SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
RJR Nabisco Holdings Corp.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $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:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
[ ] 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:
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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
["RJR NABISCO" LOGO]
RJR NABISCO HOLDINGS CORP.
April 11, 1994
Dear Stockholder:
You are cordially invited to attend the 1994 Annual Meeting of Stockholders
of RJR Nabisco Holdings Corp. The meeting will be held at 2:00 p.m. (local time)
on Wednesday, May 4, 1994 at the Holiday Inn, Civic Center, 700 Rogers Avenue,
Fort Smith, Arkansas. Fort Smith is the home of one of our food manufacturing
plants.
Please note that attendance at the Annual Meeting will be limited to
stockholders as of the record date (or their authorized representatives) and to
guests of the company. If your shares are registered in your name and you plan
to attend the Annual Meeting, please mark the appropriate box on the enclosed
proxy card and you will be pre-registered for the meeting. If your shares are
held of record by a broker, bank or other nominee and you plan to attend the
meeting, you must also pre-register by returning the registration card forwarded
to you by your bank or broker. Stockholders who are not pre-registered will only
be admitted to the Annual Meeting upon verification of stock ownership.
Please give these proxy materials your careful attention. It is important
that your shares be represented and voted at the Annual Meeting regardless of
the size of your holdings. Accordingly, whether or not you plan to attend the
Annual Meeting, please complete, sign, date and return the accompanying proxy
card in the enclosed envelope in order to make certain that your shares will be
represented at the Annual Meeting.
Sincerely,
CHARLES M. HARPER
Chairman and Chief Executive Officer
IMPORTANT: YOUR PROXY CARD IS ENCLOSED IN THE
ADDRESS WINDOW OF THE ENVELOPE CONTAINING THIS MATERIAL
<PAGE>
["RJR NABISCO" LOGO]
RJR NABISCO HOLDINGS CORP.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 1994
To the Stockholders:
The Annual Meeting of Stockholders of RJR Nabisco Holdings Corp., a
Delaware corporation ("Holdings"), will be held at the Holiday Inn, Civic
Center, 700 Rogers Avenue, Fort Smith, Arkansas 72901, at 2:00 p.m., local time,
on Wednesday, May 4, 1994 for the following purposes:
1. To elect fifteen Directors to serve until the 1995 annual meeting of
stockholders and until their respective successors are duly elected
and qualified;
2. To ratify the appointment of Deloitte & Touche as independent
auditors for Holdings' 1994 fiscal year;
3. To act on four stockholder proposals if presented by their
proponents; and
4. To transact such other business as may be properly brought before the
meeting and any adjournments or postponements thereof.
Only holders of record of Holdings' Common Stock, Series A Conversion
Preferred Stock and ESOP Convertible Preferred Stock as of the close of business
on March 29, 1994 are entitled to notice of and to vote at the Annual Meeting
and any adjournments or postponements thereof. A list of such stockholders may
be examined for any purpose germane to the meeting at the Holiday Inn during the
ten-day period preceding the meeting.
ROBERT F. SHARPE, JR.
Vice President and Secretary
New York, New York
April 11, 1994
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE URGED TO COMPLETE,
SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING.
<PAGE>
RJR NABISCO HOLDINGS CORP.
1301 AVENUE OF THE AMERICAS
NEW YORK, NY 10019
PROXY STATEMENT
This Proxy Statement and enclosed form of proxy are being furnished
commencing on or about April 11, 1994 in connection with the solicitation by the
Board of Directors of RJR Nabisco Holdings Corp., a Delaware corporation
("Holdings"), of proxies in the enclosed form for use at the annual meeting of
stockholders to be held on May 4, 1994 for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. Any proxy given pursuant
to such solicitation and received in time for the meeting will be voted as
specified in such proxy. If no instructions are given, proxies will be voted FOR
the election of the nominees listed below under the caption "Election of
Directors-- Information Concerning the Nominees", FOR the ratification of the
appointment of Deloitte & Touche as independent auditors for Holdings' 1994
fiscal year, AGAINST the four stockholder proposals, and in the discretion of
the proxies named on the proxy card with respect to any other matters properly
brought before the meeting and any adjournments thereof. Any proxy may be
revoked by written notice received by the Secretary of Holdings at any time
prior to the voting thereof, by submitting a subsequent proxy or by attending
the meeting and voting in person.
Only holders of record of Holdings' voting securities as of the close of
business on March 29, 1994 are entitled to notice of and to vote at the annual
meeting and any adjournments or postponements thereof. As of the record date,
the following shares of voting securities were outstanding: 1,138,538,697 shares
of Common Stock, par value $.01 per share ("Common Stock"), 52,500,000 shares of
Series A Conversion Preferred Stock, par value $.01 per share ("PERCS"), and
15,576,577 shares of ESOP Convertible Preferred Stock, par value $.01 per share
and stated value $16 per share ("ESOP Preferred Stock"). All issued shares of
PERCS are held by First Chicago Trust Company of New York as Depositary for
holders of $.835 Depositary Shares ("$.835 Depositary Shares"). Each $.835
Depositary Share represents one-quarter of a share of PERCS.
Each share of Common Stock, PERCS and ESOP Preferred Stock, voting together
as a single class, entitles the record date holder thereof to one vote on the
proposals to elect directors and ratify the appointment of auditors, as well as
on the four stockholder proposals and all other matters properly brought before
the meeting.
The presence of a majority of the combined outstanding shares of Common
Stock, PERCS and ESOP Preferred Stock, represented in person or by proxy at the
meeting, will constitute a quorum. Shares represented by proxies that are marked
"abstain" will be counted as shares present for purposes of determining the
presence of a quorum on all matters. Proxies relating to "street name" shares
that are voted by brokers on some but not all of the matters will be treated as
shares present for purposes of determining the presence of a quorum on all
matters, but will not be treated as shares entitled to vote at the annual
meeting on those matters as to which authority to vote is withheld by the broker
("broker non-votes"). The fifteen nominees receiving the highest vote totals
will be elected as Directors of Holdings. Accordingly, abstentions and broker
non-votes will not affect the outcome of the election. All other matters to be
voted on will be decided by the affirmative vote of a majority of the shares
present or represented at the meeting and entitled to vote. On any such matter,
an abstention will have the same effect as a negative vote but, because shares
held by brokers will not be considered entitled to vote on matters as to which
the brokers withhold authority, a broker non-vote will have no effect on the
vote.
A proxy card is enclosed for your use. YOU ARE SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS TO COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD IN THE
ACCOMPANYING ENVELOPE, which is postage-paid if mailed in the United States.
1
<PAGE>
Securities and Exchange Commission rules require that an annual report
precede or accompany proxy materials. However, if you are a stockholder of
record and have your shares registered in more than one account at the same
address, you may wish to authorize Holdings to discontinue sending annual and
quarterly reports to all but one of your accounts. You can eliminate such
duplicate mailings by marking the appropriate box on the proxy card for any
account for which you do not wish to receive reports. You will, however,
continue to receive proxy statements and proxy cards to vote the shares for all
of your accounts.
ITEM 1--ELECTION OF DIRECTORS
INFORMATION CONCERNING THE NOMINEES
At the upcoming annual meeting, a board of fifteen Directors will be
elected to hold office until the next annual meeting of stockholders and until
their successors have been elected and qualified. Directors are elected by a
plurality of the votes cast. Although management does not anticipate that any of
the persons named below will be unable or unwilling to stand for election, in
the event of such an occurrence, proxies may be voted for a substitute
designated by the Board of Directors. All of the Board of Directors' nominees
were elected to their present terms by the stockholders in April 1993, except
Mr. Harper who was elected to his present term in May 1993, Gen. Chain who was
elected in January 1994 and Mr. Clendenin who is not currently a director of
Holdings but who served as a director of RJR Nabisco, Inc. ("RJRN") from 1984 to
1989.
Background information appears below with respect to the Board of
Directors' nominees for election, all of whom are incumbent Directors other than
Mr. Clendenin. See "Security Ownership of Certain Beneficial Owners and
Management" for information regarding such persons' holdings of equity
securities of Holdings.
YEAR BUSINESS EXPERIENCE DURING PAST FIVE
FIRST YEARS
NAME AGE ELECTED AND OTHER INFORMATION
- ------------------------- --- ------- --------------------------------------
John T. Chain, Jr........ 59 1994 Executive Vice President, Safety and
Corporate Support, Burlington
Northern Railroad since 1991. For
more than five years prior thereto,
General (Commander-in-Chief,
Strategic Air Command), United States
Air Force. Member of the Board of
Directors of Kemper Corporation and
Northrop Corporation.
John L. Clendenin........ 59 -- Chairman of the Board and Chief
Executive Officer, BellSouth
Corporation for more than five
years. Member of the Board of
Directors of BellSouth Corporation,
Capital Holding Corporation, Coca-
Cola Enterprises Inc., Equifax Inc.,
National Service Industries, Inc.,
Springs Industries, Inc., The Kroger
Company, The New York Stock
Exchange, Inc. and Wachovia
Corporation.
James H. Greene, Jr...... 43 1988 General Partner of KKR and KKR
Associates since January 1993 and an
executive of KKR and a limited
partner of KKR Associates for more
than five years prior thereto.
Member of the Board of Directors of
Owens-Illinois, Inc., Owens-Illinois
Group, Inc., Safeway Inc., The Stop
& Shop Companies, Inc., Union Texas
Petroleum Holdings, Inc. and The
Vons Companies, Inc.
H. John Greeniaus........ 49 1992 Chairman and Chief Executive Officer
of Nabisco Foods Group since May 1993
and President of Nabisco Foods Group
since 1992. From 1987-1991,
President and Chief Executive
Officer of Nabisco Brands, Inc. and
in 1987, Executive Vice President of
Nabisco Brands, Inc.
2
<PAGE>
YEAR BUSINESS EXPERIENCE DURING PAST FIVE
FIRST YEARS
NAME AGE ELECTED AND OTHER INFORMATION
- ------------------------- --- ------- --------------------------------------
Charles M. Harper........ 66 1993 Chairman and Chief Executive Officer
of Holdings since May 1993. For more
than five years prior thereto,
Chairman and, until 1992, Chief
Executive Officer of ConAgra, Inc.
Member of the Board of Directors of
ConAgra, Inc., E.I. DuPont de
Nemours and Co., Norwest Corp.,
Peter Kiewit Sons', Inc. and Valmont
Industries, Inc.
James W. Johnston........ 47 1992 Chairman and Chief Executive Officer
of R.J. Reynolds Tobacco Company
since 1989 and Chairman of R. J.
Reynolds Tobacco International, Inc.
since October 1993. From 1984-1989,
Division Executive, Citibank, N.A.
Member of the Board of Directors of
Sealy Corporation and Wachovia
Corporation.
Henry R. Kravis(1)....... 50 1989 General Partner of KKR since its
establishment in 1976 and a General
Partner of KKR Associates since its
establishment. Member of the Board
of Directors of American Re
Corporation, AutoZone, Inc.,
Duracell International Inc.,
Flagstar Companies, Inc., Flagstar
Corporation, IDEX Corporation, K-III
Communications Corp., Owens-
Illinois, Inc., Owens-Illinois
Group, Inc., Safeway Inc., The Stop
& Shop Companies, Inc. and Union
Texas Petroleum Holdings, Inc.
John G. Medlin, Jr....... 60 1989 Chairman of Wachovia Corporation for
more than five years and Chief
Executive Officer until December
1993. Member of the Board of
Directors of Wachovia Corporation,
BellSouth Corporation, Media
General, Inc., National Services
Industries, Inc. and USAir Group,
Inc.
Paul E. Raether.......... 47 1989 General Partner of KKR and KKR
Associates for more than five years.
Member of the Board of Directors of
Duracell International Inc.,
Flagstar Companies, Inc., Flagstar
Corporation, Fred Meyer, Inc., IDEX
Corporation and The Stop & Shop
Companies, Inc.
Lawrence R. Ricciardi.... 53 1993 President and General Counsel of
Holdings since May 1993. From
March-May 1993, Co-Chairman and
Chief Executive Officer and General
Counsel, and from 1989-1993,
Executive Vice President and General
Counsel, of Holdings. From
1985-1989, Executive Vice President
and General Counsel of American
Express Travel Related Services Co.,
Inc.
Rozanne L. Ridgway....... 58 1989 Co-Chair of the Atlantic Council of
the United States since January 1993
and President of the Council from
1989-1992. From 1985-1989, Assistant
Secretary of State for European and
Canadian Affairs. Member of the
Board of Directors of Bell Atlantic
Corporation, The Boeing Company,
Citicorp, Minnesota Mining and
Manufacturing Company, Sara Lee
Corporation and Union Carbide Corp.
Clifton S. Robbins....... 36 1988 Executive of KKR and a limited partner
of KKR Associates for more than five
years. Member of the Board of
Directors of Flagstar Companies,
Inc., Flagstar Corporation, IDEX
Corporation and The Stop & Shop
Companies, Inc.
3
<PAGE>
YEAR BUSINESS EXPERIENCE DURING PAST FIVE
FIRST YEARS
NAME AGE ELECTED AND OTHER INFORMATION
- ------------------------- --- ------- --------------------------------------
George R. Roberts(1)..... 50 1989 General Partner of KKR since its
establishment in 1976 and a General
Partner of KKR Associates since its
establishment. Member of the Board
of Directors of American Re
Corporation, AutoZone, Inc.,
Duracell International Inc.,
Flagstar Companies, Inc., Flagstar
Corporation, IDEX Corporation, K-III
Communications Corp., Owens-
Illinois, Inc., Owens-Illinois
Group, Inc., Red Lion Properties
Inc., Safeway Inc., The Stop & Shop
Companies, Inc. and Union Texas
Petroleum Holdings, Inc.
Scott M. Stuart.......... 34 1988 Executive of KKR and a limited partner
of KKR Associates for more than five
years. Member of the Board of
Directors of Duracell International
Inc. and World Color Press, Inc.
Michael T. Tokarz........ 44 1992 General Partner of KKR and KKR
Associates since January 1993 and
an executive of KKR and a limited
partner of KKR Associates for more
than five years prior thereto.
Member of the Board of Directors of
Flagstar Companies, Inc., Flagstar
Corporation, IDEX Corporation, K-III
Communications Corp. and Safeway
Inc.
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(1) Messrs. Kravis and Roberts are first cousins.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF EACH NOMINEE FOR DIRECTOR NAMED ABOVE.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors met nine times during the 1993 fiscal year. During
1993, all incumbent Directors attended at least 75% of the meetings of the Board
of Directors and the committees thereof on which they served except Mr. Roberts.
The standing committees of the Board of Directors include the Executive
Committee, the Audit Committee and the Compensation Committee. The Board of
Directors does not have a Nominating Committee and the usual functions of such a
committee are performed by the entire Board of Directors.
Executive Committee. The Executive Committee has authority to act for the
Board on most matters during intervals between Board meetings. The Executive
Committee, whose current members are Messrs. Harper, Greene, Kravis and Raether,
did not meet during the 1993 fiscal year.
Audit Committee. The Audit Committee has the principal function of
reviewing the adequacy of Holdings' internal system of accounting controls,
conferring with the independent auditors and the internal auditors concerning
the scope of their examinations of the books and records of Holdings and its
subsidiaries, reviewing with appropriate personnel actions taken to ensure
compliance with Holdings' Code of Conduct, recommending to the Board of
Directors the appointment of independent auditors and considering other
appropriate matters regarding the financial affairs of Holdings and its
subsidiaries. The Audit Committee, whose current members are Mr. Medlin and
Ambassador Ridgway, held three meetings during the 1993 fiscal year.
Compensation Committee. The Compensation Committee makes recommendations to
the Board with respect to compensation and grants of stock options to management
employees. In addition, the Compensation Committee administers plans and
programs relating to employee benefits, incentives and compensation. The
Compensation Committee, whose current members are Vernon E. Jordan, Jr. (who
4
<PAGE>
is not a nominee for re-election) and Messrs. Raether and Stuart, met five times
during the 1993 fiscal year.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information, as of March 29, 1994,
regarding the beneficial ownership of Common Stock by each director and nominee
for director of Holdings, by each of the five most highly compensated executive
officers of Holdings during the last fiscal year, by another individual who
served as Chief Executive Officer of Holdings during the last fiscal year, and
by all directors, nominees for director and executive officers of Holdings as a
group. Except as otherwise noted, the persons named in the table below have sole
voting and investment power with respect to all shares shown as beneficially
owned by them.
<TABLE> <CAPTION>
NUMBER OF SHARES OF
COMMON STOCK
BENEFICIALLY PERCENT OF
NAME OF BENEFICIAL OWNER OWNED(1) COMMON STOCK
- --------------------------------------------------------------------------- -------------------- ---------------
<S> <C> <C>
John T. Chain, Jr.(1)...................................................... 10,000 *
John L. Clendenin.......................................................... 2,266 *
Saul A. Fox(2)(3).......................................................... 31,852 *
Louis V. Gerstner, Jr.(1)(3)(4)............................................ 5,325,533 .47%
James H. Greene, Jr.(2).................................................... 27,301 *
H. John Greeniaus(1)....................................................... 2,068,762 .18
Charles M. Harper (1)...................................................... 622,680 *
James W. Johnston(1)(5).................................................... 2,054,124 .18
Vernon E. Jordan, Jr.(1)(3)................................................ 31,287 *
Henry R. Kravis(2)......................................................... 289,189 *
John G. Medlin, Jr......................................................... 34,333 *
Paul E. Raether(2)......................................................... 94,185 *
Lawrence R. Ricciardi(1)(6)................................................ 1,365,008 .12
Rozanne L. Ridgway(1)...................................................... 30,000 *
Clifton S. Robbins(2)...................................................... 21,614 *
George R. Roberts(2)....................................................... 289,189 *
Scott M. Stuart(2)......................................................... 14,106 *
G. Richard Thoman(1)(7).................................................... 285,922 *
Michael T. Tokarz(2)....................................................... 29,577 *
Karl M. von der Heyden(1).................................................. 1,618,584 .14
All directors, nominees for director and executive officers as a group
(other than as set forth below in relation to KKR Associates)(1)(2)...... 17,569,801 1.54%
</TABLE>
- ---------------
* Less than 0.1%.
(1) For purposes of this table, a person or group of persons is deemed to be the
"beneficial owner" of any shares that such person has the right to acquire
within 60 days. For purposes of computing the percentage of outstanding
shares held by each person or group of persons named above on a given date,
any security that such person or persons has the right to acquire within 60
days is deemed to be outstanding, but is not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person. The
number of shares beneficially owned includes (i) 30,000 shares subject to
currently exercisable options granted to each of Mr. Jordan and Ms. Ridgway;
3,211,320 shares subject to currently exercisable options granted to Mr.
Gerstner; 1,437,600 shares subject to currently exercisable options granted
to each of Messrs. Greeniaus and Johnston; 904,799 shares subject to
currently exercisable options granted to Mr. Ricciardi; and 11,072,438
shares subject to currently exercisable options granted to all directors and
executive officers as a group; and (ii) 458, 977, 986, 984, 472, 984 and
13,581 shares of Common Stock currently issuable on conversion of a like
number of shares of ESOP Preferred Stock owned by, respectively, Messrs.
Harper, Greeniaus, Johnston, Ricciardi, Thoman, von der Heyden and all
directors and executive officers as a group.
(2) Messrs. Fox, Greene, Kravis, Raether, Roberts and Tokarz, all directors of
Holdings, and Robert I. MacDonnell and Michael W. Michelson are general
partners of KKR Associates, a limited partnership that owns 556,766,236
shares of Common Stock as set forth in the table below. Such persons may be
deemed to share beneficial ownership of the shares shown in the table below
as
(Footnotes continued on following page)
5
<PAGE>
(Footnotes continued from preceding page)
owned by KKR Associates. The foregoing persons disclaim beneficial ownership
of any of such shares. Messrs. Robbins and Stuart, both directors of
Holdings, are limited partners of KKR Associates.
(3) Messrs. Fox, Gerstner and Jordan are currently directors of Holdings but are
not nominees for re-election.
(4) The outstanding shares of Common Stock shown as beneficially owned by Mr.
Gerstner include 103,600 shares held in trust for the benefit of Mr.
Gerstner's children, as to which Mr. Gerstner disclaims beneficial
ownership.
(5) The outstanding shares of Common Stock shown as beneficially owned by Mr.
Johnston include 60,000 shares held in trust for the benefit of Mr.
Johnston's children, as to which Mr. Johnston disclaims beneficial
ownership.
(6) The outstanding shares of Common Stock shown as beneficially owned by Mr.
Ricciardi include 60,000 shares held in trust for the benefit of Mr.
Ricciardi's children, as to which Mr. Ricciardi disclaims beneficial
ownership.
(7) In addition, Mr. Thoman's spouse is the beneficial owner of 14,000 $.835
Depositary Shares, representing less than 0.1% of that class of voting
securities, and as to which Mr. Thoman disclaims beneficial ownership.
Compliance with Section 16(a) of The Exchange Act. Section 16(a) of the
Securities Exchange Act of 1934, as amended, requires Holdings' officers and
directors, and persons who own more than ten-percent of a registered class of
Holdings' equity securities, to file initial statements of beneficial ownership
(Form 3), and statements of changes in beneficial ownership (Forms 4 or 5), of
Common Stock and other equity securities of Holdings with the Securities and
Exchange Commission (the "SEC") and the New York Stock Exchange, Inc. Officers,
directors and greater than ten-percent stockholders are required by SEC
regulation to furnish Holdings with copies of all such forms they file.
To Holdings' knowledge, based solely on its review of the copies of such
forms received by it, or written representations from certain reporting persons
that no additional forms were required for those persons, Holdings believes that
during 1993 all filing requirements applicable to its officers, directors, and
greater than ten-percent beneficial owners were complied with, except that David
Kalis, who was an executive officer of Holdings during part of 1993, filed two
untimely reports with respect to ten transactions related to his disposition of
Common Stock and employee stock options. These transactions occurred after Mr.
Kalis resigned as an executive officer.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information, as of March 29, 1994,
regarding the beneficial ownership of persons known to Holdings to be the
beneficial owners of more than five percent of any class of Holdings' voting
securities. Except as otherwise noted, the persons named in the table below have
sole voting and investment power with respect to all shares shown as
beneficially owned by them.
<TABLE> <CAPTION>
NUMBER OF SHARES
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
- --------------------- ---------------------------------------------------- ------------------ --------------------
<S> <C> <C> <C>
Common Stock KKR Associates(1)................................... 556,766,236 48.9%
9 West 57th Street
New York, NY 10019
Common Stock College Retirement Equities Fund(2)................. 57,360,153 5.0%
730 Third Avenue
New York, NY 10017
ESOP Convertible Wachovia Bank of North Carolina, N.A.(3)............ 15,576,577 100%
Preferred Stock Box 3075, Trust Operations
Winston-Salem, NC 27102
</TABLE>
(Footnotes on following page)
6
<PAGE>
(Footnotes for preceding page)
- ---------------
(1) Shares of Common Stock shown as beneficially owned by KKR Associates include
shares owned of record by the limited partnerships of which KKR Associates
is the sole general partner and as to which it possesses sole voting and
investment power. KKR Associates is a limited partnership of which Messrs.
Fox, Greene, Kravis, Raether, Roberts and Tokarz, all directors of Holdings,
and Robert I. MacDonnell and Michael W. Michelson are the general partners.
Such persons may be deemed to share beneficial ownership of the shares shown
as owned by KKR Associates. The foregoing persons disclaim beneficial
ownership of any such shares. Messrs. Robbins and Stuart, both directors of
Holdings, are limited partners of KKR Associates.
(2) College Retirement Equities Fund reported in its Schedule 13G dated February
8, 1994 that it had sole voting and investment power over all of its shares.
(3) Wachovia Bank of North Carolina, N.A. ("Wachovia") holds such shares in its
capacity as Trustee of the RJRN Defined Contribution Master Trust. Under the
terms of the Master Trust, Wachovia is required to vote shares of ESOP
Preferred Stock allocated to participants' accounts in accordance with
instructions received from such participants and to vote allocated shares of
ESOP Preferred Stock for which it has not received instructions and
unallocated shares in the same ratio as shares with respect to which
instructions have been received. Wachovia has no investment power with
respect to shares of ESOP Preferred Stock.
ITEM 2--RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Subject to stockholder ratification, the Board of Directors has appointed
the firm of Deloitte & Touche as independent auditors for the fiscal year ending
December 31, 1994 and until their successors are selected. The appointment was
made upon the recommendation of the Audit Committee, which is comprised of
Directors who are not employees of Holdings or its subsidiaries.
A representative of Deloitte & Touche will be present at the Annual Meeting
and will have the opportunity to make a statement if he desires to do so and
will be available to answer appropriate questions.
THE BOARD OF DIRECTORS CONSIDERS DELOITTE & TOUCHE TO BE WELL-QUALIFIED AND
RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR RATIFICATION.
The affirmative vote of the shares representing a majority of the shares
present at the meeting in person or represented by proxy and entitled to vote,
will be required to approve this item proposed by the Board of Directors.
STOCKHOLDER PROPOSALS
Various stockholders have submitted the four proposals set forth below.
Holdings will furnish orally or in writing the identity of the proponents of
these stockholder proposals, as well as their claimed share ownership amounts,
upon written or oral request directed to the Secretary or any Assistant
Secretary of Holdings. The following proposals have been carefully considered by
the Board of Directors which has concluded that their adoption would not be in
the best interests of Holdings or its stockholders. For the reasons stated after
each proposal, the Board of Directors recommends a vote "AGAINST" each proposal.
Proposals of stockholders intended to be presented at the next Annual
Meeting must be received by the Secretary, RJR Nabisco Holdings Corp., 1301
Avenue of the Americas, New York, NY 10019-6013 no later than December 12, 1994.
7
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ITEM 3--STOCKHOLDER PROPOSAL ON CIGARETTE SALES TO MINORS
Two stockholders have submitted the following proposal, which will be voted
upon at the meeting if presented by its proponents:
"WHEREAS--RJR Nabisco Inc. says "kids shouldn't smoke" and "we have worked
with retailers nationwide to introduce programs to help them support minimum age
laws";
"--Because these laws are rarely enforced, minors easily buy cigarettes
from convenience stores and vending machines. Increasingly these are Camels;
"--The FTC staff has called for a ban on all "Cool Joe Camel" advertising,
as have the attorney generals of 26 states;
"--The Company has stated it opposition to enforcement mechanisms at local
levels to implement state anti-smoking efforts geared toward children;
"--RJ Reynolds recently launched massive efforts to keep local enforcement
mechanisms geared to keep minors from smoking from being passed. For instance,
in 1993 the Common Council of Fond du Lac, Wisconsin considered an ordinance
whose enactment "directly pertains to and is in furtherance of the health,
safety, and general welfare of the residents of the city, particularly those
residents under eighteen (18) years of age." This did not consider vending
machines but only "self-service promotional displays of cigarettes" which it
considered able to "promote illegal tobacco sales to minors" as well as
shoplifting. Reynolds Tobacco Company Federal Expressed a letter to all 131
tobacco liscensees in that city's limits indicating "volume would decrease by
10%" if the ordinance would be enacted;
"--Much of this "10%" represents minors who would thereby be dissuaded from
purchasing cigarettes if they were forced to ask for them instead of serving
themselves;
"--The RJ Reynolds letter also indicated "the average gross profit loss for
each store in Fond du Lac would be $9,000 a year in addition to the retrofitting
costs the first year" even though other statistics show savings gained from less
pilferage and shoplifting (often by minors) would be balanced with any other
costs incurred when over-the-counter sales would be in place;
"--Our Company seems to have statistics readily available detailing
potential losses for retailers for cigarettes sold to minors, yet refuses to
indicate how many young people smoke our brands, arguing it has no such
statistics;
"--RESOLVED that shareholders request management to endorse a policy
supporting enforcement mechanisms at all governmental levels (state,
county/parish, local) geared to prevent illegal sales to minors of our tobacco
products. Furthermore that management evaluate its minor-oriented "anti-smoking"
material's effectiveness and expand them to include support for enforcement
mechanisms geared to keep minors from smoking our tobacco products."
The proponent has submitted the following statement in support of this
proposal:
"As shareholders sponsoring this resolution, we are appalled by our
Company's tactics which ensure minors have virtually unlimited access to
cigarettes. On the one hand it says it works to discourage "kids" from smoking;
on the other it does all it can to keep enforcement mechanisms from being
enacted. It is not enough to argue parents have the responsibility to make sure
children don't smoke when all the evidence indicates this is not enough. If you
agree, and sincerely want to limit children from smoking (realizing many of
those hooked by 19 are already addicted), please support this resolution."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL.
8
<PAGE>
Holdings shares the proponent's desire to eliminate underage smoking.
Towards this end, R.J. Reynolds Tobacco Company ("RJRT"), both individually and
through the Tobacco Institute, has initiated a number of programs designed to
discourage youngsters from smoking.
Holdings and RJRT believe that the most effective means of discouraging
underage smoking are to enforce existing laws that restrict youth access to
cigarettes and to focus on the primary reasons why youngsters decide to smoke,
namely peer pressure and sibling and parental example.
In this regard, RJRT, with the support of educators and parents, has
initiated the "Right Decisions/Right Now" program aimed at 12-15 year olds with
the message that young people should not smoke. This program encompasses
classroom teaching and parent-discussion materials and is ongoing in markets
nationwide.
RJRT has also actively advocated the enactment of a minimum age requirement
of 18 for the purchase of tobacco products in every state. Partly as a result of
these efforts, minimum age requirements now exist in all 50 states and the
District of Columbia. RJRT has consistently supported efforts to limit cigarette
vending machines to adult establishments or to locations where use of such
machines can be supervised by an adult.
RJRT and the tobacco industry have actively worked with retailers to step
up compliance with minimum age laws for the purchase of tobacco products.
Through an industry-led program called "It's the Law", and an RJRT program
called "Support the Law--It Works", RJRT has worked with retailers nationwide to
provide a comprehensive training program to help them comply with minimum age
laws on all age-restricted products, including tobacco.
Through the Tobacco Institute, the tobacco industry maintains the "Helping
Youth Decide" program, providing materials to educators and parents encouraging
them to include the issue of smoking in discussions with children. To date, over
600,000 copies of these materials have been dispersed nationwide. Public service
announcements were produced by the Tobacco Institute and have been aired on over
360 television stations in 40 states. Both the "Right Decisions/Right Now"
program and the "Helping Youth Decide" program were developed with the
assistance of independent adolescent behavior experts.
According to a University of Michigan study of high school seniors
conducted for the National Institute of Drug Abuse, daily smoking has declined
31% during the past 15 years. RJRT's and the tobacco industry's programs aim to
continue this trend.
In summary, RJRT and Holdings are committed to eliminating underage smoking
and already are actively working to achieve this objective. Since Holdings
already supports enforcement of age-restriction laws, this stockholder proposal
is inappropriate.
THEREFORE, YOUR BOARD URGES STOCKHOLDERS TO VOTE "AGAINST" THIS PROPOSAL.
The affirmative vote of the shares representing a majority of the shares
present at the meeting in person or represented by proxy and entitled to vote,
will be required to approve this item.
ITEM 4--STOCKHOLDER PROPOSAL ON FACILITATING TOBACCO
FARMERS' ECONOMIC CONVERSION
A stockholder has submitted the following proposal, which will be voted
upon at the meeting if presented by its proponent:
"WHEREAS
"--Except for last year, domestic tobacco consumption rates declined 1 to 2
percent a year since the mid-1960s, falling from 42% of adult Americans in 1965
to 25.7% of adults in 1991. This decline in tobacco consumption adversely
impacted domestic tobacco growers;
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<PAGE>
"--As tobacco prices rose in the 1980s, U.S. companies started looking to
foreign markets and, according to farm leaders, subsidized growers in places
like Malawi, Argentina, and Brazil to grow tobacco of comparable quality to the
American leaf for the domestic market. In 1969 less than 1 percent of the
tobacco used in U.S. cigarettes was imported. By 1992, 28 percent of burley and
23 percent of the flue cured was foreign. Burley imports alone increased 40
percent between 1990 and 1992.
"--The New York Times noted: "Farmers' profit margins have declined while
the major manufacturers' profits have risen. . .
"--Farmers have been squeezed by a combination of rising costs for labor,
fertilizers and chemicals, and the relatively stagnant prices of tobacco leaves,
depressed by an influx of cheap foreign imports." (08/06/93);
"--After being challenged about unilateral price increases for domestic
cigarettes even as domestic tobacco purchases and income decreased because of
the foreign tobacco purchases, the major U.S. cigarette companies have agreed to
support floors for content percentages of domestic tobacco for cigarettes;
"--Given past actions which indicate the tobacco companies have created
practices which have enhanced their own profits from tobacco as the income to
tobacco farmers has decreased;
"--It has been recognized that the agricultural economy in tobacco-growing
states must be diversified and that funds to achieve this must come, in part,
from a portion of federal cigarette excise tax revenues, as well as other
funding sources;
"--Various recommendations have been developed from within the
tobacco-growing community to ease the transition of tobacco farmers from
dependency on production for cigarette sales to alternative uses of their land,
including:
"1) reducing or eliminating tobacco acreage by diversification into
other crops or land usage;
"2) dedicating a portion of any cigarette excise tax increase for the
government to purchase tobacco growing allotments and retire them.
Inclusion of tax benefits forfeiting the allotments would also be
effective, particularly to farmers reinvesting into the growth of
alternative crops;
"3) providing grants and low-interest loans to tobacco farmers who
change to new crops, to be used for equipment, seeds, nursery stocks, new
farm equipment, and irrigation systems.
"RESOLVED that RJR Nabisco Holdings Corporation establish a Committee of
the Board to review the Company's connections to its farm-suppliers and to
determine how they can be helped in efforts at economic conversion from
dependency on tobacco-for-cigarettes to use of farmland for other purposes.
Furthermore that the Company support legislation to help ease this economic
conversion for tobacco-growers at federal and state levels."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL.
RJRT has a vital interest in securing an adequate supply of quality tobacco
to manufacture cigarettes. Converting farmland used to grow tobacco to another
crop would diminish the supply of quality U.S. tobacco available to RJRT and is
therefore not in Holdings' business interests or in the interests of its
stockholders. The Board of Directors believes that it is inappropriate for
Holdings or RJRT to support efforts of any sort to reduce the supply of raw
materials that RJRT uses to produce its products. The Board will oppose any and
all proposals that threaten the ability of Holdings to generate earnings to
enhance stockholder returns.
Holdings is not, however, insensitive to the issues currently facing the
tobacco grower. During recent years, U.S. cigarette manufacturers have faced
declining domestic cigarette consumption and growing consumer demand for cheaper
cigarettes, resulting in lower manufacturer pricing levels. These
10
<PAGE>
factors have had a negative impact on both manufacturers of domestic cigarettes
and U.S. growers alike.
Domestic tobaccos compete in a global leaf market and U.S. growers and
manufacturers have an opportunity to expand their business by exporting their
products abroad. U.S. tobacco, the key ingredient in American-style cigarettes,
is experiencing a growing acceptability in cigarette markets around the world.
Holdings believes that U.S. grower interests are best served by efforts to
expand domestic tobacco exports and to enhance the competitiveness of the U.S.
grower in world markets.
THEREFORE, YOUR BOARD URGES STOCKHOLDERS TO VOTE "AGAINST" THIS PROPOSAL.
The affirmative vote of the shares representing a majority of the shares
present at the meeting in person or represented by proxy and entitled to vote,
will be required to approve this item.
ITEM 5--STOCKHOLDER PROPOSAL ON WARNING LABELS FOR
ADVERTISING AND PROMOTIONAL ITEMS
Two stockholders have submitted the following proposal, which will be voted
upon at the meeting if presented by its proponents:
"WHEREAS Camel cigarettes has been the fastest-growing brand among
teenagers for the last five years;
"Our Company actively reaches out to customers and potential customers for
its cigarette brands by spending hundreds of millions of dollars around the
world in advertising and promotions;
"These efforts include advertising on billboards, magazines, bus signs,
placards and television whenever allowed as well as advertising through
sponsorships and promotional items bearing our Company's cigarette logos and
symbols. These include clothing, toys, sporting goods, and watches. Many of
these items are popular with children. For instance, 30% of 12-17 year olds in a
Gallup survey reported having received promotional items for tobacco products;
"In recent years, our Company has shifted advertising dollars into
promotional advertising to convey the images, symbols, and other advertising
messages of its cigarette brands to impress the image of the brands on potential
consumers' psyches.
"The Joe Camel campaign has helped increase our Company's share of the
cigarette market for minors from less than 0.5% to almost 33.0% between 1988 and
1993. In 1992, Camel was the only major brand of cigarettes to show a sales
increase, which we believe is attributable to sales to minors.
"Although promotions are a form of advertising for our Company's brands,
they carry no warnings about the health hazards caused by smoking our cigarette
brands;
"The Federal Trade Commission requires that promotional items such as caps
and t-shirts for brands of chewing tobacco and moist snuff carry prominent
warning labels on the items themselves;
"RESOLVED that shareholders request the Board to adopt the following policy
to be put into effect by January 1, 1995: All advertising and promotional items
for our Company's tobacco products distributed throughout the world shall
include clear and effective health warnings about the dangers of addiction,
disease and death from smoking cigarettes."
The proponent has submitted the following statement in support of this
proposal:
"On the one hand, our Company says smoking is an adult custom and that it
tries to "discourage" children from smoking. Yet, on the other hand, we believe
it encourages them to smoke through promotions and by sponsoring sporting events
which attract them. The cigarette brand symbols and logos invade their
consciousness with no simultaneous warning about the health hazards caused by
smoking. We believe there should be warnings wherever our ads and promotions
appear; these should be
11
<PAGE>
at least as easily readable and easy to see as the images and symbols associated
with our cigarette brands.
"Our Company has been relatively free of damages from litigation brought by
people harmed by smoking, arguing that cigarette packages contained warnings.
Similar warnings should be placed on any ads or promotional symbols connected to
our cigarettes because it may be argued these attracted people to use our
products to the detriment of their health. Recently our Company voluntarily
placed health warnings on all cigarette packages sold throughout the world, even
though such were not required by law. We believe warnings on all uses of our
cigarette logos is the logical next step. If you agree, please vote "yes" for
this resolution."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL.
Independent studies consistently conclude that advertising does not play a
significant role in the decision to start smoking. Peer pressure and sibling and
parental example are consistently found to be the principal reasons young people
start to smoke; indeed, many studies conclude that advertising plays no role in
this decision at all.
Claims that the CAMEL campaign has resulted in additional underage smoking
are not supported by the empirical data. In fact, the same studies cited by the
proponents conclude that another brand manufactured by another company has the
overwhelming share of underage smokers. A recent Roper Starch survey indicates
that Joe Camel is no more recognizable to youth than any other advertising
character and that those who associate the Camel illustration with cigarettes
generally have a decidedly negative view of cigarettes.
RJRT is committed to marketing its products responsibly and does not direct
its cigarette advertising and/or promotions towards minors. RJRT's off-shore
subsidiaries also comply with industry marketing codes which exist in a number
of markets in which they compete. These codes similarly seek to ensure that
cigarettes are advertised and promoted to adults only.
Holdings believes that there is awareness throughout the world of the
health issues involved with smoking and this awareness is furthered by the
presence of a warning label on each pack of cigarettes that RJRT manufactures.
Additionally, RJRT is already in compliance with age and label regulations in
all the countries in which it operates.
The world cigarette market is extremely competitive. Even if Holdings were
to place warnings on advertising and promotional items, it is likely that its
competitors would take advantage of such an action to market their products to
the detriment of RJRT and possibly make it more difficult to serve the financial
interests of Holdings' stockholders.
In summary, RJRT and Holdings are confident that its CAMEL advertising does
not influence children to start smoking, and do not believe that extending
warning labels to promotional items would decrease the incidence of underage
smoking.
THEREFORE, YOUR BOARD URGES STOCKHOLDERS TO VOTE "AGAINST" THIS PROPOSAL.
The affirmative vote of the shares representing a majority of the shares
present at the meeting in person or represented by proxy and entitled to vote,
will be required to approve this item.
12
<PAGE>
ITEM 6--STOCKHOLDER PROPOSAL ON
LEGISLATIVE ACTIVITY AND RESEARCH FUNDING
A stockholder has submitted the following proposal, which will be voted
upon at the meeting if presented by its proponent:
"WHEREAS--after "two years of wrangling between the EPA and tobacco
companies," the "Environmental Protection Agency.... concluded that 'passive'
tobacco smoke is a human lung carcinogen" causing 3,000 lung cancer deaths
yearly (The Wall Street Journal, 1/6/93);
"--Since the Report's release, 20 states tightened or considered tightening
public smoking laws; 150 local governments enacted smoking bans, the largest
being Los Angeles despite a massive effort by the tobacco industry to overturn
its ban;
"--Our Company joined the tobacco industry seeking a permanent injunction
overturning the EPA's findings, alleging EPA officials misused scientific data
and EPA regulations promoting anti-smoking objectives. The print media's
reaction indicated this strategy to be faulty, if not filled with
contradictions:
"--The New York Times headlined an article on the subject: "E.P.A.
Finding: Tobacco's Loss? Evidence for Industry Lawsuit Appears Somewhat
Shaky" (6/29/93);
"--In an editorial entitled, "Let Judge Choke off Tobacco Suit," The
Milwaukee Journal editorialized: "In a transparent attempt to stave off
further regulation of smoking, the tobacco industry has sued the US
Environmental Protection Agency for deeming secondhand cigarette smoke a
cancer risk to non-smokers. Now here is a business in deep denial. May the
judge assigned to hear the industry's case see this frivolous lawsuit for
what it is and throw it our" (6/24/93).
"--USA Today in its own editorial entitled "Expand No-Smoking Zones to
Curb Passive Smoke Risk" noted the tobacco industry's lawsuit in light of
the current rise in restriction for smokers and declared: "Small wonder
that the tobacco industry is resorting to ever more desperate measures." It
continued: "The industry has a lonely battle to fight. It may be the sole
entity harmed by smoking restrictions. . . . . With so much going for
them, smoking bans are a valuable tool for those yearning to breathe free"
(6/24/93).
"--The Los Angeles Times, in an editorial 6/25/93, titled: "Fighting
Fire with Smoke," concluded: The tobacco industry increasingly recognizes
the EPA's findings could do what decades of public service announcements
about smoking failed to do--dramatically change laws governing smoking. As
such, nervous cigarette makers feel themselves backed into a corner.
"Not surprisingly, then they are lashing out. In a federal suit filed
Tuesday, a coalition of tobacco groups wants the EPA report declared null
and void. The EPA was biased in its use of scientific findings, the
industry contends. "The science" of cigarette smoking in humans "is
complex", say the cigarette makers. Perhaps. But the personal and financial
cost of smoking-related diseases is quite clear."
"--No labels warn about ETS. Since our Company has not paid for any
plaintiffs by arguing that warnings free it from responsibility, efforts to
undermine notification of ETS hazards might result in huge awards for lost ETS
lawsuits;
"RESOLVED that shareholders request RJR Nabisco to refrain from efforts to
undermine legislation geared to restrict smoking in public places and to cease
expenditures of funds challenging legitimate studies consistently showing ETS
health hazards."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL.
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<PAGE>
RJRT recognizes that many nonsmokers do not like environmental tobacco
smoke ("ETS") and wish to minimize their exposure to it. However, Holdings and
RJRT--as well as numerous research authorities--believe that the Environmental
Protection Agency's ("EPA") January 7, 1993 report classifying ETS as a Group A
carcinogen is based on statistically inaccurate data. Because Holdings and RJRT
are convinced that the EPA's claims are wrong, RJRT recently joined others in
legally challenging the EPA's findings. That lawsuit argues that the EPA's
classification of secondhand smoke should be declared void for many reasons,
including (i) the EPA's classification of secondhand smoke is invalid given the
body of scientific evidence available; (ii) in reaching its conclusion, the EPA
did not apply the same risk-assessment guidelines to ETS that it applies to all
other substances; and (iii) the EPA's conclusions are designed to encourage
lawsuits and regulations that would force employers, restaurant operators and
building owners to totally ban smoking.
Without a doubt, secondhand smoke can be annoying. However, Holdings and
RJRT believe that the EPA's conclusion that secondhand smoke causes cancer in
non-smokers is not justified by the available evidence and claims that
secondhand smoke causes heart disease are equally unjustified. This belief is
supported by a number of independent scientists and research experts who have
pointed out that the EPA report deliberately used different statistical methods
to examine ETS than those applied by the EPA to other substances.
It is important to put all risks in perspective. Many things people come
into contact with every day--including many popular foods, alcoholic beverages,
chlorinated water, automobile emissions, and even sand--have been reported to
increase people's risk of disease or death. Depending on which study one reads,
some of these risks are considerably higher, and some lower, than the risk the
EPA reports for secondhand smoke.
Smoking bans are unfair and are unnecessary. Complaints about secondhand
smoke can be greatly reduced, and in many cases eliminated, through a variety of
approaches including simple separation of smokers and non-smokers, the use of
partitions, portable air cleaners and designated smoking areas, and adequate
ventilation.
In this regard, RJRT is working with restaurant and bar owners, business
leaders, air quality experts and others to develop programs that create a
climate where the preferences of smokers and non-smokers alike are treated with
courtesy and respect. RJRT has also produced brochures and other materials that
can help businesses develop smoking policies appropriate to their employee
populations and have produced a guide to help facilities managers understand the
principles of smoking lounge design.
In our view, RJRT's actions with regard to ETS are prudent, responsible and
in the best interest of Holdings' stockholders.
THEREFORE, YOUR BOARD URGES STOCKHOLDERS TO VOTE "AGAINST" THIS PROPOSAL.
The affirmative vote of the shares representing a majority of the shares
present at the meeting in person or represented by proxy and entitled to vote,
will be required to approve this item.
14
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY
The following pages describe the components of the total compensation of
the five most highly compensated executive officers of Holdings at the end of
the last fiscal year and two other individuals who served as chief executive
officers of Holdings during the last fiscal year. The principal components of
such individuals' current cash compensation are the annual base salary and bonus
included in the Summary Compensation Table. The bonus amounts represent amounts
that the Compensation Committee and the Board have approved for each named
individual based on company and individual performance during 1993. The
long-term portion of the individuals' total compensation is provided under
Holdings' 1990 Long Term Incentive Plan (the "LTIP") which provides for various
types of stock-based awards such as stock options, restricted stock and
performance share awards, as described below. Also described below is the future
compensation such individuals can receive under Holdings' retirement plans or,
following termination of employment, under private employment agreements between
Holdings and such individuals.
SUMMARY COMPENSATION TABLE
The following table presents certain specific information regarding the
1993 compensation of the five most highly compensated executive officers of
Holdings at the end of the last fiscal year and two other individuals who served
as chief executive officers of Holdings during the last fiscal year. Effective
March 26, 1993, Mr. Gerstner resigned from his position as Chairman and Chief
Executive Officer of Holdings. On that date, Messrs. Ricciardi and von der
Heyden were elected Co-Chairmen and Chief Executive Officers of Holdings. Prior
thereto, Mr. Ricciardi had served as Executive Vice President and General
Counsel and Mr. von der Heyden had served as Executive Vice President and Chief
Financial Officer. On May 27, 1993, Mr. Harper was elected a director and sole
Chairman and Chief Executive Officer of Holdings. Also on such date, Mr.
Ricciardi was elected President, and Mr. von der Heyden resigned as an officer
and director of Holdings. On January 3, 1994, Mr. Thoman ceased to be an
executive officer of Holdings.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------------------------------- -------------------------------------------
OTHER ANNUAL RESTRICTED LONG-TERM
NAME & PRINCIPAL COMPENSATION STOCK STOCK INCENTIVE
POSITION YEAR SALARY ($) BONUS ($) ($) AWARD(S)($)(6) OPTIONS (#) PAYOUTS ($)
- ---------------------- --------- ---------- ---------- --------------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles M. Harper 1993 $ 704,615 $1,750,000 $ 472,830(1) $ 0 8,750,000 $ 0
Chairman & Chief
Executive Officer
Lawrence R. Ricciardi 1993 $ 557,333 $ 462,000 $ 77,254(2) $ 815,625 500,000 $ 0
President & General 1992 $ 420,833 $ 385,000 $ 59,480 $ 0 0 $ 0
Counsel 1991 $ 400,000 $ 400,000 $ 0 560,000 $ 0
H. John Greeniaus 1993 $ 603,445 $ 557,000 $ 71,398(3) $ 600,000 500,000 $ 0
Chairman & Chief 1992 $ 572,500 $ 310,000 $ 58,644 $ 0 0 $ 0
Executive Officer, 1991 $ 560,000 $ 450,000 $ 0 720,000 $ 0
Nabisco Foods Group
James W. Johnston 1993 $ 607,292 $ 225,000 $ 123,435(4) $ 826,460 500,000 $ 0
Chairman & Chief 1992 $ 572,500 $ 495,000 $ 99,991 $ 0 0 $ 0
Executive Officer, 1991 $ 560,000 $ 440,000 $ 0 720,000 $ 0
R. J. Reynolds
Tobacco Company
G. Richard Thoman 1993 $ 417,067 $ 347,000 $ 67,796(3) $ 600,000 515,000 $ 0
President & Chief 1992 $ 163,840 $ 150,000 $ 26,888 $ 0 800,000 $ 0
Executive Officer,
Nabisco
International, Inc.
Louis V. Gerstner, Jr. 1993 $ 307,729 $ 0 $2,031,512(5) $ 0 640,000 $ 0
Former Chairman & 1992 $1,161,240 $1,900,000 $1,047,255 $ 0 0 $ 0
Chief Executive 1991 $1,095,510 $2,000,000 $ 0 1,200,000 $ 0
Officer
Karl M. von der Heyden 1993 $ 575,000 $ 420,000 $ 67,088(3) $ 720,000 0 $ 0
Former Co-Chairman & 1992 $ 493,333 $ 428,000 $ 60,462 $ 0 0 $ 0
Chief Executive 1991 $ 485,000 $ 445,000 $ 0 720,000 $ 0
Officer
<CAPTION>
NAME & PRINCIPAL ALL OTHER
POSITION COMPENSATION
- ---------------------- -------------
<S> <C>
Charles M. Harper $ 423,417(7)
Chairman & Chief
Executive Officer
Lawrence R. Ricciardi $ 43,979(7)
President & General $ 12,276
Counsel
H. John Greeniaus $ 34,808(7)
Chairman & Chief $ 17,210
Executive Officer,
Nabisco Foods Group
James W. Johnston $ 70,065(7)
Chairman & Chief $ 17,210
Executive Officer,
R. J. Reynolds
Tobacco Company
G. Richard Thoman $ 22,876(7)
President & Chief $ 9,000
Executive Officer,
Nabisco
International, Inc.
Louis V. Gerstner, Jr. $ 127,912(8)
Former Chairman & $ 150,520
Chief Executive
Officer
Karl M. von der Heyden $ 33,010(7)
Former Co-Chairman & $ 14,893
Chief Executive
Officer
</TABLE>
(Footnotes on following page)
15
<PAGE>
(Footnotes for preceding page)
- ---------------
(1) Mr. Harper's employment agreement requires Holdings to pay annual premiums
on a $5 million permanent life insurance policy owned by Mr. Harper.
$319,653 of the amount shown was Mr. Harper's increased personal income tax
liability attributable to the payment of the 1993 premium by Holdings, which
was reimbursed by Holdings to Mr. Harper under the terms of his employment
agreement. The amount of the 1993 premium is included in the "All Other
Compensation" column. The amount shown also reflects other income tax
liabilities which were reimbursed by Holdings to Mr. Harper ($43,565),
amounts not paid to Mr. Harper but nonetheless allocable to his personal use
of company facilities and aircraft ($52,374), and amounts attributable to
his participation in RJRN's executive perquisite program, which provides him
with supplemental insurance, a leased automobile and an annual allowance
($36,021, based on the portion of the year Mr. Harper was an employee) which
may be used to reimburse miscellaneous expenses and, to the extent not so
used, is paid to him in cash. The supplemental insurance consists of
medical, dental, business travel accident and, to the extent elected, life,
spousal life and personal liability insurance.
(2) Mr. Ricciardi's employment agreement requires Holdings to make annual
payments to Mr. Ricciardi in lieu of paying annual premiums on a $3 million
term life insurance policy for Mr. Ricciardi. $7,417 of the amount shown was
Mr. Ricciardi's increased personal income tax liability attributable to the
1993 payment, which was reimbursed by Holdings to Mr. Ricciardi. The amount
of the 1993 payment is included in the "All Other Compensation" column. The
amount shown also reflects amounts not paid to Mr. Ricciardi but nonetheless
allocable to his personal use of company aircraft ($2,101), and amounts
attributable to his participation in RJRN's executive perquisite program,
which provides him with supplemental insurance, a leased automobile and an
annual allowance ($47,500) which may be used to reimburse miscellaneous
expenses and, to the extent not so used, is paid to him in cash. The
supplemental insurance consists of medical, dental, business travel accident
and, to the extent elected, life, spousal life and personal liability
insurance.
(3) The amounts shown in the table reflect Mr. Greeniaus', Mr. Thoman's and Mr.
von der Heyden's participation in RJRN's executive perquisite program, which
provides each individual with supplemental insurance, a leased automobile
and an annual allowance which may be used to reimburse miscellaneous
expenses and, to the extent not so used, is paid to each individual in cash.
In 1993, the annual allowance for each individual was $47,500. The
supplemental insurance consists of medical, dental, business travel accident
and, to the extent elected, life, spousal life and personal liability
insurance. The amounts shown in the table for Mr. Greeniaus and Mr. von der
Heyden include amounts not paid to them but nonetheless allocable to their
personal use of company aircraft ($10,502 for Mr. Greeniaus and $4,392 for
Mr. von der Heyden).
(4) Mr. Johnston's employment agreement requires Holdings to pay annual premiums
on a $1 million term life insurance policy and a $1 million permanent life
insurance policy owned by Mr. Johnston. $29,851 of the amount shown was Mr.
Johnston's increased personal income tax liability attributable to the
payment of the 1993 premium by Holdings, which was reimbursed by Holdings to
Mr. Johnston. The amount of the 1993 payment is included in the "All Other
Compensation" column. The amount shown also reflects amounts not paid to Mr.
Johnston but nonetheless allocable to his personal use of company aircraft
($30,625) and amounts attributable to Mr. Johnston's participation in RJRN's
executive perquisite program, which provides him with supplemental
insurance, a leased automobile and an annual allowance ($47,500) which may
be used to reimburse miscellaneous expenses and, to the extent not so used,
is paid to him in cash. The supplemental insurance consists of medical,
dental, business travel accident and, to the extent elected, life, spousal
life and personal liability insurance.
(5) Mr. Gerstner resigned as an executive officer of Holdings effective as of
March 26,1993. The amount shown in the table reflects amounts paid or
allocated to Mr. Gerstner pursuant to the terms of his employment agreement
either (i) for the period prior to March 26, 1993 or (ii) in connection with
his termination of employment. The largest component of the amount shown
reflects the funding of Mr. Gerstner's retirement arrangement, as required
by the terms of his employment agreement. Mr. Gerstner's pension at
retirement is calculated using the same formula as is used for the other
individuals in the table, and is in lieu of the supplemental pension
arrangements provided to such individuals. Pursuant to Mr. Gerstner's
employment agreement, this benefit is funded through the delivery to him of
annuity contracts. $448,355 of the amount shown is (i) the cost to Holdings
of a single premium annuity contract delivered to him in 1993 to fund his
incremental pension accruals through December 31, 1992 and (ii) related
reimbursement for taxes. An additional $1,495,959 of the amount shown is (i)
the cost to Holdings of a single premium annuity contract delivered to Mr.
Gerstner following his termination of employment in 1993 to fund incremental
pension accruals in 1993 and the remaining unfunded portion of his
supplemental pension benefit and (ii) related reimbursement for taxes. The
annuity contracts fund an amount equal to the after-tax retirement benefit
accrued by Mr. Gerstner pursuant to his employment agreement, reduced by Mr.
Gerstner's vested benefit provided under Holdings' qualified pension plan.
Mr. Gerstner's employment agreement also required Holdings to pay annual
premiums on a $5 million permanent life insurance policy owned by Mr.
Gerstner. $66,964 of the amount shown was Mr. Gerstner's increased personal
income tax liability attributable to the payment of the 1993 premium by
Holdings, which was reimbursed by Holdings to Mr. Gerstner under the terms
of his employment agreement. The amount of the 1993 premium is included in
the "All Other Compensation" column. The amount shown also reflects amounts
not paid to Mr. Gerstner, but nonetheless allocable to his personal use of
company aircraft ($6,426), and amounts attributable to his participation in
RJRN's executive perquisite program, which provided him with supplemental
insurance, a leased automobile and an annual allowance which was used to
reimburse miscellaneous expenses ($8,038, based on the portion of the year
Mr. Gerstner was an employee). The supplemental insurance consists of
medical, dental, business travel accident and, to the extent elected, life,
spousal life and personal liability insurance.
(6) The amount shown in the table for each named executive officer is equal to
the product of: (i) the closing market price of Common Stock on the date(s)
on which the restricted stock was granted, multiplied by (ii) the number of
restricted shares of Common Stock held by the named executive officer as of
December 31, 1993. Restricted stock holdings as of December 31, 1993, and
their value on such date, based on the value of an equivalent number of
unrestricted shares were: Mr. Harper, 0 shares; Mr. Ricciardi, 135,000
shares ($860,625); Mr. Greeniaus, 100,000 shares ($637,500); Mr. Johnston,
134,840 shares ($859,605); Mr. Thoman, 100,000 shares ($637,500); Mr.
Gerstner, 0 shares; and Mr. von der Heyden, 120,000 shares ($765,000). All
of Mr. Thoman's restricted stock was forfeited upon his termination of
employment on January 3, 1994. Restrictions will lapse on December 31, 1994
with respect to all of the restricted stock described herein.
(7) The amount shown in the table reflects the individual's participation in
RJRN's qualified and non-qualified retirement plans. The amount shown in the
table for Mr. Harper also includes $349,917, which was the 1993 premium for
the insurance policy described in footnote (1). The amount shown in the
table for Mr. Ricciardi also includes $9,045, which was the 1993 payment in
lieu of insurance described in footnote (2). The amount shown in the table
for Mr. Johnston also includes $35,813, which was the 1993 premium for the
insurance policies described in footnote (4).
(Footnotes continued on following page)
16
<PAGE>
(Footnotes continued from preceding page)
(8) The amount shown in the table reflects Mr. Gerstner's participation in
RJRN's qualified and non-qualified retirement plans, but does not include
benefits funded through the annuity contracts described in footnote (5). The
amount shown in the table also includes $116,700, which was the 1993 premium
for the insurance policy described in footnote (5).
STOCK OWNERSHIP
Holdings believes that significant purchases of Common Stock by its
executives through the commitment of personal financial resources is critical to
Holdings' philosophy of encouraging executives to act as owner-managers.
Accordingly, Holdings has implemented two programs to encourage executives to
purchase Common Stock: the Management Equity Participation Plan and the LTIP
(collectively, the "Programs"). Holdings has issued stock options under the
Programs to the named executive officers and to other key employees. Certain
options granted to all of the named executive officers were conditioned on the
purchase by them of Common Stock under purchase stock agreements that, together
with the options granted, contained a variety of limitations on the ability of
the holders to transfer or realize gain from the purchase stock or the options.
The executives received options to purchase four shares of Common Stock for
every share purchased.
In connection with the purchase of Common Stock under the LTIP, executives
were permitted to borrow on a secured basis from Holdings the purchase price for
the shares of the purchased stock. In addition, purchasers were entitled to
borrow money from Holdings on substantially the same terms to pay taxes due on
any taxable income recognized in connection with such purchases. The current
annual interest rate, which was set in July 1993 at the then applicable federal
rate for long term loans, is 6.37%. The indebtedness, plus accrued interest and
taxes, must be repaid upon the earlier of sale of the shares or termination of
plan participation. As of the latest practicable date, the named executive
officers and other executive officers of Holdings, with outstanding indebtedness
in connection with such loans were: Mr. Ricciardi $1,303,699; Mr. Greeniaus
$1,992,900; Mr. Johnston $1,676,185; Mr. Thoman $605,473; Mr. Eugene R. Croisant
(Executive Vice President, Human Resources and Administration) $931,214; Mr.
Stephen W. Wilson (Executive Vice President and Chief Financial Officer)
$458,754; and Mr. Robert S. Roath (Senior Vice President and Controller)
$257,605. Mr. Thoman repaid a portion of his indebtedness on January 3, 1994.
The largest amount of indebtedness in 1993 for Mr. Thoman was $1,888,839.
Messrs. Gerstner and von der Heyden repaid their indebtedness during 1993. The
largest amount of outstanding indebtedness during 1993 for Mr. Gerstner was
$2,739,014 and for Mr. von der Heyden was $1,637,697.
The following table identifies the stock option grants made to the named
executive officers in 1993.
<TABLE>
OPTION GRANTS IN THE LAST FISCAL YEAR (1993)
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF AT ASSUMED ANNUAL RATES OF
SECURITIES PERCENT OF TOTAL STOCK PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN FISCAL PRICE EXPIRATION --------------------------
NAME GRANTED (#) YEAR ($/SHARE) DATE 0.0% 5.0%
- ------------------------------ ----------- ------------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
C. M. Harper(1)............... 8,000,000 16.1% $ 5.625 5/31/08 $ 0 $ 48,551,768
750,000... 1.5% $ 6.563 12/31/08 $ 0 $ 5,310,754
L. R. Ricciardi(2)............ 500,000 1.0% $ 5.563 7/1/08 $ 0 $ 3,001,039
H. J. Greeniaus(2)............ 500,000 1.0% $ 5.563 7/1/08 $ 0 $ 3,001,039
J. W. Johnston(2)............. 500,000 1.0% $ 5.563 7/1/08 $ 0 $ 3,001,039
G. R. Thoman(2)............... 65,000 0.1% $ 8.250 1/1/08 $ 0 $ 578,575
450,000 0.9% $ 5.563 7/1/08 $ 0 $ 2,700,935
L. V. Gerstner, Jr.(3)........ 640,000 1.3% $ 8.250 3/29/93 n/a n/a
K. M. von der Heyden.......... 0 0.0% n/a n/a n/a n/a
All Stockholders(4)........... n/a n/a n/a n/a $ 0 $7,827,431,878
Gain to Named Executive
Officers as a Percentage of
Gain to All Stockholders(5)... n/a n/a n/a n/a n/a 0.845%
<CAPTION>
NAME 10.0%
- ------------------------------ ---------------
<S> <C>
C. M. Harper(1)............... $ 142,976,168
$ 15,639,210
L. R. Ricciardi(2)............ $ 8,837,516
H. J. Greeniaus(2)............ $ 8,837,516
J. W. Johnston(2)............. $ 8,837,516
G. R. Thoman(2)............... $ 1,703,799
$ 7,953,764
L. V. Gerstner, Jr.(3)........ n/a
K. M. von der Heyden.......... n/a
All Stockholders(4)........... $23,050,369,876
Gain to Named Executive
Officers as a Percentage of
Gain to All Stockholders(5)... 0.845%
</TABLE>
(Footnotes on following page)
17
<PAGE>
(Footnotes for preceding page)
- ---------------
(1) Mr. Harper's stock options were granted pursuant to the terms of his
employment agreement (described below). The first grant shown for Mr. Harper
was made on May 31, 1993, and the second grant shown for Mr. Harper was made
on December 31, 1993. The exercise price of the stock options is equal to
the fair market value of Common Stock on the date immediately prior to the
date of grant. The stock options become exercisable over four years in
accordance with the following schedule: 25% on each May 31, beginning May
31, 1994. The stock options have terms of 15 years from the date of grant,
but are subject to earlier cancellation in certain circumstances.
(2) The stock options identified on the table were granted on July 1, 1993
(except for the first grant shown for Mr. Thoman, which was made on January
1, 1993). The exercise price of the stock options is equal to the fair
market value of Common Stock on the date of grant. The stock options have
terms of 15 years from the date of grant, but are subject to earlier
cancellation in certain circumstances. The stock options granted to Mr.
Thoman in 1993 (with the exception of options with respect to 21,450 shares
of Common Stock) were forfeited on January 3, 1994 when he ceased to be an
executive officer of Holdings.
(3) The stock options were granted to Mr. Gerstner on January 28, 1993 and had
an original expiration date of January 1, 2008 but were forfeited on March
26, 1993 in connection with Mr. Gerstner's resignation as an executive
officer of Holdings.
(4) The amounts on this line of the table show the potential increase in the
value of the Common Stock issued and outstanding as of December 31, 1993
(1,138,011,292 shares) if the assumed annual rates of stock price
appreciation are maintained over a 15 year term (equal to the term of the
stock options) beginning December 31, 1993.
(5) No gain to the optionees is possible without an increase in the price of
Common Stock, which would benefit all stockholders commensurately.
The following table provides information relating to the number and value
of shares of Common Stock subject to options held by the named executive
officers as of December 31, 1993. There were no stock option exercises during
1993 by any of the named individuals.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END VALUE (1993)
<CAPTION>
VALUE OF UNEXERCISED,
IN-THE-MONEY
TOTAL NO. UNEXERCISED OPTIONS HELD AT FY-END
SHARES OPTIONS HELD AT FY-END (#) ($)(1)
ACQUIRED ON VALUE -------------------------- ----------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- ------------------- --------------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
C. M. Harper.............. 0 $0 0 8,750,000 $0 $6,000,000
L. R. Ricciardi........... 0 $0 760,799 1,019,201 $792,000 $604,000
H. J. Greeniaus........... 0 $0 1,197,600 1,222,400 $1,320,000 $736,000
J. W. Johnston............ 0 $0 1,197,600 1,222,400 $1,320,000 $736,000
G. R. Thoman(2)........... 0 $0 285,450 1,029,550 $0 $365,400
L. V. Gerstner, Jr........ 0 $0 3,211,320 0 $4,360,565 $0
K. M. von der Heyden...... 0 $0 1,197,600 722,400 $1,320,000 $330,000
</TABLE>
- ---------------
(1) Calculated based on the excess of the fair market value of Common Stock on
December 31, 1993 ($6.375) over the option exercise price.
(2) The unexercisable options shown for Mr. Thoman were forfeited on January 3,
1994 when he ceased to be an executive officer of Holdings.
LONG TERM INCENTIVE AWARDS
The following table describes performance shares that were granted to the
named executive officers in 1993 pursuant to the LTIP. The performance share
program is designed to encourage participants to maintain a long term strategic
focus while also promoting stock ownership. Participants are granted a
designated number of performance shares, which may be earned upon completion of
a three-year performance period. Payouts of awards at the end of the performance
period are based on Holdings' cumulative cash earnings per share during the
performance period.
18
<PAGE>
<TABLE>
LONG TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR (1993)
<CAPTION>
AWARDS
------------------------------------------ ESTIMATED FUTURE PAYOUTS(1)
PERFORMANCE OR -------------------------------------------
NO. OF SHARES/UNITS OTHER PERIOD UNTIL THRESHOLD TARGET MAXIMUM
NAME OR OTHER RIGHTS (#) MATURATION OR PAYOUT (# OF SHARES) (# OF SHARES) (# OF SHARES)
- -------------------------- ------------------- --------------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
C. M. Harper.............. 0 n/a n/a n/a n/a
L. R. Ricciardi........... 50,000 12/31/95 30,000 50,000 75,000
H. J. Greeniaus........... 50,000 12/31/95 30,000 50,000 75,000
J. W. Johnston............ 50,000 12/31/95 30,000 50,000 75,000
G. R. Thoman(2)........... 50,000 12/31/95 30,000 50,000 75,000
L. V. Gerstner, Jr.(3).... 182,000 12/31/95 0 0 0
K. M. von der Heyden...... 50,000 12/31/95 30,000 50,000 75,000
</TABLE>
- ---------------
(1) If targeted results are achieved, the participant will receive a number of
shares of Common Stock equal to the number of performance shares granted.
The threshold number of shares will be awarded if the actual performance
equals 91.8% of the target, and the maximum number of shares will be awarded
if the actual performance equals 104.1% of the target.
(2) The performance shares granted to Mr. Thoman were forfeited on January 3,
1994 when he ceased to be an executive officer of Holdings.
(3) The performance shares granted to Mr. Gerstner were forfeited on March 26,
1993 when he ceased to be an executive officer of Holdings.
RETIREMENT PLANS
The named executive officers participate in noncontributory defined benefit
retirement plans maintained by Holdings or its subsidiaries. Mr. Ricciardi, Mr.
Greeniaus, Mr. Johnston, Mr. Thoman, and Mr. von der Heyden also participate in
a Supplemental Executive Retirement Plan. Mr. Harper's employment agreement
provides him with a vested supplemental pension substantially similar to the
Supplemental Executive Retirement Plan, except that Mr. Harper will be credited
with 6 years of service in addition to his actual service with RJRN. Mr.
Gerstner's employment agreement also provided him with a vested supplemental
pension. Following Mr. Gerstner's resignation in March 1993, the supplemental
pension provided to Mr. Gerstner pursuant to his employment agreement, stated as
a single-life annuity commencing at age 60, was $1,196,004 per year, and has
been fully funded through the purchase of annuity contracts, as described in
footnote 5 to the Summary Compensation Table. Benefits under the Supplemental
Executive Retirement Plan are payable only after a participant's retirement at a
specified retirement age. Mr. Thoman's retirement plan benefits were forfeited
on January 3, 1994 when he ceased to be an executive officer of Holdings.
The following table shows the estimated annual benefits payable upon
retirement under the Supplemental Executive Retirement Plan and, in Mr. Harper's
case, pursuant to his employment agreement, as described in the preceding
paragraph. The retirement benefits shown are computed without regard to the
Social Security offset and are based upon retirement at age 60 and the payment
of a single-life annuity to the employee.
ESTIMATED ANNUAL RETIREMENT BENEFITS
YEARS OF SERVICE
-------------------------------------
AVERAGE FINAL COMPENSATION 10 OR FEWER 15 20 OR MORE
-------------------------- ----------- ----------- -----------
$ 800,000 266,666 300,000 400,000
$ 900,000 300,000 337,500 450,000
$ 1,000,000 333,333 375,000 500,000
$ 1,200,000 400,000 450,000 600,000
$ 1,600,000 533,333 600,000 800,000
$ 2,000,000 666,666 750,000 1,000,000
$ 2,400,000 800,000 900,000 1,200,000
$ 2,800,000 933,333 1,050,000 1,600,000
$ 3,200,000 1,066,666 1,200,000 1,600,000
$ 3,600,000 1,200,000 1,350,000 1,800,000
$ 4,000,000 1,333,333 1,500,000 2,000,000
19
<PAGE>
The retirement benefits for Mr. Harper, Mr. Ricciardi, Mr. Greeniaus, Mr.
Johnston, and Mr. von der Heyden are determined under this table. For purposes
of determining retirement benefits under the Supplemental Executive Retirement
Plan (and, in Mr. Harper's case, under his employment agreement), compensation
includes base salary, bonus (in the year earned) and pre-tax contributions to
plans maintained under sections 401(k) and 125 of the Code. "Average Final
Compensation" under the Supplemental Executive Retirement Plan (and, in Mr.
Harper's case, under his employment agreement) is determined by considering the
36 consecutive months that yield the highest average compensation during the
participant's last 60 months of service. If the participant has fewer than 36
months of service, all months are considered. Average Final Compensation as of
December 31, 1993 for the named individuals who are participants in the
Supplemental Executive Retirement Plan was: Mr. Ricciardi: $875,056; Mr.
Greeniaus: $1,024,982; Mr. Johnston: $1,024,311; and Mr. von der Heyden:
$948,778. Mr. Harper's Average Final Compensation as of December 31, 1993 was
$3,000,000. The following are estimated years of credited service at age 60
(rounded to the nearest year) under the Supplemental Executive Retirement Plan
(giving effect to individual arrangements) for the participants listed above:
Mr. Ricciardi: 27 years; Mr. Greeniaus: 28 years; and Mr. Johnston: 30 years. On
June 16, 1994, the effective date of Mr. von der Heyden's retirement as an
employee, Mr. von der Heyden's years of credited service will be 20 years. Mr.
Harper's estimated years of credited service at the end of the term of his
employment agreement will be 10 years.
AGREEMENTS WITH CERTAIN OFFICERS
In 1993, Holdings and RJRN entered into an employment agreement with Mr.
Harper pursuant to which Mr. Harper became employed as Chief Executive Officer
and Chairman of the Board of Holdings and RJRN for a period commencing on May
31, 1993 and continuing through May 31, 1997. Pursuant to the employment
agreement, Mr. Harper will receive a base salary of $1.2 million per annum,
increasing each January 1 by at least 6%. Pursuant to the employment agreement,
Mr. Harper received a bonus of $1.75 million in 1993 and will receive guaranteed
annual minimum bonuses so that his salary plus bonuses for calendar years after
1994 will be at a rate that is no less than $3.0 million per year. Pursuant to
the employment agreement, Mr. Harper is provided with life insurance in the
amount of $5 million.
Mr. Harper's employment agreement provides that Mr. Harper will receive a
supplemental pension substantially similar to the Supplemental Executive
Retirement Plan, except that Mr. Harper will be credited for six of his years of
service with his previous employer in addition to his actual service with RJRN.
Mr. Harper's benefit under this supplemental pension is vested at all times. Mr.
Harper's employment agreement also provides for the payment to Mr. Harper of
compensation continuance until May 31, 1997, based on Mr. Harper's then current
base salary and the highest annual bonus paid to, or accrued for, him, if
Holdings or RJRN terminates Mr. Harper's employment without cause or if Mr.
Harper terminates his employment under conditions specified in the employment
agreement. Under certain circumstances involving a change of control of
Holdings, Mr. Harper would also be reimbursed for the amount of the excise tax,
if any, on his termination payments, as well as any incremental income taxes
payable on the reimbursed amount.
Under the terms of his employment agreement, Mr. Harper was required to
purchase 622,222 shares of Common Stock at a price of $5.625 (the closing market
price on May 21, 1993) from Holdings. The employment agreement restricts the
transfer of such stock so long as Mr. Harper remains employed by Holdings or any
of its subsidiaries. The purchase of such stock was a condition to the grant to
Mr. Harper on May 31, 1993 under the LTIP of options to purchase 8,000,000
shares of Common Stock at an exercise price of $5.625. Such options will become
vested and exercisable in four equal annual installments on the first, second,
third and fourth anniversaries of the date of grant. The employment agreement
also provides that Holdings will grant options to purchase 750,000 shares of
Common Stock to Mr. Harper on each December 31 on which he remains employed by
RJRN through December 31, 1996. The exercise price for such options will be
equal to the fair market value of such shares on the business day immediately
preceding the date of grant. Such additional options will become
20
<PAGE>
vested and exercisable in equal annual installments on each May 31 after the
date of grant through May 31, 1997. All of the options referred to above will be
exercisable for 15 years from the date of grant unless Mr. Harper's employment
terminates other than by reason of a permitted retirement. If his employment
terminates for any reason other than a permitted retirement, the options will
remain exercisable for one year, provided that if his termination were for
cause, the options would terminate immediately.
Mr. Ricciardi, Mr. Johnston and Mr. Greeniaus also have employment
agreements with RJRN.
In 1993, Holdings and RJRN entered into a revised employment agreement with
Mr. Ricciardi for the period commencing on May 31, 1993 and continuing through
May 31, 1997, pursuant to which Mr. Ricciardi will receive an annual base salary
of no less than $600,000. Mr. Ricciardi's employment agreement also provides
that if his employment is terminated without cause or if he terminates
employment for reasons specified in the agreement, he will receive compensation
and benefit continuance for the longer of (i) 36 months or (ii) the remainder of
the term of the agreement. Such continued compensation will be based on Mr.
Ricciardi's annual base salary plus the highest annual bonus paid to, or
targeted for, him. Pursuant to the employment agreement, Mr. Ricciardi is
entitled to $3 million of term life insurance during the term of the agreement,
and is reimbursed for taxes incurred as a result of this arrangement. In
addition, Mr. Ricciardi has an arrangement with RJRN pursuant to which he is
credited with an additional 16 years of benefit calculation service under the
Supplemental Executive Retirement Plan to reflect service with his prior
employer. Upon reaching age 55 (or if terminated by RJRN prior thereto other
than for cause) Mr. Ricciardi will be entitled to his maximum benefit under the
Supplemental Executive Retirement Plan, without reduction for early retirement.
Mr. Johnston's employment agreement was revised in 1993. Mr. Johnston will
receive a base salary of no less than $700,000 per annum and a target bonus of
at least 70% of his base salary. Mr. Johnston's revised employment agreement
provides that if his employment is terminated without cause (as defined in the
employment agreement) or if he terminates employment for reasons specified in
the agreement he will receive compensation and benefit continuance for three
years, based on his then current annual base salary and targeted annual bonus.
Mr. Johnston may elect to receive the discounted present value of his severance
in a lump sum. Mr. Johnston is not entitled to severance if he voluntarily
resigns or if he is terminated for cause. In the event of a change of control
(as defined in the employment agreement), Mr. Johnston would receive three
annual lump-sum payments equal in the aggregate to the salary and bonus that
would have been payable to him had his termination occurred upon such change of
control; provided, however, that any amounts payable upon subsequent termination
of employment shall be offset by amounts paid in connection with such change of
control. Pursuant to the employment agreement, Mr. Johnston is provided with $1
million of term life insurance and $1 million of whole life insurance while
actively employed. Mr. Johnston will continue to be provided with his whole life
insurance following termination of employment (other than for cause) until age
70. Mr. Johnston is reimbursed for taxes payable as a result of this
arrangement. Pursuant to the employment agreement, Mr. Johnston is credited
under the Supplemental Executive Retirement Plan with 8 years of service in
addition to his actual current and prior service with subsidiaries of RJRN. Mr.
Johnston's normal retirement age for purposes of the Supplemental Executive
Retirement Plan is 52, and no early retirement reduction will be taken unless
Mr. Johnston terminates employment without good reason prior to attaining age
52.
Mr. Greeniaus's employment agreement provides that if he is involuntarily
terminated other than for cause, he will receive three years' base salary plus
bonus. Payments would be made over three years, except that such continued
compensation would not extend beyond normal retirement age established under the
Supplemental Executive Retirement Plan. Compensation continuance is based on the
annual rate of salary in effect immediately prior to termination and the most
recent annual incentive award or then current target level, if higher.
Mr. Ricciardi, Mr. Johnston and Mr. Greeniaus have each entered into
agreements with Holdings pursuant to which they are expected to receive grants
of Common Stock on future dates based on the
21
<PAGE>
difference between a specified percentage of the maximum amount that they could
have borrowed from Holdings to acquire stock purchased by such individuals under
the LTIP and the fair market value (on such future grant dates) of the same
percentage of their purchase stock. The number of shares of Common Stock that
may be granted, if any, is not presently determinable.
Mr. Gerstner's employment agreement was terminated in 1993 upon his
resignation. Amounts paid to Mr. Gerstner in 1993 pursuant to his employment
agreement are described in footnotes to the Summary Compensation Table.
Mr. von der Heyden has an arrangement with RJRN pursuant to which he is
credited with an additional 15 years of benefit calculation service under the
Supplemental Executive Retirement Plan.
DIRECTORS' COMPENSATION
Directors who are not employees of Holdings or its subsidiaries are
compensated at the rate of $50,000 per year. Holdings provides directors who are
not employees and who are not associated with KKR with life insurance having a
death benefit of $100,000, participation in charitable giving programs and
supplemental insurance programs. In addition, each of the current directors who
is neither associated with KKR nor an employee of Holdings or its subsidiaries
is granted an option pursuant to a stock option plan to purchase 30,000 shares
of Common Stock. The options have an exercise price equal to the fair market
value of the Common Stock on the date of grant and are exercisable for ten years
from the date of grant. With the exception of the option grant made in 1994 to
Gen. Chain, whose option will vest six months from the date of grant, option
grants to other eligible directors are fully vested or have been exercised. No
additional compensation is paid to directors who are employees of Holdings or
its subsidiaries in their capacity as directors.
Directors who have never been employees of Holdings or its subsidiaries and
who are not associated with KKR participate in the Directors Retirement Plan.
The Directors Retirement Plan provides each eligible director with a monthly
allowance equal to the monthly directors' fee in effect on the date the
director's service terminates. The maximum benefits payable under the Directors
Retirement Plan are (a) for those directors with ten or more years of service,
180 monthly payments; (b) for those directors with less than ten but more than
five years of service, monthly payments equal to 180 multiplied by a fraction,
the numerator of which is equal to the years of service of such director and the
denominator of which is 10; or (c) for directors with less than five years of
service, 48 monthly payments. For purposes of computing years of service,
partial years of service count as a full year. The Directors Retirement Plan
also provides that upon a "change in control", the Directors Retirement Plan
cannot be amended or terminated.
Compensation Committee Interlocks and Insider Participation. The
Compensation Committee consists of Messrs. Jordan, Raether and Stuart. Mr.
Raether was an officer of Holdings from February 1989 through February 1991, and
Mr. Stuart was an officer of Holdings from November 1988 through February 1991.
KKR, of which Mr. Raether is a general partner and Mr. Stuart is an executive,
renders management, consulting and financial services to Holdings and its
subsidiaries for an annual fee. A fee of $10,000,000 plus expenses has been paid
for such services performed in 1993. Partners and employees of KKR who also
serve as directors and officers of Holdings or its subsidiaries do not receive
additional compensation for service in such capacity, other than customary
directors' fees.
The law firm of Akin, Gump, Strauss, Hauer & Feld of Washington, D.C. and
Dallas, Texas, of which Mr. Jordan is a Senior Partner, provided legal services
to RJRN during 1993.
Mr. Johnston is a member of the Nominating, Compensation and Organization
Committee of the Board of Directors of Wachovia Corporation. Mr. Medlin, who is
a director of Holdings, is Chairman of Wachovia Corporation.
22
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURNS
RJR NABISCO HOLDINGS CORP., S&P 500 INDEX, AND S&P FOOD/TOBACCO INDEX
[PERFORMANCE CHART FILED IN PAPER FORMAT UNDER FORM SE]
- ---------------
. The S&P Food/Tobacco Index is a weighted average of the separate S&P Food and
Tobacco Indices based upon the percentage of operating income from Holdings'
business units. As of December 31, 1993 59% of Holdings' total company
operating income came from Tobacco operations and 41% came from Food
operations.
. Total returns assume $100 invested on February 1, 1991 in Common Stock, the
S&P 500 Index, and the S&P Food/Tobacco Index with reinvestment of dividends.
Common Stock was first issued to the public under a registration statement
which was effective January 31, 1991. February 1, 1991 was the first trading
day for Common Stock.
23
<PAGE>
COMPENSATION COMMITTEE REPORT
This report was prepared by the Compensation Committee of the Board of
Directors (the "Committee") of Holdings which is comprised solely of independent
directors who are not employees of Holdings or its subsidiaries. The Committee
designs and administers Holdings' executive compensation programs and has
responsibility for all compensation and benefits matters of Holdings' executive
officers. The current members of the Committee are Vernon E. Jordan, Jr. who
serves as Chairman, Paul E. Raether and Scott M. Stuart.
OVERVIEW
In determining the amount and composition of executive compensation, the
Committee is guided by the following fundamental objectives: (1) attracting and
retaining outstanding executive officers; (2) encouraging executives to hold
significant amounts of Common Stock; and (3) ensuring that a substantial portion
of executive compensation is variable, tied to quantifiable short-term and
long-term measures of Holdings' performance. These principles are discussed in
more detail below.
The adverse effect on Holdings' common stock of significant unanticipated
events in the domestic cigarette market during 1993 had a disproportionate
impact on Holdings' executive compensation plans when compared to many other
companies because Holdings' executive compensation philosophy is so heavily
weighted toward stock value. The Committee believes this represented a
significant risk to the stability of Holdings' management group. Although normal
variations in stock value are inherent to Holdings' assumptions in setting
targeted compensation levels, unprecedented adverse changes in stock value
impair the effectiveness and competitiveness of Holdings' programs. Because the
Committee and the Board of Directors believe the management group represents an
important competitive asset of Holdings, the Committee made changes to the
incentive and employment arrangements for key executives during 1993 that
enabled it to retain such individuals and to attract other individuals to
replace certain key executives who left Holdings.
LONG-TERM INCENTIVE COMPENSATION PROGRAM
As of December 31, 1993, 345 key executives of Holdings and its
subsidiaries owned approximately 8,445,000 shares of Common Stock. This number
is exclusive of stock options or future incentive awards. The Committee believes
this number is significant and that, in many cases, it represents a majority of
the net worth of individual executives. This significant stock ownership
properly aligns executives' interests with that of shareholders.
Holdings' current principal form of long term incentive compensation is a
combination of performance shares and non-qualified stock options. During the
year, both performance shares and stock options were granted to key executives.
The performance shares granted during 1993 related to a three-year award
cycle ending after the 1995 fiscal year. The Committee adjusted the targeted
performance measures under such awards so that the performance shares granted
would be tied to its new five year financial objectives and, in the wake of
changes in the domestic tobacco industry, continue to represent meaningful
incentives to executives. To further motivate executives in the face of
challenges in the domestic tobacco industry, the Committee also approved stock
option awards during 1993 in advance of their normal grant date, which would
have been January 1994. These grants are in lieu of those planned to be made in
January 1994.
The Committee also chose to make grants of restricted stock to a small
group of executives during 1993 to reflect their importance to Holdings during
this period and to provide additional stock-based incentives for such
individuals to remain with Holdings. In addition, during 1993 the Committee made
stock-based grants to executives who had purchased stock under the LTIP during
1991. With respect to the individuals named in the summary compensation table,
these grants provide for delivery during the following four years of shares of
Common Stock or cash to such individuals if they remain employed by Holdings on
each anniversary date of the grants or are involuntarily terminated. The amount
delivered will be based on the shortfall, if any, in the value of the stock
purchased by them from their assumed costs related to 25% of the stock
purchased, as measured on each such anniversary date. The
24
<PAGE>
Committee believes this program was necessary to encourage executives to
maintain their level of stock ownership.
ANNUAL INCENTIVE COMPENSATION PROGRAM
The Committee believes that Holdings' short-term objectives are enhanced
with annual performance-based compensation under Holdings' AIAP. The annual
award under the AIAP is based on both performance by Holdings against financial
objectives during the current year, focusing on operating company contribution
and cash flow, and the executive's individual performance. As an executive's
level of responsibility increases, a greater portion of potential total cash
compensation is at risk in the form of annual performance-based incentives,
which can cause variability in the executive officer's actual total cash
compensation from year to year. Because of the financial performance of
Holdings' domestic tobacco subsidiary during 1993, aggregate bonuses for
executives on the corporate staff and in the domestic tobacco business were
lower than in the prior year. Because of the strong performance of Holdings'
international tobacco and food businesses during 1993, aggregate bonuses for
executives in those businesses were higher than in the prior year.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Mr. Harper's compensation was determined pursuant to his employment
agreement with Holdings, which was approved unanimously by the Board of
Directors, and reflects levels of compensation necessary to obtain an executive
of Mr. Harper's experience and stature and are comparable to those previously
provided to Mr. Gerstner. Although this agreement allows annual incentive awards
in excess of those specified in such agreement, the Committee determined not to
award any additional amount for Mr. Harper's services during 1993.
Mr. Ricciardi briefly served as a Co-Chairman and Chief Executive Officer
before Mr. Harper joined Holdings and he has subsequently served as President
and General Counsel. His cash compensation reflected increased base salary
during the year. The increased salary and his annual incentive award and changes
to his employment agreement were determined based on his increased
responsibilities during the year, and his key role in the successful management
transition following Mr. Gerstner's resignation and in directing a number of
critical corporate staff projects during the year. Mr. Ricciardi's long term
incentive awards during the time he was Co-Chairman and Chief Executive Officer
were designed to reflect his increased responsibilities and to encourage him to
remain with Holdings.
Mr. von der Heyden's annual incentive award was determined pursuant to his
retirement arrangement with Holdings, although his salary was increased after
Mr. Gerstner's resignation to reflect increased responsibilities. Mr. Gerstner's
compensation was determined pursuant to his employment contract. Although Mr.
Gerstner and Mr. von der Heyden were awarded performance shares during 1993 at
levels determined to be appropriate and competitive for their responsibilities,
the performance shares were forfeited upon their resignations. Mr. von der
Heyden was awarded restricted stock during the period he was Co-Chairman and
Chief Executive Officer. The Committee determined that in order to assure
Holdings continued access to Mr. von der Heyden following his resignation, it
was appropriate to allow him to vest in this restricted stock at a later time.
Changes made to the Internal Revenue Code in 1993 limit Holdings' ability
to deduct, for federal income tax purposes, certain compensation in excess of $1
million per year paid to individuals named in the summary compensation table.
This limitation is effective beginning in 1994. Holdings has taken steps to
minimize the impact of this limitation in 1994 and will continue to seek ways to
do so without compromising Holdings' and the Committee's flexibility in
designing effective compensation plans that can respond quickly to marketplace
and company needs. Although the Committee will from time-to-time review the
advisability of making changes in compensation plans to reflect government
mandated policies, it will not do so unless it feels that such changes are in
the best interest of Holdings or its stockholders, particularly in a company
that must compete for executive talent on a global basis.
Respectfully submitted,
Vernon E. Jordan, Jr.
Paul E. Raether
Scott M. Stuart
25
<PAGE>
OTHER INFORMATION
Solicitation may be made personally, by telephone, by telegraph or by mail
by officers and employees of Holdings and its subsidiaries who will not be
additionally compensated therefor. Holdings will request persons such as
brokers, nominees and fiduciaries, holding stock in their names for others, or
holding stock for others who have the right to give voting instructions, to
forward proxy material to their principals and request authority for the
execution of the proxy. Holdings will reimburse such persons for their expenses
in so doing. MacKenzie Partners, Inc. has been retained to assist in the
solicitation of proxies for a fee not to exceed $20,000, plus reimbursement of
out of pocket expenses. The total cost of soliciting proxies will be borne by
Holdings.
The Board of Directors has no knowledge of any other matters to be
presented at the meeting other than those described herein. If any other matters
should properly come before the meeting, it is the intention of the persons
designated in the proxy to vote thereon according to their best judgment.
Stockholders are urged to forward their proxies without delay. A prompt
response will be greatly appreciated.
RJR NABISCO HOLDINGS CORP.
New York, New York
April 11, 1994
26
<PAGE>
PROXY RJR NABISCO HOLDINGS CORP.
ANNUAL MEETING OF STOCKHOLDERS--MAY 4, 1994
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Charles M. Harper, Lawrence
R. Ricciardi and Robert F. Sharpe, Jr., and each of them, his true and lawful
agents and proxies with full power of substitution in each, to represent the
undersigned at the Annual Meeting of Stockholders of RJR NABISCO HOLDINGS CORP.,
to be held at the Holiday Inn, Civic Center, 700 Rogers Avenue, Fort Smith,
Arkansas on Wednesday, May 4, 1994 at 2:00 P.M., and at any adjournments or
postponements thereof, and to vote all the shares of stock of the Company which
the undersigned may be entitled to vote on all matters coming before said
meeting.
Election of Directors. Nominees:
J.T. Chain, Jr.; J.L. Clendenin; J.H. Greene, Jr.; H.J. Greeniaus; C.M. Harper;
J.W. Johnston; H.R. Kravis; J.G. Medlin, Jr.; P.E. Raether; L.R. Ricciardi; R.L.
Ridgway; C.S. Robbins; G.R. Roberts; S.M. Stuart and M.T. Tokarz.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2 AND AGAINST PROPOSALS 3, 4, 5 AND 6. PLEASE MARK
THIS PROXY CARD, FILL IN THE DATE AND SIGN ON THE REVERSE SIDE AND RETURN
PROMPTLY IN THE ACCOMPANYING ENVELOPE. NO POSTAGE IS NECESSARY IF MAILED IN THE
UNITED STATES.
Change of address:
________________________________________________________________________________
[X] Please mark your votes as in this example.
The proxies are directed to vote as specified below and in their discretion
on all other matters. If no direction is made, this signed Proxy will be voted
FOR the election of all directors, FOR proposal 2 and AGAINST proposals 3, 4, 5
and 6.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
1. Election of Directors (see reverse) FOR [ ] WITHHELD [ ]
For, except withheld from the following nominee(s):
--------------------------------------------------------------------
2. Ratify the appointment of Deloitte & Touche as Independent Auditors
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 3, 4, 5 AND 6.
3. Stockholder proposal on cigarette sales to minors
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Stockholder proposal on facilitating tobacco farmers' economic conversion
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. Stockholder proposal on warning labels for advertising and promotional items
FOR [ ] AGAINST [ ] ABSTAIN [ ]
6. Stockholder proposal on legislative activity and research funding
FOR [ ] AGAINST [ ] ABSTAIN [ ]
WILL ATTEND DO NOT SEND
ANNUAL MEETING [ ] ANNUAL REPORTS [ ] Please sign exactly as name
appears hereon. Joint owners
should each sign. When
signing as attorney,
executor, administrator,
trustee or guardian, please
give full title as such.
---------------------------------------
---------------------------------------
Signature(s) Date
<PAGE>
P R O X Y [ PERCS ]
RJR NABISCO HOLDINGS CORP.
Annual Meeting of Stockholders - May 4, 1994
Proxy Solicitation on Behalf of the Board of Directors
The undersigned hereby constitutes and appoints Charles M. Harper,
Lawrence R. Ricciardi and Robert F. Sharpe, Jr., and each of them, his true and
lawful agents and proxies with full power of substitution in each, to represent
the undersigned at the Annual Meeting of Stockholders of RJR NABISCO HOLDINGS
CORP., to be held at the Holiday Inn, Civic Center, 700 Rogers Avenue, Fort
Smith, Arkansas, on Wednesday, May 4, 1994 at 2:00 P.M., and at any
adjournments or postponements thereof, and to vote all the shares of stock of
the Company which the undersigned may be entitled to vote on all matters coming
before said meeting.
The undersigned is acting pursuant to instructions from the holders
of $.835 Depositary Shares, each representing one-quarter of a share of Series
A Conversion Preferred Stock (PERCS), and evidenced by depositary receipts
issued under the Deposit Agreement, dated as of November 8, 1991, among RJR
Nabisco Holdings Corp., the undersigned and all holders from time to time of
depositary receipts issued thereunder.
This Proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder. If no direction is made, this
Proxy will be voted FOR the election of all directors, FOR proposal 2 and
AGAINST proposals 3, 4, 5 and 6, and in the discretion of the proxies on all
other matters. Please MARK this Proxy Card, fill in the date and sign and
return promptly in the accompanying envelope. No postage is necessary if
mailed in the United States.
The Board of Directors recommends a vote FOR proposals 1 and 2.
1. Election of Directors
FOR WITHHELD
J.T. Chain, Jr. ___________________ ______________________
J.L. Clendenin ___________________ ______________________
J.H. Greene, Jr. ___________________ ______________________
H.J. Greeniaus ___________________ ______________________
C.M. Harper ___________________ ______________________
J.W. Johnston ___________________ ______________________
H.R. Kravis ___________________ ______________________
J.G. Medlin, Jr. ___________________ ______________________
P.E. Raether ___________________ ______________________
L.R. Ricciardi ___________________ ______________________
R.L. Ridgway ___________________ ______________________
C.S. Robbins ___________________ ______________________
G.R. Roberts ___________________ ______________________
S.M. Stuart ___________________ ______________________
M.T. Tokarz ___________________ ______________________
2. Ratify the appointment of Deloitte & Touche as Independent Auditors
FOR AGAINST ABSTAIN
---------------- -------------- --------------
[ continued on reverse ]
<PAGE>
The Board of Directors recommends a vote AGAINST proposals 3, 4, 5 and 6.
3. Stockholder proposal on cigarette sales to minors
FOR AGAINST ABSTAIN
---------------- -------------- --------------
4. Stockholder proposal on facilitating tobacco farmers' economic
conversion
FOR AGAINST ABSTAIN
---------------- -------------- --------------
5. Stockholder proposal on warning labels for advertising and
promotional items
FOR AGAINST ABSTAIN
---------------- -------------- --------------
6. Stockholder proposal on legislative activity and research funding
FOR AGAINST ABSTAIN
---------------- -------------- --------------
Please sign exactly as name appears
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.
__________________________________
Signature(s) Date
First Chicago Trust Company of New York as
Depositary under a Deposit Agreement dated
11/8/91 among RJR Nabisco Holdings Corp.,
First Chicago Trust Company of New York and
Holders of Depositary Receipts Issued Thereunder
14 Wall Street
New York, NY 10005
Holder of record of 52,500,000 shares
of Series A Conversion Preferred Stock
- 2 -
<PAGE>
P R O X Y [ ESOP ]
RJR NABISCO HOLDINGS CORP.
Annual Meeting of Stockholders - May 4, 1994
Proxy Solicitation on Behalf of the Board of Directors
The undersigned hereby constitutes and appoints Charles M. Harper,
Lawrence R. Ricciardi and Robert F. Sharpe, Jr., and each of them, his true and
lawful agents and proxies with full power of substitution in each, to represent
the undersigned at the Annual Meeting of Stockholders of RJR NABISCO HOLDINGS
CORP., to be held at the Holiday Inn, Civic Center, 700 Rogers Avenue, Fort
Smith, Arkansas, on Wednesday, May 4, 1994 at 2:00 P.M., and at any
adjournments or postponements thereof, and to vote all the shares of stock of
the Company which the undersigned may be entitled to vote on all matters coming
before said meeting.
This Proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder. If no direction is made, this
Proxy will be voted FOR the election of all directors, FOR proposal 2 and
AGAINST proposals 3, 4, 5 and 6, and in the discretion of the proxies on all
other matters. Please MARK this Proxy Card, fill in the date and sign and
return promptly in the accompanying envelope. No postage is necessary if
mailed in the United States.
The Board of Directors recommends a vote FOR proposals 1 and 2.
1. Election of Directors
FOR WITHHELD
J.T. Chain, Jr. ___________________ ______________________
J.L. Clendenin ___________________ ______________________
J.H. Greene, Jr. ___________________ ______________________
H.J. Greeniaus ___________________ ______________________
C.M. Harper ___________________ ______________________
J.W. Johnston ___________________ ______________________
H.R. Kravis ___________________ ______________________
J.G. Medlin, Jr. ___________________ ______________________
P.E. Raether ___________________ ______________________
L.R. Ricciardi ___________________ ______________________
R.L. Ridgway ___________________ ______________________
C.S. Robbins ___________________ ______________________
G.R. Roberts ___________________ ______________________
S.M. Stuart ___________________ ______________________
M.T. Tokarz ___________________ ______________________
2. Ratify the appointment of Deloitte & Touche as Independent Auditors
FOR AGAINST ABSTAIN
---------------- -------------- --------------
[ continued on reverse ]
<PAGE>
The Board of Directors recommends a vote AGAINST proposals 3, 4, 5 and 6.
3. Stockholder proposal on cigarette sales to minors
FOR AGAINST ABSTAIN
---------------- -------------- --------------
4. Stockholder proposal on facilitating tobacco farmers' economic
conversion
FOR AGAINST ABSTAIN
---------------- -------------- --------------
5. Stockholder proposal on warning labels for advertising and
promotional items
FOR AGAINST ABSTAIN
---------------- -------------- --------------
6. Stockholder proposal on legislative activity and research funding
FOR AGAINST ABSTAIN
---------------- -------------- --------------
Please sign exactly as name appears
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.
__________________________________
Signature(s) Date
Bull & Co.
Wachovia Bank of North Carolina, N.A.
Box 3075, Trust Operations
Winston-Salem, NC 27102
Holder of record of 15,576,577 shares
of ESOP Convertible Preferred Stock
- 2 -
<PAGE>
PROXY VOTING INSTRUCTION CARD
RJR NABISCO HOLDINGS CORP.
ANNUAL MEETING OF STOCKHOLDERS--MAY 4, 1994
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Wachovia Bank of North
Carolina, N.A., as Trustee, his true and lawful agent and proxy, to represent
the undersigned at the Annual Meeting of Stockholders of RJR NABISCO HOLDINGS
CORP., to be held at the Holiday Inn, Civic Center, 700 Rogers Avenue, Fort
Smith, Arkansas on Wednesday, May 4, 1994 at 2:00 P.M., and at any adjournments
or postponements thereof, and to vote all the shares of stock of the Company
which the undersigned may be entitled to vote on all matters coming before said
meeting.
Election of Directors. Nominees:
J.T. Chain, Jr.; J.L. Clendenin; J.H. Greene, Jr.; H.J. Greeniaus; C.M. Harper;
J.W. Johnston; H.R. Kravis; J.G. Medlin, Jr.; P.E. Raether; L.R. Ricciardi; R.L.
Ridgway; C.S. Robbins; G.R. Roberts; S.M. Stuart and M.T. Tokarz.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2 AND AGAINST PROPOSALS 3, 4, 5 AND 6. PLEASE MARK
THIS PROXY CARD, FILL IN THE DATE AND SIGN ON THE REVERSE SIDE AND RETURN
PROMPTLY IN THE ACCOMPANYING ENVELOPE. NO POSTAGE IS NECESSARY IF MAILED IN THE
UNITED STATES.
------------------------
[X] Please mark your votes as in this example.
The Trustee is directed to vote as specified below and in its discretion on
all other matters. If no direction is made, this signed Proxy will be voted FOR
the election of all directors, FOR proposal 2 and AGAINST proposals 3, 4, 5 and
6.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
1. Election of Directors (see reverse) FOR [ ] WITHHELD [ ]
For, except withheld from the following nominee(s):
--------------------------------------------------------------------
2. Ratify the appointment of Deloitte & Touche as Independent Auditors
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 3, 4, 5 AND 6.
3. Stockholder proposal on cigarette sales to minors
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Stockholder proposal on facilitating tobacco farmers' economic conversion
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. Stockholder proposal on warning labels for advertising and promotional items
FOR [ ] AGAINST [ ] ABSTAIN [ ]
6. Stockholder proposal on legislative activity and research funding
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Please sign exactly as name
appears hereon. Joint owners
should each sign. When
signing as attorney,
executor, administrator,
trustee or guardian, please
give full title as such.
---------------------------------------
---------------------------------------
Signature(s) Date
<PAGE>
Employee Benefit Trust Services
301 North Main Street
Winston-Salem, NC 27150-3099
April 1994
To: Participants in the RJR Nabisco Capital Investment Plan ("CIP")
As a Participant in a Company sponsored employee benefit savings plan that
requires passthrough voting, you are entitled to vote shares of Common Stock and
Matching Stock held by Wachovia Bank of North Carolina, N.A. in its capacity as
Trustee of the RJR Nabisco Capital Investment Plan. Enclosed are the following:
1. Notice of Annual Meeting of Stockholders to be held on May 4, 1994
and the accompanying Proxy Statement;
2. The Proxy/Voting Instruction Card; and
3. A postage-paid return envelope.
You have previously been sent a copy of the RJR Nabisco Annual Report to
Stockholders for the fiscal year ended December 31, 1993.
The number and type of shares you hold in your CIP account as of the most
recent date available is shown on the Proxy/Voting Instruction Card. A "C" after
the plan name abbreviation indicates Common Stock, an "M" indicates Matching
Stock.
These shares will be voted as you direct if the enclosed Proxy/Voting
Instruction Card is completed by you and received by First Chicago Trust Company
of New York on or before April 28, 1994. First Chicago Trust Company is
responsible for tabulating the returns. Shares for which no instructions are
received, including shares of Matching Stock that have not been allocated to
Participants' accounts, shall be voted in the same proportion as the shares for
which instructions are received.
We appreciate your completing, dating and signing the Proxy/Voting
Instruction Card and returning it promptly in the postage-paid return envelope.
Cordially yours,
WACHOVIA BANK OF NORTH CAROLINA, N.A.
Trustee
Enclosures
<PAGE>
Employee Benefit Trust Services
301 North Main Street
Winston-Salem, NC 27150-3099
April 1994
To: Participants in the Nabisco Employee Savings Plan ("ESP")
As a Participant in a Company sponsored employee benefit savings plan that
requires pass-through voting, you are entitled to vote shares of Common Stock
held by Wachovia Bank of North Carolina, N.A. in its capacity as Trustee of the
Nabisco Employee Savings Plan. Enclosed are the following:
1. Notice of Annual Meeting of Stockholders to be held on May 4, 1994
and the accompanying Proxy Statement;
2. The Proxy/Voting Instruction Card; and
3. A postage-paid return envelope.
You have previously been sent a copy of the RJR Nabisco Annual Report to
Stockholders for the fiscal year ended December 31, 1993.
The number of shares you hold in your plan account as of the most recent
date available is shown on the Proxy/Voting Instruction Card. These shares will
be voted as you direct if the enclosed Proxy/Voting Instruction Card is
completed by you and received by First Chicago Trust Company of New York on or
before April 28, 1994. First Chicago Trust Company is responsible for tabulating
the returns. Shares for which no instructions are received shall be voted in the
same proportion as the shares for which instructions are received.
We appreciate your completing, dating and signing the Proxy/Voting
Instruction Card and returning it promptly in the postage-paid return envelope.
Cordially yours,
WACHOVIA BANK OF NORTH CAROLINA, N.A.
Trustee
Enclosures
<PAGE>
Employee Benefit Trust Services
301 North Main Street
Winston-Salem, NC 27150-3099
DE TENER ALGUNA DUDA RELATIVO A ESTOS
DOCUMENTOS FAVOR DE COMUNICARSE CON
EL DEPARTAMENTO DE RECURSOS HUMANOS.
April 1994
To: Participants in the Savings and Investment Plan for Employees
of R. J. Reynolds Tobacco Company in Puerto Rico ("PRSIP")
As a Participant in a Company sponsored employee benefit savings plan that
requires pass-through voting, you are entitled to vote shares of Common Stock
held by Wachovia Bank of North Carolina, N.A. in its capacity as Trustee of the
Savings and Investment Plan for Employees of R. J. Reynolds Tobacco Company in
Puerto Rico. Enclosed are the following:
1. Notice of Annual Meeting of Stockholders to be held on May 4, 1994
and the accompanying Proxy Statement;
2. The Proxy/Voting Instruction Card; and
3. A postage-paid return envelope.
You have previously been sent a copy of the RJR Nabisco Annual Report to
Stockholders for the fiscal year ended December 31, 1993.
The number of shares you hold in your PRSIP account as of the most recent
date available is shown on the Proxy/Voting Instruction Card. These shares will
be voted as you direct if the enclosed Proxy/Voting Instruction Card is
completed by you and received by First Chicago Trust Company of New York on or
before April 28, 1994. First Chicago Trust Company is responsible for tabulating
the returns. Shares for which no instructions are received shall be voted in the
same proportion as the shares for which instructions are received.
We appreciate your completing, dating and signing the Proxy/Voting
Instruction Card and returning it promptly in the postage-paid return envelope.
Cordially yours,
WACHOVIA BANK OF NORTH CAROLINA, N.A.
Trustee
Enclosures
