<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 Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
AMERICAN STANDARD COMPANIES INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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[ ] 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.
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<PAGE> 2
[AMERICAN STANDARD COMPANIES LOGO]
American Standard Companies Inc.
Notice of Annual Meeting
of Stockholders and
Proxy Statement
May 4, 2000
American Standard College
One Centennial Avenue
Piscataway, New Jersey
<PAGE> 3
[AMERICAN STANDARD COMPANIES LOGO]
Corporate Headquarters
------------------------------------------
One Centennial Avenue
P.O. Box 6820
Piscataway, NJ 08855-6820
Phone 732.980.6000
FREDERIC M. POSES
Chairman and
Chief Executive Officer
March 27, 2000
Dear Stockholder:
I invite you to the Annual Meeting of Stockholders of American Standard
Companies Inc. This year's meeting will be held on Thursday, May 4, 2000, at
11:30 A.M. in the American Standard College, One Centennial Avenue, Piscataway,
New Jersey.
This will be my first Annual Meeting since becoming your Chairman and Chief
Executive Officer, and our sixth since becoming a public company. Our directors
and senior management will attend the meeting, and I will report on our
Company's recent performance and our vision for its future. We will also
consider the items of business listed in the attached formal notice of meeting
and proxy statement. Our 1999 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. To do so, simply send the Company
a completed proxy by mail or, for the first time, this year via the internet or
by telephone.
Sincerely,
/s/ Frederic M. Poses
FREDERIC M. POSES
Chairman and
Chief Executive Officer
American Standard Companies Inc.
- --------------------------------------------------------------------------------
AIR CONDITIONING SYSTEMS AND SERVICES: Trane(R), American Standard(R); PLUMBING
PRODUCTS: American Standard(R), Ideal Standard(R), Standard(R), Porcher(R);
Armitage Shanks(R), Dolomite(R); VEHICLE CONTROL SYSTEMS: WABCO(R)
<PAGE> 4
AMERICAN STANDARD COMPANIES INC.
NOTICE OF 2000 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 American Standard College, One Centennial Avenue,
Piscataway, New Jersey, on Thursday, May 4, 2000, at 11:30 A.M. to consider and
vote upon the following proposals:
1. The election of two Class II Directors with terms expiring at the 2003
Annual Meeting of Stockholders;
2. Approval of the Company's Stock Incentive Plan for purposes of Section
162(m) of the Internal Revenue Code;
3. Approval of the Company's Annual Incentive Compensation Plan for
purposes of Section 162(m) of the Internal Revenue Code;
4. Approval of the Company's Long-Term Incentive Compensation Plan for
purposes of Section 162(m) of the Internal Revenue Code;
5. Approval of the LTIP Alternate Plan for purposes of Section 162(m) of
the Internal Revenue Code;
6. Ratification of the appointment of Ernst & Young LLP as independent
Certified Public Accountants for the year 2000; and
7. 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 10, 2000 are entitled to notice of, and to vote at, the Annual
Meeting. For ten days prior to the Annual Meeting, a complete list of such
stockholders will be open for examination by any stockholder, during ordinary
business hours, at the Company's offices at One Centennial Avenue, Piscataway,
New Jersey. The list of stockholders will also be available at the Annual
Meeting.
Your vote is important. In order to assure a quorum and that your vote is
counted, please indicate your vote on the enclosed proxy card, and promptly
complete and return it to the Company. This year you may submit your proxy by
mail, over the telephone or by internet. Instructions for each type of
submission are provided on the enclosed proxy card. If you prefer to send your
proxy by mail, an envelope is enclosed for which no postage is required if
mailed in the United States.
By order of the Board of Directors,
/s/ J. Paul McGrath
J. PAUL MCGRATH
Senior Vice President, General Counsel
and Secretary
Piscataway, New Jersey
March 27, 2000
<PAGE> 5
PROXY STATEMENT
The Board of Directors of American Standard Companies Inc. is soliciting
proxies for use at the Annual Meeting of Stockholders of the Company to be held
on May 4, 2000 and at any adjournments thereof. This Proxy Statement, the proxy
card and the Company's 1999 Annual Report were first sent to stockholders on
March 31, 2000. The time and place of the Annual Meeting is set forth in the
Notice that accompanies this Proxy Statement.
INFORMATION ABOUT VOTING
You may vote if you are a holder of the Company's common stock, par value
$.01 per share (the "Common Stock"). You will have one vote per share on each
matter to be considered at this Annual Meeting. Only stockholders of record at
the close of business on March 10, 2000 will be entitled to vote. At that time
70,775,276 shares of Common Stock were outstanding and entitled to vote. The
holders of record of a majority of those shares will constitute a quorum.
At the Annual Meeting, stockholders will be asked to vote on the following
six proposals:
1. The election of two Class II Directors with terms expiring at the 2003
Annual Meeting of Stockholders;
2. Approval of the Company's Stock Incentive Plan for purposes of Section
162(m) of the Internal Revenue Code;
3. Approval of the Company's Annual Incentive Compensation Plan for
purposes of Section 162(m) of the Internal Revenue Code;
4. Approval of the Company's Long-Term Incentive Compensation Plan for
purposes of Section 162(m) of the Internal Revenue Code;
5. Approval of the LTIP Alternate Plan for purposes of Section 162 (m) of
the Internal Revenue Code; and
6. Ratification of the appointment of Ernst & Young LLP as independent
Certified Public Accountants for the year 2000.
You may vote at the Annual Meeting in either of two ways: you can attend
the Annual Meeting and cast your vote there, or you may vote by submitting a
properly completed proxy to the Company. All shares represented by a properly
completed proxy received in time for the meeting will be voted in accordance
with your instructions or, if no instructions are given, in accordance with the
recommendations of the Board of Directors. As indicated on the proxy card, you
may also return your proxy by telephone or over the internet. Unless you give
different instructions on your proxy, the persons designated as proxy holders
will vote FOR the director nominees proposed by the Board of Directors and FOR
approval of all of the other proposals listed above. You 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 to represent you at the meeting. In
addition you may revoke any proxy that you submit in any of three ways: by
attending the Annual Meeting and voting in person, by sending written notice to
the Secretary of the Company revoking your proxy or by filing another properly
completed proxy bearing a later date.
The Company will pay the cost of this proxy 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 the 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
CERTAIN MANAGEMENT AND DIRECTOR CHANGES
On March 4, 1999, the Board of Directors formed the Strategic Initiative,
Management Development and Nominating Committee (the "Strategic Initiative
Committee") to make recommendations to the Board of Directors with respect to
the selection of new candidates for the Board of Directors, development of a
plan of succession for corporate management including the Chairman, President
and Chief Executive Officer, and strategic options to be pursued to maximize the
value to stockholders of the Company's Medical businesses. Shortly thereafter,
the Board of Directors nominated James F. Hardymon to be a director of the
Company and Mr. Hardymon was elected as a Class I director at the Company's 1999
Annual Meeting of Stockholders. In addition, on October 7, 1999, the Board
elected Frederic M. Poses as a Class II director of the Company and, effective
January 1, 2000, Chairman and Chief Executive Officer, and Jared L. Cohon as a
Class III director. At the same time, the Board instructed the Company's
management to sell the Company's Medical businesses. Thereafter, on October 27,
1999, Mr. Schuchert resigned as a director, Mr. Allardyce, who headed the
Medical Systems Group, resigned as an executive officer effective November 4,
1999 and, effective at the close of business on December 31, 1999, Mr. Mizushima
resigned as a director and Mr. Hinrichs and Mr. Kampouris resigned as directors
and executive officers. As a result, information in this proxy statement
concerning current officers and directors reflects the changes that occurred
during 1999, while information concerning executive compensation during 1999 of
the Chief Executive Officer and four other most highly compensated executive
officers (the "Named Officers") is provided with respect to individuals who
served as executive officers through the end of 1999.
3
<PAGE> 7
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 10, 2000
by each director and nominee, each of the executive officers named in the
Summary Compensation Table included elsewhere in this Proxy Statement, all
directors and executive officers of the Company as a group, and each holder of
5% or more of the outstanding Common Stock.
<TABLE>
SHARES
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED CLASS
- ------------------------------------------------------------ ---------- ----
<S> <C> <C>
Sanford C. Bernstein & Co., Inc.(a)......................... 8,240,317 11.6%
FMR Corp.(b)................................................ 4,108,870 5.8%
Brinson Partners, Inc.(c)................................... 3,959,046 5.6%
Emmanuel A. Kampouris(d)(f)................................. 1,790,837 2.5%
George H. Kerckhove(d)(f)................................... 418,194 *
Horst Hinrichs(d)(f)........................................ 281,512 *
W. Craig Kissel(d)(f)....................................... 208,189 *
James H. Schultz(d)(f)...................................... 330,672 *
Steven E. Anderson(d)....................................... 9,942 *
Jared L. Cohon(d)........................................... 2,623 *
James F. Hardymon(d)........................................ 2,185 *
Roger W. Parsons(d)......................................... 8,485 *
Frederic M. Poses(d)(e)..................................... 9,639 *
J. Danforth Quayle(d)....................................... 8,485 *
David M. Roderick(d)........................................ 18,485 *
American-Standard Employee Stock Ownership Plan (the
"ESOP")(f)................................................ 11,878,029 16.8%
All directors and executive officers of the Company as a
group (30 persons, including the foregoing)(f)............ 3,263,533 4.6%
</TABLE>
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* Less than one percent.
(a) In a Schedule 13G dated February 8, 2000, Sanford Bernstein & Co., Inc., 767
Fifth Avenue, New York, New York, a Delaware corporation, reported
dispositive power over all these shares, sole voting power over 4,087,475 of
such shares and shared voting power, with clients that have appointed an
independent voting agent with instructions to vote in the same manner as
Sanford C. Bernstein & Co., Inc., with respect to 1,011,359 of such shares.
(b) In a Schedule 13G dated January 10, 2000, FMR Corp., a Massachusetts
corporation and parent holding company ("FMR"), 82 Devonshire Street,
Boston, Massachusetts, certain subsidiaries of FMR, and Edward C. Johnson
3rd and Abigail P. Johnson who together with members of their family and
trusts for their benefit may be deemed to control FMR, reported dispositive
power over all of these shares and voting power over 125,900 of such shares
held by FMR and certain of its wholly-owned investment advisors.
(c) In a joint Schedule 13G dated February 4, 2000, Brinson Partners, Inc., a
Delaware corporation and registered investment company under section 203 of
the Investment Advisors Act of 1940, 209 South LaSalle, Chicago, Illinois,
and its indirect parent, UBS AG, a Switzerland corporation and Bank under
Section 3(a)(6) of the Securities Act of 1933, Bahnhofstrasse 45, 8021,
Zurich, Switzerland, reported sole voting power over 3,916,946 of such
shares and shared dispositive power over all of the reported shares.
(d) The Named Officers appearing in the Stock Ownership table are Messrs.
Hinrichs, Kampouris, Kerckhove, Kissel and Schultz. Effective as of the
close of business on December 31, 1999, Messrs. Hinrichs and Kampouris
resigned from their positions as executive officers and directors of the
Company. Messrs. Anderson, Cohon, Hardymon, Parsons, Poses, Quayle and
Roderick are directors of the Company.
4
<PAGE> 8
(e) Not included in Mr. Poses' ownership are 1,000,000 options to purchase
Common Stock granted upon his election as a director of the Company, none of
which are exercisable, and the right to receive 250,000 shares of Common
Stock in three equal annual installments beginning January 1, 2003.
(f) 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
300 Puritan Way, Mail Zone-MM3H, Marlborough, Massachusetts 01752-3070. As
of March 10, 2000, all of the shares held in the ESOP were allocated to ESOP
participants, including 159,680 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 that have been allocated to participants are voted by the
ESOP trustee in accordance with the instructions of participants. Where no
participant instructions are received, such shares are not voted.
Unallocated 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 10, 2000
are as follows: Mr. Kampouris, 13,255 shares; Mr. Kerckhove, 12,822 shares;
Mr. Hinrichs, 0 shares; Mr. Kissel, 9,565 shares; and Mr. Schultz, 13,420
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, 1,274,629; Mr.
Kerckhove, 232,000; Mr. Hinrichs, 268,000; Mr. Kissel, 196,000; Mr. Schultz,
190,333; and all executive officers, 2,437,042.
The number of shares shown for Named Officers in the Stock Ownership table
does not reflect shares of Common Stock issued as part of payouts under the
Long-Term Incentive Compensation Plan ("LTIP") and the 1994-1995
Supplemental Incentive Compensation Plan, which shares are held in trust
under a trust agreement (the "Executive Trust"). Shares in the Executive
Trust are voted by the trustee as directed pursuant to the terms of the
LTIP. Until termination of employment, a beneficiary of the Executive Trust
cannot dispose of shares credited to his account. Shares of Common Stock in
the Named Officers' accounts in the Executive Trust are as follows: Messrs.
Kampouris and Hinrichs, no shares; Mr. Kerckhove, 16,165 shares; Mr. Kissel,
6,263 shares; and Mr. Schultz, 9,852 shares. The shares in Executive Trust
accounts for all executive officers as a group total 117,814 shares.
Also not included above are 22,340 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.
1. ELECTION OF DIRECTORS
The Company has three classes of directors, as nearly equal in number as
possible. Directors serve for three-year terms. The terms of the classes expire
sequentially so that one class of directors is elected each year. At this Annual
Meeting, the stockholders will vote to elect two Class II Directors for a term
expiring in 2003. 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. If any nominee should become
unavailable to serve as a director, and if the Board designates a substitute
nominee, the proxy holders named in the proxy card will vote for the substitute
nominee designated by the Board unless you submit a proxy card instructing them
to vote differently.
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.
5
<PAGE> 9
DIRECTORS(1)
NOMINEES
NOMINEES FOR ELECTION AS CLASS II DIRECTORS -- TERMS
EXPIRING AT 2003 ANNUAL MEETING
FREDERIC M. POSES -- AGE 57
Mr. Poses was elected as a director on October 7, 1999 and as Chairman and
Chief Executive Officer effective January 1, 2000. Prior to that, beginning in
1998, he was President and Chief Operating Officer of AlliedSignal, Inc., where
he had spent his entire 30-year business career, starting as a financial analyst
in 1969 and serving in various capacities including President of the Engineered
Materials business beginning in April 1988. He was also a director of
AlliedSignal Inc. from 1997 until October 22, 1999 following his election to the
Company's Board of Directors.
J. DANFORTH QUAYLE -- AGE 53
Mr. Quayle served as Vice President of the United States from January 1989
to January 1993. Since leaving that office Mr. Quayle has been self employed as
a consultant, author and public speaker. Mr. Quayle has served as a Director of
the Company since September 1993.
DIRECTORS CONTINUING IN OFFICE
CLASS III DIRECTORS -- TERMS EXPIRING AT 2001 ANNUAL MEETING
STEVEN E. ANDERSON -- AGE 57
Mr. Anderson served as National Partner in Charge-Industries of KPMG Peat
Marwick and as a member of the firm's Management Committee from November 1990
until he retired in June 1994. Prior thereto his responsibilities 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. Mr. Anderson has served as a director of the Company since September
1994.
ROGER W. PARSONS -- AGE 58
Mr. Parsons was formerly Chief Executive of Rea Brothers Group PLC, a U. K.
investment bank, which he joined in 1988 after a career in banking. He retired
when that company was sold in August 1999. He is a director of Marfin Investment
Portfolio S. A., an investment fund quoted on the Athens, Greece, stock
exchange. He is also a director of several private U. K. companies. Mr. Parsons
has served as a director of the Company since March 1994.
JARED L. COHON -- AGE 52
Dr. Cohon was elected President of Carnegie Mellon University in 1997 and
was also appointed Professor of Civil and Environmental Engineering and
Professor of Engineering and Public Policy. Prior thereto, in 1992 he was
appointed Dean and Professor of Environmental Systems Analysis in the School of
Forestry and Environmental Studies at Yale University. Dr. Cohon began his
academic and administrative career in 1973 at The Johns Hopkins University,
advancing to the position of Assistant Dean of Engineering in 1981 and Associate
Dean in 1983, and served as Vice Provost for Research from 1986 to 1992. He was
appointed Chairman of the Nuclear Waste Technical Review Board by President
Clinton in 1997, and also served as Legislative Assistant for Energy and
Environment on the staff of U. S. Senator Moynihan in 1977 and 1978. He is a
director of Mellon Financial Services Corporation and has served as a director
of the Company since October 1999.
- ---------------
1 Ages of directors are given as of March 1, 2000
6
<PAGE> 10
CLASS I DIRECTORS -- TERMS EXPIRING AT 2002 ANNUAL MEETING
JAMES F. HARDYMON -- AGE 65
Mr. Hardymon joined Textron, Inc., a manufacturing and financial services
business, in 1989 as President and Chief Operating Officer. He became Chief
Executive Officer in 1992 and assumed the title of Chairman in 1993, served as
Chairman and Chief Executive Officer from 1993 to 1998, and continued as
Chairman until his retirement in 1999. Prior to his affiliation with Textron,
Mr. Hardymon served from 1961 to 1989 in various executive capacities with
Emerson Electric Company. He is a director of Air Products and Chemicals, Inc.,
Championship Auto Racing Teams, Inc., Circuit City Stores, Inc., FleetBoston
Financial Corp., Schneider Electric SA and Lexmark International, Inc. Mr.
Hardymon has served as a director of the Company since May 1999.
GEORGE H. KERCKHOVE -- AGE 62
Mr. Kerckhove has served as an executive officer of the Company since 1985,
at which time he was responsible for The Trane Company's Commercial Systems
Group, worldwide. Thereafter, he was Vice President and Group Executive of
European Plumbing Products from 1988 until June 1990 and Senior Vice President,
Plumbing Products, of the Company and American Standard Inc. from June 1990 to
January 1, 1998, at which time he assumed the position of Vice President and
Chief Financial Officer of the Company and American Standard Inc. Since February
1, 2000 he has served as Vice President of the Company with responsibility for
disposition of the Medical Systems Group. Mr. Kerckhove has served as a director
of the Company since September 1990.
DAVID M. RODERICK -- AGE 75
Mr. Roderick 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 a director of Kelso & Companies, Inc., Chairman and a director of
Earle M. Jorgensen Company, and a director of University of Pittsburgh Medical
Center. He is also Chairman Emeritus of the U.S. Korea Business Council. Mr.
Roderick has served as a director of the Company since June 1994.
DIRECTORS' FEES AND OTHER ARRANGEMENTS
Each outside director is paid a fee of $7,500 per calendar quarter and
receives $1,000 for attendance at each meeting and reconvened meeting of the
Board of Directors or committee of the Board. Committee chairmen are paid $2,000
for their attendance at meetings of the committees they chair. The only
directors currently eligible for directors' fees are those who are not employees
of the Company or any subsidiary. They are Messrs. Anderson, Cohon, Hardymon,
Parsons, Quayle and Roderick. 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 and
December 1997. Under the Supplemental Compensation Plan, a plan account is
established for each participating director consisting of shares of Common Stock
that are delivered to a grantor's trust and held for the benefit of each
director. The shares are voted by the trustee of the trust on behalf of each
participating director in accordance with the director's instructions. Each
participating director who became a Board member before March 1996 was awarded
5,819 restricted shares. Persons becoming eligible 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. Pursuant to the
December 1997 amendment, directors who are not employees of the Company or any
affiliate will have credited to their plan accounts annually, on the date prior
7
<PAGE> 11
to the Annual Meeting of Stockholders, 500 shares of Common Stock subject to the
same restrictions applicable to shares credited to their plan accounts upon
becoming a director. The first such annual allocation was made in May 1998.
Shares held under the Supplemental Compensation Plan are Mr. Anderson, 6,819;
Mr. Cohon, 2,623; Mr. Hardymon, 2,185; Mr. Parsons, 6,819; Mr. Quayle, 6,819;
and Mr. Roderick, 6,819.
When a participating director ceases to be a member of the Board, he or his
beneficiary will receive a distribution of the shares of Common Stock in the
director's plan account. Until distributed, assets in the grantor's trust are
subject to the claims of creditors of the Company and its wholly-owned
subsidiaries, American Standard Inc. and American Standard International Inc. If
a participating director is removed for cause, his entire interest in the Plan
is forfeited. Employee directors do not participate in the Supplemental
Compensation Plan.
In March 1999, the Company amended its Stock Incentive Plan to make
non-employee directors eligible to receive grants of options to purchase shares
of Common Stock on the same terms as options are granted to Company employees.
Pursuant to the Stock Incentive Plan, non-employee directors have been granted
options to purchase 5,000 shares of Common Stock with an exercise price equal to
the average of the high and low sale price of the Common Stock as reported on
the New York Stock Exchange on February 2, each year beginning in 1999 as
follows: Messrs. Anderson, Parsons, Quayle and Roderick, 10,000 options; Messrs.
Cohon and Hardymon, 5,000 options; all of which are unexercised.
COMMITTEES OF THE BOARD
The Board has standing Executive and Audit Committees and maintains a
Management Development and Nominating Committee (the "MDC"). At its regularly
scheduled meeting on March 4, 1999, the Board suspended operation of the MDC and
assigned executive compensation matters to a newly-formed "Compensation
Committee". In addition, the Board formed the Strategic Initiative Committee
which, in addition to taking responsibility to make recommendations to the Board
concerning the Company's management, governance and business strategy, assumed
responsibility for the non-compensation matters formerly managed by the MDC. On
December 2, 1999, upon completion by the Strategic Initiative Committee of its
strategic responsibilities, the Compensation Committee and Strategic Initiative
Committee were terminated and the MDC reconstituted. As a result, during 1999,
management development and director nominating responsibilities were assigned at
different times to the MDC and Strategic Initiative Committee, and
responsibility for executive compensation matters was assigned at different
times to the MDC and Compensation Committee.
The Executive Committee. The members of the Executive Committee are
Messrs. Poses (Chairman), Parsons and Roderick. During 1999, the members of the
Executive Committee were Messrs. Kampouris (Chairman), Hinrichs, Kerckhove and,
until his resignation on October 27, 1999, Mr. Schuchert. 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
met five times in 1999.
The Audit Committee. The members of the Audit Committee are Messrs.
Anderson (Chairman), Hardymon, Quayle and Roderick. During 1999, the members of
the Audit Committee were: prior to the Annual Meeting of Directors in May 1999,
Messrs. Anderson, Parsons (Chairman), Quayle and Roderick; and thereafter,
Messrs. Anderson (Chairman), Hardymon, Mizushima, Quayle and Roderick. 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, compliance with environmental standards and the investment
performance and funding of the Company's retirement plans. The Audit Committee
met five times in 1999.
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<PAGE> 12
The Management Development and Nominating Committee. The members of the
MDC are Messrs. Parsons (Chairman), Cohon, Quayle and Roderick. The MDC
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 of the Company's employee benefit and compensation
plans, 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 with respect to candidates for director proposed by stockholders. The
Management Development and Nominating Committee met two times in 1999.
The Strategic Initiative, Management Development and Nominating
Committee. The members of the Strategic Initiative Committee were Messrs.
Roderick (Chairman), Anderson, Kampouris, Parsons and, until his resignation on
October 27, 1999, Mr. Schuchert. The Committee was created to consider and make
recommendations to the Board of Directors with respect to the selection of new
candidates for and the reorganization of the Board of Directors, development of
a plan of succession for corporate management including the offices of Chairman,
President and Chief Executive Officer of the Company, and identification of
strategic options to be pursued related to the Company's Medical businesses. The
Strategic Initiative Committee met six times in 1999.
The Compensation Committee. The members of the Compensation Committee were
Messrs. Parsons (Chairman), Quayle, Anderson from March 4 until the Annual
Meeting of Directors in May 1999 and, until his resignation as a Director on
October 27, 1999, Mr. Schuchert. The Compensation Committee was formed to review
and make recommendations with respect to officers' salaries and employee
benefits and to administer certain of the Company's employee benefit and
compensation plans, including the Company's incentive compensation and stock
incentive plans. The Compensation Committee met three times in 1999.
The Board of Directors had six meetings in 1999. All directors attended 75%
or more of the combined total number of meetings of the Board of Directors and
its respective committees held in 1999 during the period in which they served as
Directors or committee members.
9
<PAGE> 13
EXECUTIVE COMPENSATION
Set forth below is information concerning the annual and long-term
compensation (based on appropriate foreign exchange rates, where applicable) for
services in all capacities to the Company for 1999, 1998 and 1997 of those
persons who were during 1999 the chief executive officer and the other four most
highly compensated executive officers of the Company (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..................... 1999 $700,000 $2,000,000 $265,519 250,000 $809,200 $15,840,619
Chairman, President & 1998 700,000 2,000,000 192,145 250,000 743,750 93,052
Chief Executive Officer 1997 700,000 1,700,000 240,938 200,000 -- 244,919
George H. Kerckhove....................... 1999 $375,000 $ 280,000 $ 8,788 30,000 $331,500 $ 19,641
Vice President & Chief 1998 375,000 275,000 6,386 33,000 307,125 36,589
Financial Officer 1997 375,000 188,000 12,525 30,000 -- 36,399
Horst Hinrichs............................ 1999 $281,750 $ 200,500 $ 3,074 30,000 $253,184 $ 1,108,103
Vice Chairman 1998 315,215 275,000 3,434 36,000 270,771 14,400
1997 322,918 200,000 3,135 32,000 -- 15,580
W. Craig Kissel........................... 1999 $300,000 $ 260,000 $ 5,589 35,000 $236,300 $ 14,400
Senior Vice President 1998 300,000 250,000 6,884 35,000 186,585 18,751
1997 218,750 130,000 7,954 36,000 -- 14,483
James H. Schultz.......................... 1999 $300,000 $ 225,000 $ 4,941 30,000 $235,280 $ 16,022
Vice President 1998 300,000 200,000 6,905 35,000 204,120 103,616
1997 265,000 117,000 17,281 32,000 -- 21,888
</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 amounts shown in 1997, 1998 and 1999 for Mr. Kampouris include
allocation of $41,204, $127,375 and $170,928, respectively, of tax
consultant fees.
(4) Amounts for 1999 represent estimates of payments to be made under the LTIP
on the basis of estimated achievement of 68% of the 1997-1999 performance
goal. Amounts for 1998 represent payments made under the LTIP on the basis
of achievement of 63% of the 1996-1998 performance goal. No LTIP payments
were made in 1997 as the performance goal related to inventory turnover rate
for the 1995-1997 performance period was not achieved. Awards for
achievement above 100% of applicable performance goals may be paid in shares
of Common Stock and held in the Executive Trust. LTIP payouts may be
deferred at the election of the recipient.
(5) All Other Compensation for 1999 includes the following: For Mr. Kampouris,
$13,801,802 paid
under the Corporate Officers' Severance Plan described on page 14 of this
proxy statement and $2,000,000 awarded by the Board in special recognition
of Mr. Kampouris' prior contributions to
the Company, and for Mr. Hinrichs, $1,093,703 under the Corporate Officers'
Severance Plan.
10
<PAGE> 14
The amount shown for Mr. Schultz in 1998 includes $80,750 received with respect
to losses incurred on the sale of a residence.
Also included in All Other Compensation for 1999 was the following:
<TABLE>
<CAPTION>
PREMIUMS FOR ESOP
TERM LIFE ALLOCATIONS*
INSURANCE $
------------ ------------
<S> <C> <C>
Emmanuel A. Kampouris............................... $24,417 $14,400
George H. Kerckhove................................. 5,241 14,400
Horst Hinrichs...................................... 0 14,400
W. Craig Kissel..................................... 0 14,400
James H. Schultz.................................... 1,622 14,400
</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 1999, 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 1999 would produce the
pretax gain in 2009 of $12,957,500 shown in the table only if the market price
of the Common Stock rises to $84.39 per share by the time the option is
exercised. Based on the number and market price of shares of Common Stock
outstanding at year-end 1999, such an increase in the price of the Common Stock
would produce a corresponding aggregate pretax gain of more than $3.6 billion
for the Company's stockholders. All of the options listed below have exercise
prices equal to the fair market value of the Common Stock at the date of grant.
One-third of the granted options become exercisable annually in installments
beginning one year after the date of grant, subject to acceleration in the event
of a change in control of the Company.
1999 OPTION GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
NO. OF % OF TOTAL OF STOCK PRICE
SHARES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES PRICE EXPIRATION ------------------------
NAME GRANTED IN 1999* ($/SHARE) DATE 5% 10%
---- ---------- ---------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Emmanuel A. Kampouris.......... 250,000 10.2% $32.56 2/2/09 $5,105,000 $12,957,500
George H. Kerckhove............ 30,000 1.2 32.56 2/2/09 612,600 1,554,900
Horst Hinrichs................. 30,000 1.2 32.56 2/2/09 612,600 1,554,900
W. Craig Kissel................ 35,000 1.4 32.56 2/2/09 714,700 1,814,050
James H. Schultz............... 30,000 1.2 32.56 2/2/09 612,600 1,554,900
</TABLE>
- ---------------
* In 1999, options were granted covering 2,445,750 shares of Common Stock.
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, 1999 (the difference between the aggregate
11
<PAGE> 15
exercise price of all such options held and the closing market price of $45.875
of the shares covered by such options at December 31, 1999). No options held by
the Named Officers were exercised in 1999, except that Mr. Kampouris exercised
options covering 25,371 shares of Common Stock and did not sell the shares
acquired upon such exercise. The amount by which aggregate market value of the
acquired shares exceeded the exercise price of the related options was $463,930.
1999 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
OPTION VALUES AT 12/31/99
----------------------------------------
NUMBER OF VALUE OF
SHARES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
12/31/99 12/31/99
*EXERCISABLE/ *EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
---- ----------------- -------------------
<S> <C> <C>
Emmanuel A. Kampouris......................... 1,274,629/ 0 $20,588,569/ 0
George H. Kerckhove........................... 201,000/62,000 4,547,295/557,790
Horst Hinrichs................................ 268,000/ 0 5,129,610/ 0
W. Craig Kissel............................... 160,667/70,333 3,404,869/640,406
James H. Schultz.............................. 157,670/64,330 3,234,375/399,450
</TABLE>
- ---------------
* At year-end 1999, vesting was accelerated with respect to all options
previously awarded to Messrs. Kampouris and Hinrichs.
1999-2001 LONG-TERM INCENTIVE COMPENSATION PLAN AWARDS IN 1999
LONG-TERM INCENTIVE COMPENSATION PERFORMANCE PERIOD
<TABLE>
<CAPTION>
NUMBER OF PERFORMANCE OR ESTIMATED FUTURE PAYOUTS
SHARES OTHER PERIOD UNDER NON-STOCK-PRICE-BASED PLANS
UNITS OR UNTIL MATURATION -----------------------------------
NAME OTHER RIGHTS OR PAYOUT THRESHOLD TARGET MAXIMUM
---- ------------ ---------------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Emmanuel A. Kampouris........ (a)(b) 1/99- 1/00 $ -- $ -- $ --
George H. Kerckhove.......... (a) 1/99-12/01 243,750 487,500 975,000
Horst Hinrichs............... (a)(b) 1/99- 1/00 67,250 134,500 269,000
W. Craig Kissel.............. (a) 1/99-12/01 216,666 433,333 866,666
James H. Schultz............. (a) 1/99-12/01 216,666 433,333 866,666
</TABLE>
- ---------------
(a) Awards are denominated in dollars (based on December 31, 1999 foreign
exchange rates, where applicable).
(b) Awards for Messrs. Kampouris and Hinrichs are reduced in connection with
their retirements at December 31, 1999.
The above table shows the contingent target awards, based on 2000 salary
levels, established in 1999 for each Named Officer with respect to the 1999-2001
LTIP performance period. The targets set for the 1999-2001 LTIP performance
period were originally based on the achievement by the end of such performance
period of predetermined Company-wide levels of average inventory turnover rates,
a percentage of earnings (before interest and taxes) to sales, and a
productivity improvement factor. In March 2000, upon the recommendation of
Frederic M. Poses, Chairman and Chief Executive Officer effective January 1,
2000, the applicable performance criteria were changed by the Management
Development and Nominating Committee to Company-wide levels of revenue growth,
earnings per shares and free cash flow in order to refocus the Company's
management objectives. At the Annual Meeting of Stockholders, the Company is
seeking
12
<PAGE> 16
stockholder approval of the revised LTIP for purposes of Section 162(m) of the
Internal Revenue Code (See Proposal 4 at page 21 of this proxy statement). The
threshold payout amounts reflect 50% of the target awards; if minimum levels of
sales growth, earnings per share and free cash flow for the performance period
are not achieved, no payout is made. The maximum payout is two times the target
award and may be realized by achievement of performance 150% above target
levels.
Contingent awards are based on a participant's average annual base salary
during the period of his or her participation in the performance period, subject
to pro rated adjustment to reflect the duration of participation in the period.
At the end of a performance period, a payment in cash or Common Stock, or a
combination thereof, is made on the basis of the achievement of the goal.
Termination of employment may result in forfeiture or pro ration of the award,
depending on the reason for 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. In the event
of a change in control (as defined in the LTIP) during the performance period,
the performance period shall end and each participant shall be entitled to
receive 100% of his target award in cash.
Shares of Common Stock distributable to LTIP participants are delivered for
their benefit to the Executive Trust. 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. Until
distribution, assets of the Executive Trust are subject to the claims of
creditors of the Company or its two wholly-owned subsidiaries, American Standard
Inc. and American Standard International Inc. Shares of Common Stock held by the
Executive Trust are voted by the trustee in accordance with the terms of the
governing trust agreement.
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 are
as follows: Mr. Kampouris, $90,662; Mr. Kerckhove, $109,828; Mr. Hinrichs,
$72,945; Mr. Kissel, $4,336; and Mr. Schultz, $43,664.
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 for life to a participant 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
13
<PAGE> 17
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 YEARS OF SERVICE
AVERAGE ANNUAL -----------------------------------------------
COMPENSATION 10 20 30 40
-------------- -- -- -- --
<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.
As of December 31, 1999 the years of credited service under the
Supplemental Retirement Plan for the Named Officers are as follows: Mr.
Kampouris, 34 years; Mr. Kerckhove, 38 years; Mr. Hinrichs, 41 years; Mr.
Kissel, 18 years and Mr. Schultz, 29 years.
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 coverage, 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. The Officers' Severance Plan
cannot be amended in a manner that would reduce benefits thereunder for two
years following the occurrence of a "Change of Control" (as defined in the
Officers' Severance Plan) and no such amendment shall be effective if a Change
of Control occurs within six months following such amendment. The Officers'
Severance Plan was amended in December 1999 to provide that officers whose
employment terminates pursuant to the Company's newly implemented policy of
mandatory retirement for corporate officers upon attainment of age sixty-five
are not eligible for payments under the Officers' Severance Plan, and to further
provide that eligibility for payments under the Officers' Severance Plan is
conditioned upon each otherwise eligible participant executing an agreement
releasing the Company and its subsidiaries from any and all claims that the
participant may have against such entities at the time that the agreement is
executed.
14
<PAGE> 18
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 executive's home country.
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 for U. S. positions and Watson Wyatt Top
Management Compensation survey data for non-U. S. positions.
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. Where appropriate, salary
adjustments are made to reflect performance and market conditions. All salary
adjustments for executive officers are reviewed and approved by the Committee.
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, 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. An operating plan is
established annually which sets goals for overall corporate performance relating
to specific financial measurements. 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.
Beginning in 2000, awards payable to Named Officers will be based solely on
achievement of objective performance standards, consistent with the requirements
of Section 162(m) of the Internal Revenue Code, so that the amount of such
payments will be deductible by the Company for federal income tax purposes.
For 1999, corporate performance was above 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 1999 was
above targeted levels.
15
<PAGE> 19
LONG-TERM INCENTIVE COMPENSATION AWARDS
Executive officers of the Company also participate in the Company's
Long-Term Incentive Compensation Plan ("LTIP"), and the 1997-2000 Supplemental
Incentive Compensation Plan which provide such individuals additional incentive
compensation subject to the achievement of specific 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 1999 under the
Company's LTIP for the 1997-1999 performance period, based upon the achievement
of company-wide goals relating to inventory turnover rates and the earnings
margin rate for 1999. Beginning in 2000, the applicable performance goals have
been revised with standards based on growth in revenue, earnings per share and
free cash flow. The target award amounts range 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.
Effective May 1, 1997, the Company implemented the 1997-1999 Supplemental
Incentive Compensation Plan under which executive officers were granted awards
contingent on the Company's achievement of certain targets. In 1998, this plan
was modified to establish a new threshold target and to extend the plan period
through December 31, 2000. No payments will be made under this Supplemental
Incentive Compensation Plan unless the threshold targets established for the
LTIP 1998-2000 performance period are achieved. If those targets are met,
payments equal to 50% of the actual award under the LTIP 1997-2000 performance
period will be made if a certain pre-determined threshold of earnings per share
is reached for the year 2000. The amount of such payments will be adjusted
upward to reflect performance exceeding the threshold to a maximum amount equal
to the maximum amount payable under the LTIP 1998-2000 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.
Additionally, in 1995 the Company established an equity-based compensation
plan under which the Committee may award stock options, restricted stock and
other performance-based awards to executive officers. During 1999 stock options
were granted to each executive officer, the amount of which was based on the
1998 performance of the individual and his/her business group.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
At the end of 1999, Mr. Emmanuel Kampouris retired as Chairman and Chief
Executive Officer of the corporation. In anticipation of this retirement, on
October 6, 1999, the Board of Directors elected Mr. Frederic M. Poses as a
Director of the corporation and as the Chairman and Chief Executive Officer, the
latter to take effect upon Mr. Kampouris' retirement. In connection with the
aforementioned election, the Board of Directors authorized the grant to Mr.
Poses of 1,000,000 stock options and 250,000 shares of restricted stock.
BASE SALARY
Mr. Kampouris' base salary for 1999 was below the average base salary
payable for chief executive officers for companies having comparable sales. Mr.
Kampouris received no increase in base salary during 1999.
ANNUAL INCENTIVE COMPENSATION
Consistent with past practices for paying compensation to the Company's
Chief Executive Officer, Mr. Kampouris received a bonus for 1999 services of
$2,000,000, which was determined based on the Committee's subjective
determination of his performance and that of the Company during 1998. In
addition, in recognition of his many contributions to the corporation over the
period of his tenure, the Committee
16
<PAGE> 20
recommended and the Board approved a special one-time payment to Mr. Kampouris
in the amount of $2,000,000.
COMPLIANCE WITH SECTION 162(m)
Section 162(m) of the Internal Revenue Code of 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
and upon the attainment of objective performance criteria. In compliance with
Section 162(m) requirements, the Company will be seeking renewed shareholder
approval of the Company's Stock Incentive Plan, which had heretofore last been
approved in connection with the 1995 Initial Public Offering. In addition the
Company is seeking shareholder approval for Section 162(m) purposes of revisions
to the Annual Incentive Plan, LTIP and an LTIP Alternate Plan, as described
elsewhere in this proxy statement. 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 or in rewarding superior
executive performance. 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.
Roger W. Parsons, Chairman
Jared L. Cohon
J. Danforth Quayle
David M. Roderick
17
<PAGE> 21
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, 1999 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.
TOTAL SHAREHOLDER RETURNS
[LINE CHART]
<TABLE>
<CAPTION>
MANUFACTURING (DIVERSIFIED
AMERICAN STANDARD COS INC S&P 500 INDEX INDUSTRIALS)
------------------------- ------------- --------------------------
<S> <C> <C> <C>
2Feb95 100.00 100.00 100.00
Jun95 136.875 116.515 105.245
Dec95 140.00 133.346 135.156
Jun96 165.00 146.809 157.93
Dec96 191.25 163.962 167.068
Jun97 223.75 197.75 179.33
Dec97 191.56 218.665 202.314
Jun98 223.44 257.396 215.118
Dec98 180.00 281.156 193.006
Jun99 240.00 315.968 197.695
Dec99 229.375 340.315 185.263
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Pursuant to a Stock Disposition Agreement dated December 16, 1996, during
the first half of 1997 Kelso ASI Partners, L. P. disposed of all of the shares
it owned of the Company's Common Stock. In connection with the Stock Disposition
Agreement, Kelso ASI Partners, L. P. received from the Company warrants to
purchase three million shares of Common Stock at a purchase price of $55 per
share, expiring February 18, 2002, which warrants are currently exercisable. Mr.
Schuchert, a director of the Company and member of the Compensation Committee
until his resignation on October 27, 1999, is the Chairman of Kelso & Companies
Inc.
Mr. Schuchert, a director of the Company and member of the Compensation
Committee until his resignation on October 27, 1999, formed a general
partnership, SW Investment Associates ("SW"), which in 1996 acquired a 75%
equity interest in BSG Laboratories Inc., a company developing audio technology
("BSG"), for $6 million and commitments to provide, arrange for or guarantee
certain additional indebtedness of BSG. Among the investors in SW was a limited
partnership (the "Limited Partnership") of which
18
<PAGE> 22
American Standard Inc. is the general partner and the limited partners are
certain executive officers and former executive officers of American Standard
Inc., who agreed in April 1995 to invest in SW. The Limited Partnership invested
approximately $1.9 million in SW, of which American Standard Inc. invested $1.6
million and Mr. Kampouris and 14 other officers and former officers of American
Standard Inc. invested $120,000 and, collectively $195,000, respectively. The
Limited Partnership and Mr. Schuchert were each general partners of SW and each
owned approximately a 33% interest therein. In early October 1999, SW was
dissolved and the stock of BSG owned by SW was distributed to SW's partners. In
addition, the former partners of SW contributed $21 million to BSG (pro rata in
accordance with their prior partnership interests) and caused BSG to repay
certain bank indebtedness theretofore guaranteed by the SW partners.
Contemporaneously, American Standard Inc. perfected a security interest in all
of BSG's assets to secure approximately $12 million of prior working capital
loans and unpaid interest and guaranty fees.
Mr. Anderson, a director of the Company, Chairman of the Audit Committee
and, from March 4 until May 6, 1999, a member of the Compensation Committee, has
since mid 1998 been developing a leadership program for the Company's local
managers in the People's Republic of China. For his services, the Company has
paid Mr. Anderson $50,000 in the form of 1,457 shares of Common Stock, plus
reimbursement for certain expenses which, in 1999, totaled $59,525. This
arrangement with Mr. Anderson, which was approved by the Board of Directors of
the Company and determined to be in the interest of the Company and not in
conflict with Mr. Anderson's position as Chairman of the Audit Committee, will
end in May 2000.
Fidelity Management Trust Company ("Fidelity") is the owner of record of
the shares of Common Stock held by the ESOP, a 16.8% beneficial owner of the
Company's shares. The Company paid Fidelity approximately $341,300 in 1999 for
services in connection with administering the Company's ESOP and American
Standard Inc.'s Savings Plan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 (the "Commission"), the New York Stock Exchange and the
Company concerning their ownership of and transactions in Common Stock. 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 1999, except that an October 29
purchase of 1,000 shares by Mr. Poses was reported on November 14, 1999; sales
by Mr. Schuchert in August of 1999 were reported on September 16, 1999; sales by
Mr. Voss and Mr. Wellbrock in May 1999 were reported on June 16, 1999; purchases
by Mr. Kampouris in February and May 1999 were reported on November 9, 1999; and
a gift of 475 shares made by Mr. Allardyce in January 1998 was reported on
October 10, 1999.
2. APPROVAL OF STOCK INCENTIVE PLAN
On the recommendation of the Management Development and Nominating
Committee, the Board previously adopted the Company's Stock Incentive Plan (the
"Plan") and is currently seeking stockholder approval of the Plan to permit
income earned from incentive stock awards granted to Named 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 Plan is intended to provide the
Company's executive officers incentive compensation, principally in the form of
options to purchase Common Stock and awards of shares of restricted stock.
Awards under the Plan to executive officers, including the Named Officers,
are structured to comply with the requirements of Section 162(m) of the Internal
Revenue Code. Consequently, options to purchase Common Stock are granted by the
Management Development and Nominating Committee with an exercise price equal to
the market value of the Common Stock on the date of grant. For these purposes,
market value is the average of the high and low prices of the Common Stock as
quoted on the New York Stock Exchange for the relevant date. Under the Plan, no
individual participant in any one year may be granted options to purchase more
than one million shares of Common Stock. Options granted under the Plan may be
in the form
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<PAGE> 23
of either (i) incentive stock options within the meaning of Section 422 of the
Internal Revenue Code, or (ii) non-qualified stock options. Options generally
expire ten years after the date of grant and vest and become exercisable in
three equal annual installments following the date of grant, provided, that if
there is a "change of control" of the Company, as defined in the Plan, each
option will become immediately exercisable.
Approval of the 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 STOCK
INCENTIVE PLAN.
3. APPROVAL OF ANNUAL INCENTIVE COMPENSATION PLAN
On the recommendation of the Management Development and Nominating
Committee, the Board of Directors has previously adopted the Annual Incentive
Compensation Plan (the "AIP") and is currently seeking stockholder approval to
permit payments to Named 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 AIP is intended to provide the Company's executive officers
the opportunity to earn incentive compensation in the form of cash upon
achievement by the Company of annual performance goals established at the
beginning of each year by the Management Development and Nominating Committee.
In previous years, the amount of AIP payments made to the Company's Chief
Executive Officer were determined exclusively in the discretion of the
Management Development and Nominating Committee and, therefore, were not
"performance based" for purposes of Section 162(m) and could not be deducted by
the Company for federal income tax purposes. Under the plan, as described below
however, payments to the Company's Chief Executive Officer and four other most
highly compensated executive officers will be performance based and otherwise in
conformance with the requirements of Section 162(m). As a result, if approved by
the Company's stockholders, AIP payments to Named Officers will be deductible by
the Company for federal income tax purposes for the first time.
Target awards under the AIP are a pre-established percentage of an
executive officer's average base salary during the calendar year for which an
award is payable and, beginning in 2000, will be based on Company-wide
achievement of specified levels of revenues, earnings and cash flow. In the case
of Mr. Poses, participation in the AIP will be in lieu of the non-discretionary
annual bonus for the years 2000 and 2001 provided for in his employment
agreement, entered into at the time of his election as Chairman and Chief
Executive Officer of the Company. No payments will be made under the plan if a
specified minimum threshold level of performance is not achieved, and payments
are adjusted on a pro rata basis and (a) decreased in the case of performance
above the minimum threshold level but below the target level, and (b) increased
if performance exceeds the target level, provided that no executive officer may
receive an AIP award for any year in excess of $2 million.
Termination of employment may result in forfeiture or pro ration of an
award, depending on the nature of 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. In the event
of a change of control (as defined in the AIP) during the performance period,
the performance period shall end and each participant shall be entitled to
receive, in cash, 100% of his target award.
Approval of the AIP 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 ANNUAL
INCENTIVE COMPENSATION PLAN.
20
<PAGE> 24
4. APPROVAL OF LONG-TERM INCENTIVE COMPENSATION PLAN
On the recommendation of the Management Development and Nominating
Committee, the Board of Directors has previously adopted the Long-Term Incentive
Compensation Plan (the "LTIP") and is currently seeking to renew last year's
stockholder approval of the LTIP in order to revise the performance standards
applicable under the plan while continuing to permit plan payments to Named
Officers to be deductible by the Company for federal income tax purposes
pursuant to Section 162(m) of the Internal Revenue Code. The Management
Development and Nominating Committee has amended the prior performance standards
(inventory turnover rates and percentages of sales to earnings before interest
and taxes) with performance goals based on sales growth, earnings per share and
free cash flow. The amendments were adopted upon the recommendation of Mr.
Poses, Chairman and Chief Executive Officer since January 1, 2000, and in
recognition of Mr. Poses' belief that the new performance metrics will focus the
Company and its management on standards of performance more likely to promote
strong financial growth than prior performance goals. The LTIP is intended to
provide Company executive officers the opportunity to earn incentive
compensation, principally in the form of cash, upon achievement by the Company
of three-year performance goals, established at the beginning of each three-year
period by the Management Development and Nominating Committee and in accordance
with amounts prescribed under the plan.
Target awards under the LTIP will continue to range from 120% to 170% of an
executive officer's average base salary during a performance period. Beginning
in 2000, the performance goals to be set for each three-year LTIP performance
period (as well as those applicable to the 1998-2000 and 1999-2001 performance
periods) will be based on the achievement by the end of such performance period
of predetermined company-wide levels of sales growth, earnings per share and
free cash flow. If minimum threshold levels of sales growth, earnings per share
and free cash flow for the performance period are not achieved, no plan payout
is made. If the threshold levels are met, however, 50% of the target awards is
payable, and amounts up to two times the target awards are payable based upon
achievement of performance at a level of 150% above the target levels. In the
discretion of the Management Development and Nominating Committee, the amount of
earned awards in excess of 100% of the target award may be paid in shares of
Common Stock. A table showing LTIP awards made in 1999 is set forth in this
Proxy Statement under the heading "Executive Compensation -- 1999-2001 Long-Term
Incentive Compensation Plan Awards in 1999".
Shares of Common Stock distributable to LTIP participants are delivered for
their account to the Executive Trust. Distribution of a participant's Executive
Trust account is made on the termination of his employment with the Company, or
earlier at the discretion of the Management Development and Nominating
Committee. Until distribution, assets of the Executive Trust are subject to the
claims of creditors of the Company or American Standard Inc. Shares of Common
Stock held by the Executive Trust are voted by the trustee in accordance with
the terms of the governing trust agreement.
Contingent awards are based on a participant's average annual base salary
during participation in the performance period, subject to prorated adjustment
to reflect the duration of participation in the period. 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. In the event of a change of control
(as defined in the LTIP) during the performance period, the performance period
shall end and each participant shall be entitled to receive, in cash, 100% of
his maximum potential award.
Approval of the LTIP 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 LONG-TERM
INCENTIVE COMPENSATION PLAN.
21
<PAGE> 25
5. APPROVAL OF LTIP ALTERNATE PLAN
On the recommendation of the Management Development and Nominating
Committee, the Board of Directors has adopted the LTIP Alternate Plan (the
"Alternate Plan") to satisfy certain technical requirements under Section 162(m)
of the Internal Revenue Code so that amounts equal to those that may be payable
to the Chief Executive Officer under the Company's LTIP for the three-year
performance periods ending December 31, 2000 and December 31, 2001 will be
payable under the Alternate Plan and, if paid, be deductible by the Company for
federal income tax purposes.
The Alternate Plan is available only to the Chief Executive Officer, and
any payments made under the Alternate Plan will be in lieu of payments to which
he would be entitled under the LTIP. The Alternate Plan has two performance
periods: a one year performance period ending December 31, 2000 and a two year
performance period ending December 31, 2001. The performance goals and awards
available under the Alternate Plan are identical to those under the LTIP for
performance periods ending on the same date, provided, that under the Alternate
Plan, participation in any award will be pro rated based upon the Chief
Executive Officer's employment during the three year period ending on the
expiration date of the relevant performance period. For example, for the
Alternate Plan performance period ending December 31, 2000, Mr. Poses would
participate in only one-third of any award for that period because his
employment as an Executive Officer of the Company did not begin until January 1,
2000.
Termination of employment may result in forfeiture or pro ration of an
award, depending on the nature of the termination. Under the plan, the
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. In the event of a change of control (as defined in the LTIP) during the
performance period, the performance period shall end and the participant shall
be entitled to receive, in cash, 100% of his potential award.
Approval of the Alternate 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 LTIP ALTERNATE
PLAN.
6. RATIFICATION OF APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has re-appointed, in accordance with the
recommendations of its Audit Committee, Ernst & Young LLP as independent
Certified Public Accountants to examine the consolidated financial statements of
the Company for the year 2000 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 and will
also be available to respond to questions.
7. 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, 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.
2001 STOCKHOLDER PROPOSALS
Any proposal a stockholder wishes to submit in accordance with the proxy
rules of the Commission for inclusion in the Company's 2001 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 December 7, 2000. In
addition,
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<PAGE> 26
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 2001 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 2001 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. Nominations must be accompanied by information concerning the proposed
nominee, including such information as is required by the Company's By-Laws and
the proxy rules under the Securities Exchange Act of 1934.
By order of the Board of Directors,
/s/ J. Paul McGrath
J. PAUL MCGRATH
Senior Vice President, General Counsel
and Secretary
March 27, 2000
23
<PAGE> 27
American Standard Companies Inc.
One Centennial Avenue
Piscataway, New Jersey 08854
<PAGE> 28
AMERICAN STANDARD COMPANIES INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 2000
Your vote for the election of Directors should be indicated on the proxy card
below. Nominees for Class II Directors (to serve until the 2003 Annual Meeting)
are: Frederic M. Poses and J. Danforth Quayle. Your vote on Proposals 2 through
5 and on the ratification of auditors should also be indicated below.
YOUR VOTE IS IMPORTANT! PLEASE VOTE BY TELEPHONE OR INTERNET, OR COMPLETE THE
PROXY CARD BELOW (SIGN AND DATE ON THE REVERSE SIDE) AND RETURN IT PROMPTLY
(ENCLOSED POSTAGE-PAID ENVELOPE) TO CORPORATE ELECTION SERVICES, P.O. BOX 1150,
PITTSBURGH, PA 15230, SO YOUR SHARES CAN BE REPRESENTED AT THE MEETING.
PROXY MUST BE SIGNED AND DATED ON REVERSE SIDE.
*PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING*
|X| PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE OR VOTE BY INTERNET OR TELEPHONE AS DESCRIBED ON THE
REVERSE SIDE OF THIS CARD. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL
NOMINEES FOR DIRECTOR AND FOR PROPOSALS 2, 3, 4, 5 AND 6.
If no directions are given on any item, the proxies will vote in accordance
with the Board of Directors' recommendations.
1. Election of Directors
Nominees: Frederic M. Poses J. Danforth Quayle
|_| FOR all nominees listed above (except as listed to the contrary
below)
|_| WITHHOLD AUTHORITY to vote for all nominees listed above
If you wish to withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C>
2. Approval of Stock Incentive Plan for Section 162(m) purposes.......................... |_| |_| |_|
3. Approval of Annual Incentive Compensation Plan for Section 162(m) purposes............ |_| |_| |_|
4. Approval of Long-Term Incentive Compensation Plan for Section 162(m) purposes......... |_| |_| |_|
5. Approval of LTIP Alternate Plan for Section 162(m) purposes........................... |_| |_| |_|
6. Proposal to ratify the appointment of Ernst & Young LLP as Public Accountants for 2000 |_| |_| |_|
</TABLE>
<PAGE> 29
VOTE BY TELEPHONE
Have your proxy card available when you CALL
THE TOLL-FREE NUMBER 1-800-250-9081 using a
Touch-Tone phone. You will be prompted to
enter your control number and then you can
follow the simple prompts that will be
presented to you to record your vote.
VOTE BY INTERNET
Have your proxy card available when you
access the website http://www.votefast.com.
You will be prompted to enter your control
number and then you can follow the simple
prompts that will be presented to you to
record your vote.
VOTE BY MAIL
Please mark, sign and date your proxy card
and return it in the postage-paid envelope
provided or return it to: Corporate Election
Services, P.O. Box 1150, Pittsburgh,
Pennsylvania 15230.
VOTE BY TELEPHONE VOTE BY INTERNET VOTE BY MAIL
Call TOLL-FREE using a Access the WEBSITE and Return your proxy
Touch-Tone phone Cast your vote in the POSTAGE-PAID
1-800-250-9081 HTTP://WWW.VOTEFAST.COM envelope provided
Vote 24 hours a day, 7 days a week!
Your telephone and internet vote MUST BE RECEIVED BY 11:59 P.M. EDT ON MAY 3,
2000 to be counted in the final tabulation.
IF YOU VOTE BY TELEPHONE OR INTERNET, PLEASE DO NOT SEND YOUR PROXY BY MAIL.
YOUR CONTROL NUMBER IS:
PROXY MUST BE SIGNED AND DATED BELOW.
PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING
AMERICAN STANDARD COMPANIES INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS ON MAY 4, 2000.
The undersigned hereby appoints Frederic M. Poses, J. Paul McGrath, G. Peter
D'Aloia and Frederick C. Paine, 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 4, 2000 at 11:30 A.M.
(EDT) at the American Standard College, One Centennial Avenue, Piscataway, New
Jersey, and at any adjournments or postponements 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 A SIGNED AND DATED PROXY CARD IS SUBMITTED BUT NO
DIRECTIONS ARE GIVEN, THE PROXIES WILL VOTE FOR THE ELECTION OF ALL LISTED
NOMINEES AND IN ACCORDANCE WITH THE DIRECTORS' RECOMMENDATIONS ON ALL OTHER
MATTERS LISTED ON THE REVERSE SIDE OF THIS CARD AND IN THEIR DISCRETION ON ANY
OTHER MATTERS 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.
Sign here as name(s) appears to the left.
-----------------------------------------------------
-----------------------------------------------------
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: , 2000
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