELECTION OF DIRECTORS", and entitles ASI Partners to demand
registration rights (the first three of which shall be at the Company's
expense), as well as "piggyback" registration rights in respect of registration
statements filed by the Company covering future offerings of Common Stock. Under
the Amended and Restated Stockholders Agreement certain members of management,
which includes most of the Company's executive officers, are also entitled to
such "piggyback" registration rights with respect to Common Stock of the Company
owned by them. In the third quarter of 1995 the Company registered for sale and
sold in a secondary offering 22,500,000 shares of Common Stock, 35,000 of which
shares were owned by Mr. Kerckhove, one of the Company's Named Officers, and the
remainder of which were owned by ASI Partners.
American Standard Inc. also has entered into a transaction with Kelso
Insurance Services, Incorporated (an affiliate of Kelso) ("Kelso Insurance") and
American Telephone and Telegraph Company ("AT&T") pursuant to which the Company
(as well as other Kelso affiliated companies) participates in a
telecommunications network under which AT&T provides communications services to
the group at a special lower tariff rate. In connection with that transaction
American Standard Inc. has guaranteed a minimum annual usage by it of $2 million
for a period of five years commencing in 1993 and Kelso Insurance has guaranteed
American Standard Inc.'s minimum usage to AT&T. No fee was paid by American
Standard Inc. to Kelso Insurance in connection with this transaction.
In August 1993, American Standard Inc. purchased a limited partnership
interest in Kelso Investment Associates V, L.P. ("KIA V"), in exchange for its
commitment to make a capital contribution of $5 million to KIA V. KIA V was
formed to seek out business opportunities and invest primarily in equity
securities, leveraged buy-outs, and joint ventures. Kelso Partners V, L.P.
serves as the general partner of KIA V. The general partners of Kelso Partners
V, L.P. include Messrs. Schuchert and Nickell. Kelso is the manager of KIA V
and, as such, acts as investment adviser of KIA V. The management fee relating
to the interest held by American Standard Inc. has been waived. As of December
20, 1994, an affiliate of Kelso acquired 80% of the Company's limited
partnership interest in KIA V at a price equal to 80% of the Company's net cost
incurred to the date of such acquisition to obtain such interest, thereby
relieving the Company of 80% of the balance of its $5 million capital
contribution commitment.
Mr. Schuchert, a director of the Company, has formed a general partnership,
SW Investment Associates ("SW Associates"), for the purpose of acquiring an
equity interest in BSG Laboratories Inc., a newly-formed company developing
audio speaker and noise abatement systems. Among the investors in SW Associates
will
18
<PAGE> 22
be a limited partnership of which American Standard Inc. is the general partner
and the limited partners will be certain executive officers of American Standard
Inc., who agreed in April 1995 to invest in SW Investment Associates. Mr.
Schuchert, who is also a general partner in Kelso American Standard Partners,
L.P. (the general partner of ASI Partners) and a general partner of SW
Associates, has invested approximately $991,000 therein. American Standard Inc.,
Mr. Kampouris and 14 other officers of American Standard Inc. have agreed to
invest $4,060,000, $120,000 and $195,000, respectively, in SW Investment
Associates, which will constitute an aggregate ownership interest therein of
approximately 29%.
The Company has invested in three Cayman Islands corporations, A-S China
Plumbing Products, Limited, Wabco Automotive Products, Limited and A-S Air
Conditioning Products Limited ("ASAP"), used for the establishment of various
joint ventures in the People's Republic of China. In 1995, shares in ASAP were
sold to certain institutions and other investors. Certain executive officers,
including Messrs. Kampouris, Kerckhove and Allardyce, and other employees of the
Company and its subsidiaries, purchased indirect interests of less than 1% in
ASAP.
Mr. Mizushima, a director of American Standard Inc. and the Company, is
President and Chief Operating Officer of Daido Hoxan Inc., a Japanese
corporation which currently has an approximately 13% limited partnership
interest in ASI Partners. Daido Hoxan Inc. and Kelso and its affiliates have
engaged in certain transactions, including transfers of limited partnership
interests in ASI Partners and the provision by Daido Hoxan Inc. of consulting
services. Daido Hoxan Inc. is a non-exclusive distributor of the Company's
plumbing products in Japan. Its transactions as a distributor with American
Standard Inc. and its subsidiaries, which were on customary terms and in the
ordinary course of business, have not been material to either the Company or
Daido Hoxan Inc. American Standard Inc. also entered into leasing transactions
with an affiliate of Daido Hoxan Inc. whereby it has leased certain machinery
and equipment on financial terms that were comparable to those available from
other leasing companies. The leasing transactions were not material to either
the Company or Daido Hoxan Inc.
Fidelity Management Trust Company ("Fidelity") is the owner of record of
the shares of Common Stock held by the ESOP, a 13.9% beneficial owner of the
Company's shares. Fidelity was paid by the Company approximately $293,675 in
1995 for services in connection with administering the Company's ESOP and
American Standard Inc.'s Savings Plan.
Mr. Nickell's father is an officer and owns more than 10 percent of AC
Corporation, a contracting company which purchases air conditioning products
from the Company's Trane Division. Such purchases in 1995 were on customary
terms and in the ordinary course of business and were not material to either the
Company or AC Corporation.
2. APPROVAL OF 1996-1998 SUPPLEMENTAL INCENTIVE COMPENSATION PLAN
On the recommendation of the Management Development and Nominating
Committee, the Board has approved the 1996-1998 Supplemental Incentive
Compensation Plan (the "Supplemental Incentive Plan") and is currently seeking
stockholder approval of the Supplemental Incentive Plan to permit cash award
payments to executive officers under the plan to be deductible by the Company
for federal income tax purposes pursuant to Section 162(m) of the Internal
Revenue Code. The Supplemental Incentive Plan is intended to provide to certain
key employees, as well as executive officers, an opportunity to earn incentive
compensation, in the form of cash and Common Stock, upon achievement by the
Company of pre-established performance goals established by the Supplemental
Incentive Plan. The text of the Supplemental Incentive Plan is attached to this
Proxy Statement as Exhibit A, and the following summary of certain provisions of
the Supplemental Incentive Plan is qualified in its entirety by reference to
such text.
A description of the basis on which awards are payable to the Company's
executive officers under the Supplemental Incentive Plan and a table showing
awards made in 1995 are set forth in this Proxy Statement under the heading
"Executive Compensation -- Long-Term Incentive Compensation Plan Awards in
1995 -- 1996-1998 Supplemental Incentive Compensation Awards in 1995." In
addition to the Company's 27 executive officers who may participate in the
Supplemental Incentive Plan, 170 current non-officer executives and 600
non-officer management employees are eligible to participate in the plan.
Non-employee directors are
19
<PAGE> 23
ineligible to participate in the Supplemental Incentive Plan. Non-officer
executives and management employees will participate in the Supplemental
Incentive Plan on the same terms and subject to the same Company performance
criteria as executive officers, except that the maximum award payable to a
participating non-officer executive is equal to three times the executive's 1998
annual incentive plan payment (generally, 26% of annual salary) and the maximum
award payable to a participating non-officer management employee is equal to a
specified dollar amount, rather than an amount based on 1998 LTIP payouts as in
the case of executive officers.
Approval of the Supplemental Incentive Plan requires the affirmative vote
of a majority of the shares of Common Stock represented in person or by proxy at
the Annual Meeting, provided a quorum is present (a majority of the shares
entitled to vote at the meeting). Abstentions may be counted as votes against
the proposal; broker non-votes will not affect the outcome of the vote.
------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1996-1998
SUPPLEMENTAL INCENTIVE COMPENSATION PLAN.
3. RATIFICATION OF APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has re-appointed, in accordance with the
recommendations of its Audit Committee, the names of whose members appear on
page 8, Ernst & Young LLP as independent Certified Public Accountants to examine
the consolidated financial statements of the Company for the year 1996 upon such
terms as are fixed by the Board of Directors. The Board of Directors recommends
that such appointment be ratified by the stockholders. If the appointment of
Ernst & Young LLP is not ratified by stockholders, the Board of Directors and
the Audit Committee will give consideration to the appointment of other
independent certified public accountants. A representative of Ernst & Young LLP
is expected to be present at the Annual Meeting and will have the opportunity to
make a statement, if desired, and will also be available to respond to
appropriate questions.
1997 STOCKHOLDER PROPOSALS
Any proposal a stockholder wishes to submit in accordance with the proxy
rules of the Commission for inclusion in the Company's 1997 proxy statement must
be received by the Company at its executive offices at the same address set
forth on page 2 of this Proxy Statement no later than November 29, 1996. In
addition, proposals by stockholders are subject to the provisions of the
Company's Amended By-Laws, which may not be read to shorten the time period set
forth in the proxy rules for inclusion of stockholder proposals in proxy
materials prepared by the Company under the Securities Exchange Act of 1934. In
accordance with the Company's Amended By-Laws, stockholder proposals intended
for presentation at the 1997 Annual Meeting of Stockholders that are not
intended to be considered for inclusion in the Company's proxy statement must be
made by written notice, mailed by certified mail, to the Secretary of the
Company, and received no later than 50 days prior to the date of the 1997 Annual
Meeting. If less than 50 days' advance notice of a meeting of stockholders is
given to the stockholders, proposals must be made or delivered not later than
the close of business on the seventh day following the day on which the written
notice of such meeting was mailed.
20
<PAGE> 24
4. OTHER MATTERS WHICH MAY COME BEFORE THE MEETING
The Board of Directors of the Company is not aware of any other matters to
be presented for action at the meeting. However, if any such other matters are
presented for action, it is the intention of the proxy holders named in the
enclosed form of proxy to vote on such matters in accordance with their
discretion.
By order of the Board of Directors,
/s/ RICHARD A. KALAHER
RICHARD A. KALAHER
Vice President, General Counsel
and Secretary
March 28, 1996
21
<PAGE> 25
EXHIBIT A
AMERICAN STANDARD INC. AND SUBSIDIARIES
1996-1998 SUPPLEMENTAL INCENTIVE COMPENSATION PLAN
PLAN PERIOD
The Plan Period shall be January 1, 1996 through December 31, 1998.
PARTICIPANTS
Plan Participants shall be employees of the Corporation and its
subsidiaries, domestic and foreign, in the following participation categories:
-- elected officers of the Corporation ("Officer Participants"); and
-- non-officer Executive Level employees ("Executive Participants").
-- non-executive Management Level employees who are designated as
Participants by the Officer Participants ("Management Participants").
PLAN AWARD OPPORTUNITIES AND FORMS OF AWARDS
Plan Award Opportunities and forms of Awards will be as set forth in
Schedule A (for Officer Participants), Schedule B (for Executive Participants)
and Schedule C (for Management Participants).
PLAN AWARD TARGETS
Each Participant shall receive a Plan Award, prorated as provided below,
equal to 50% of his Plan Award Opportunity as soon as practicable after a
determination that the Corporation has achieved the 1995 Strategic Plan
management reporting operating earnings before interest and taxes derived from
existing core businesses, for the year 1998 (the "Threshold"). Such Plan Award
shall be increased to up to 75% of the Participant's Plan Award Opportunity if
actual 1998 management reporting operating earnings (before interest and taxes)
derived from existing businesses ("1998 OEBIT") is at least 5.0% above the
Threshold, with such increase to be graduated to reflect a 1998 OEBIT falling
between the 50% and 75% achievement levels; the Plan Award shall be further
increased to up to 100% of the Participant's Plan Award Opportunity if 1998
OEBIT is at least 16.7% above the Threshold, with such increase to be graduated
to reflect 1998 OEBIT between the 75% and 100% achievement levels. Calculation
of the 50% and 75% achievement levels shall not include OEBIT derived from
acquisitions involving $25,000,000 or more in capital.
FORFEITURES AND PRORATIONS
If a Participant's employment terminates for any reason other than
retirement, death or disability before December 31, 1998, such Participant shall
receive no Award under the Plan.
Provided a Participant's participation in the Plan shall have been for a
minimum of seventy-eight weeks, if a Participant's participation commenced after
January 1, 1996, and/or if a Participant's participation ends before December
31, 1998 due to retirement, death or disability, such Participant's Plan Award
shall be prorated based on the number of full or partial weeks of participation
divided by 156 weeks.
If a Participant's participation category changes during the Plan Period,
his or her Plan Award shall be prorated between the Plan Award amount that would
have been received for participation for the entire Plan Period in the earlier
participation category and the Plan Award amount that would have been received
for participation for the entire Plan Period in the later participation
category, based on the number of weeks of participation in each participation
category over a total of 156 weeks.
PLAN AWARDS IN STOCK
Any shares of American Standard Companies Inc. common stock issued as Plan
Awards shall be issued from the shares available under the American Standard
Companies Inc. Stock Incentive Plan, and shall be issued to and governed by the
Trust Agreement for the American-Standard Long-Term and 1994-1995 and 1996-1998
Supplemental Incentive Compensation Plans.
A-1
<PAGE> 26
PLAN AWARDS IN CASH
There shall be deducted from the cash portion of any Plan Awards such
payroll withholdings as the Corporation deems necessary.
TREATMENT OF PLAN AWARDS
Plan Awards will not be treated as compensation for purposes of the Savings
Plan of American Standard Inc. and Participating Subsidiary Companies, the
American-Standard Employee Stock Ownership Plan or any other benefits based on
compensation.
ADMINISTRATION OF PLAN
Except with respect to the designation of Management Participants, the Plan
will be administered by the Management Development and Nominating Committee of
the Board of Directors or the delegate of said Committee.
The Board, upon recommendation of the Management Development and Nominating
Committee, shall have the right to amend, suspend, or terminate the Plan at any
time; however, no such action of the Board shall diminish, reduce, alter or
impair a Participant's rights assigned to him before the date of such amendment,
suspension, or termination of the Plan without the consent of such Participant.
OTHER PROVISIONS
Participation in the Plan shall not affect the right of the Company or any
affiliate thereof at any time to terminate the employment of any Participant. No
interest in this Plan shall be assignable or transferable except to the extent
provided in the Trust Agreement for the American-Standard Long-Term and
1994-1995 and 1996-1998 Supplemental Incentive Compensation Plans.
A-2
<PAGE> 27
AMERICAN STANDARD INC. AND SUBSIDIARIES
1996-1998 SUPPLEMENTAL INCENTIVE COMPENSATION PLAN
SCHEDULE A
PLAN AWARD OPPORTUNITIES FOR OFFICER PARTICIPANTS
One hundred percent of the modified initial and the supplemental Payout
Awards for the 1996-1998 Performance Period under the American Standard Inc.
Long-Term Incentive Compensation Plan, payable half in cash (and/or promissory
notes of the Corporation) and half in common stock of American Standard
Companies Inc.
SCHEDULE B
PLAN AWARD OPPORTUNITIES FOR EXECUTIVE PARTICIPANTS
Three times the Executive Participants' 1998 awards under the Corporation's
Annual Incentive Plan, payable half in cash (and/or promissory notes of the
Corporation) and half in common stock of American Standard Companies Inc.
SCHEDULE C
PLAN AWARD OPPORTUNITIES FOR MANAGEMENT PARTICIPANTS
Fifteen Thousand Dollars ($15,000), payable in cash.
A-3
<PAGE> 28
American Standard Companies Inc.
One Centennial Avenue
Piscataway, New Jersey 08854
<PAGE> 29
AMERICAN STANDARD COMPANIES INC. PROXY/VOTING INSTRUCTION CARD
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS ON MAY 2, 1996.
The undersigned hereby appoints Emmanuel A. Kampouris, Fred A. Allardyce and
Richard A. Kalaher, and each of them, proxies, with full power of substitution,
to vote all the shares of Common Stock of the undersigned at the Annual Meeting
of Stockholders to be held on Thursday, May 2, 1996, at 10:00 A.M. (EDT), at the
Embassy Suites Hotel, Embassy Ballroom, 121 Centennial Avenue, Piscataway, New
Jersey, and at any adjournment thereof, upon all subjects that may properly come
before the meeting, including the matters described in the proxy statement
furnished herewith, subject to any directions indicated on the reverse side of
this card. IF NO DIRECTIONS ARE GIVEN, THE PROXIES WILL VOTE FOR THE ELECTION OF
ALL LISTED NOMINEES, IN ACCORDANCE WITH THE DIRECTORS' RECOMMENDATIONS ON THE
OTHER MATTERS LISTED ON THE REVERSE SIDE OF THIS CARD AND IN THEIR DISCRETION ON
ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING. NO MATTER TO BE
VOTED UPON IS RELATED TO OR CONDITIONED ON THE APPROVAL OF ANY OTHER MATTER.
YOUR VOTE FOR THE ELECTION OF DIRECTORS SHOULD BE INDICATED ON THE REVERSE SIDE
OF THIS CARD. Nominees for Class I Directors (to serve until the 1999 Annual
Meeting) are: Horst Hinrichs, George H. Kerckhove and David M. Roderick. YOUR
VOTE ON THE APPROVAL OF THE 1996-1998 SUPPLEMENTAL INCENTIVE COMPENSATION PLAN
SHOULD BE INDICATED ON THE REVERSE SIDE OF THIS CARD. YOUR VOTE ON THE
RATIFICATION OF AUDITORS SHOULD ALSO BE INDICATED.
YOUR VOTE IS IMPORTANT! PLEASE SIGN AND DATE ON THE REVERSE AND RETURN PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR OTHERWISE TO CITICORP DATA
DISTRIBUTION, P.O. BOX 1429, PARAMUS, NEW JERSEY 07653, SO THAT YOUR SHARES CAN
BE REPRESENTED AT THE MEETING.
<PAGE> 30
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
TO VOTE FOR ALL DIRECTOR NOMINEES, MARK THE "FOR" BOX ON ITEM "1". TO
WITHHOLD VOTING FOR ALL NOMINEES, MARK THE "WITHHOLD" BOX. TO WITHHOLD VOTING
FOR A PARTICULAR NOMINEE, MARK THE "FOR ALL EXCEPT" BOX AND ENTER NAME(S) OF THE
EXCEPTION(S) IN THE SPACE PROVIDED; YOUR SHARES WILL BE VOTED FOR THE REMAINING
NOMINEES.
DIRECTORS RECOMMEND A VOTE "FOR" ON 1, 2 AND 3 BELOW
<TABLE>
<S> <C> <C> <C> <C>
1. Election of All Class I Director Nominees. FOR WITHHELD FOR ALL EXCEPT
Exceptions ____________________________________________ / / / / / /
2. Approval of 1996-1998 Supplemental Incentive Compensation FOR AGAINST ABSTAIN
Plan. / / / / / /
3. Proposal to ratify the appointment of Ernst & Young LLP as FOR AGAINST ABSTAIN
Independent Certified Public Accountants for 1996. / / / / / /
</TABLE>
SIGN HERE AS NAME(S) APPEAR ABOVE.
_________________________________
_________________________________
PLEASE SIGN THIS PROXY AND RETURN
IT PROMPTLY WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING. IF
SIGNING FOR A CORPORATION OR
PARTNERSHIP OR AS AGENT, ATTORNEY
OR FIDUCIARY, INDICATE THE
CAPACITY IN WHICH YOU ARE SIGNING.
IF YOU DO ATTEND THE MEETING AND
DECIDE TO VOTE BY BALLOT, SUCH
VOTE WILL SUPERSEDE THIS PROXY.
DATE ______________________ , 1996
