<PAGE>
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/ / 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)
RJR NABISCO HOLDINGS CORP.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
---------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
---------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
---------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
RJR NABISCO HOLDINGS CORP.
1301 AVENUE OF THE AMERICAS
NEW YORK, NY 10019-6013
March [31], 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of RJR Nabisco Holdings Corp. (the "Company"). The meeting will be held at 9:00
a.m. (local time) on Wednesday, May 12, 1999 at The M.C. Benton, Jr. Convention
& Civic Center, 301 West Fifth Street, Winston-Salem, North Carolina 27102.
At this year's stockholders meeting, you will be asked to elect nine
directors, ratify the appointment of Deloitte & Touche llp as independent
auditors and consider two stockholder proposals, if presented by their
proponents. The Board of Directors unanimously recommends a vote FOR the
directors recommended by the Board, FOR ratification of the appointment of
Deloitte & Touche llp as independent auditors and AGAINST all other proposals.
Accordingly, please give careful attention to these proxy materials. [The
Company's 1998 Annual Report will be sent to you under separate cover.]
It is important that your shares be represented and voted at the Annual
Meeting regardless of the size of your holdings. Whether or not you plan to
attend the Annual Meeting, please complete, sign, date and return the
accompanying white proxy card in the enclosed envelope in order to make certain
that your shares will be represented at the Annual Meeting.
Attendance at the Annual Meeting will be limited to stockholders as of March
22, 1999 and to guests of the Company. Admittance tickets will be required. If
you are a stockholder and plan to attend, you MUST request an admittance ticket
by writing to the Office of the Secretary at the address shown above. If your
shares are not registered in your own name, evidence of your stock ownership
must accompany your letter. You can obtain this evidence from your bank or
brokerage firm, typically in the form of your most recent monthly statement. An
admittance ticket will be held in your name at the registration desk, not mailed
to you in advance of the meeting.
We anticipate that a large number of stockholders will attend the meeting.
Seating is limited, so we suggest you arrive early. The auditorium will open at
8:30 a.m.
If you have any questions, please contact our proxy solicitors, MacKenzie
Partners, Inc., at the phone numbers listed on the back cover.
Thank you for your support and continued interest in RJR Nabisco.
Sincerely,
STEVEN F. GOLDSTONE
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE URGED TO COMPLETE, SIGN, DATE AND
RETURN THE ACCOMPANYING WHITE PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING.
<PAGE>
RJR NABISCO HOLDINGS CORP.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1999
To the Stockholders:
The Annual Meeting of Stockholders of RJR Nabisco Holdings Corp., a Delaware
corporation (the "Company"), will be held at The M.C. Benton, Jr. Convention &
Civic Center, 301 West Fifth Street, Winston-Salem, North Carolina 27102 at 9:00
a.m., local time, on Wednesday, May 12, 1999 for the following purposes:
1. To elect nine Directors to serve until the 2000 Annual Meeting of
Stockholders and until their respective successors are duly elected and
qualified;
2. To ratify the appointment of Deloitte & Touche llp as independent
auditors for the Company's 1999 fiscal year;
3. To act on two 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 the Company's Common Stock and ESOP Convertible
Preferred Stock as of the close of business on March 22, 1999 are entitled to
notice of and to vote at the Annual Meeting. You may examine a list of the
stockholders for any purpose germane to the meeting during the ten-day period
preceding the date of the meeting at the offices of Womble Carlyle Sandridge &
Rice, BB&T Financial Center, 200 West Second Street, Suite 1600, Winston-Salem,
North Carolina 27102.
H. COLIN MCBRIDE
SENIOR VICE PRESIDENT, ASSOCIATE
GENERAL COUNSEL
AND SECRETARY
New York, New York
March [31], 1999
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE URGED TO COMPLETE, SIGN, DATE AND
RETURN THE ACCOMPANYING WHITE PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING.
<PAGE>
RJR NABISCO HOLDINGS CORP.
1301 AVENUE OF THE AMERICAS
NEW YORK, NY 10019-6013
PROXY STATEMENT
This Proxy Statement and enclosed form of proxy are being furnished
commencing on or about March [31], 1999 in connection with the solicitation by
the Board of Directors (the "Board") of RJR Nabisco Holdings Corp., a Delaware
corporation (the "Company"), of proxies in the enclosed form for use at the
annual meeting of stockholders (the "Annual Meeting") to be held on Wednesday,
May 12, 1999 for the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders.
A proxy card is enclosed for your use. THE BOARD URGES YOU TO COMPLETE,
SIGN, DATE AND RETURN THE WHITE PROXY CARD IN THE ACCOMPANYING ENVELOPE, which
is postage-paid if mailed in the United States.
IF YOUR SHARES ARE HELD IN THE NAME OF A BANK, BROKER OR OTHER NOMINEE, ONLY
YOUR BANK OR BROKER CAN VOTE YOUR SHARES AND ONLY UPON YOUR SPECIFIC
INSTRUCTIONS. PLEASE CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND
INSTRUCT HIM OR HER TO VOTE THE WHITE PROXY CARD AS SOON AS POSSIBLE.
If you have any questions or need further assistance in voting your shares,
please call:
MACKENZIE PARTNERS, INC.
156 FIFTH AVENUE
NEW YORK, NY 10010
(212) 929-5500 (COLLECT)
OR
(800) 322-2885 (TOLL FREE)
VOTING
Only holders of record of the Company's voting securities as of the close of
business on March 22, 1999 (the "Record Date") 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:
[325,018,348 --> UPDATE AS OF RECORD DATE] shares of Common Stock, par value
$.01 per share ("Common Stock"), and [12,630,583 --> UPDATE AS OF RECORD DATE]
shares of ESOP Convertible Preferred Stock, par value $.01 per share and stated
value of $16 per share ("ESOP Preferred Stock"). The Common Stock and the ESOP
Preferred Stock vote as a single class on all matters properly brought before
the Annual Meeting. Holders of Common Stock are entitled to one (1) vote per
share, and holders of ESOP Preferred Stock are entitled to one-fifth ( 1/5) of a
vote per share.
Any proxy given pursuant to this solicitation and received in time for the
meeting will be voted as specified in such proxy. If the enclosed proxy card is
executed and returned without instructions as to how it is to be voted, proxies
will be voted FOR the election of the nominees listed below under the caption
"Election of Directors-Information Concerning Nominees," FOR the ratification of
the appointment of Deloitte & Touche llp as independent auditors for the
Company's 1999 fiscal year, AGAINST the two stockholder proposals and in the
discretion of the proxies named on the proxy card with respect to any other
matters properly brought before the Annual Meeting and any adjournments thereof.
Any proxy may be revoked by written notice received by the Secretary of the
Company at any time prior to the voting thereof by submitting a subsequent proxy
or by attending the meeting and voting in person.
The presence of the holders of a majority of the outstanding shares of
Common Stock and ESOP Preferred Stock entitled to vote, represented at the
Annual Meeting in person or by proxy, 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
<PAGE>
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 they 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 nine nominees receiving the highest vote totals will
be elected as Directors of the Company. 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 a majority vote of the shares represented at the
Annual 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.
[Securities and Exchange Commission (the "SEC") rules require stockholders
at least 20 days before its annual meeting. THE COMPANY'S 1998 ANNUAL REPORT
WILL BE SENT TO YOU AS SOON AS IT IS AVAILABLE AND, IN ANY EVENT, ON OR BEFORE
[DATE]. However,] if you are a stockholder of record, have the same address as
another stockholder of record and do not hold shares in nominee name, you may
wish to authorize the Company to discontinue sending more than one annual report
to the same address. 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 annual reports. You will, however, continue to receive proxy statements
and proxy cards to vote the shares for all of your accounts.
BACKGROUND
On March 9, 1999, RJR Nabisco, Inc. and R.J. Reynolds Tobacco Company
entered into a definitive agreement to sell the international tobacco business
to Japan Tobacco, Inc. for $8 billion, including the assumption of approximately
$200 million of net debt. In addition, the Company announced that its Board had
approved a plan to separate the domestic tobacco business conducted by R.J.
Reynolds Tobacco Company from the food business conducted by Nabisco, Inc. by
distributing all of the shares of the tobacco business to its stockholders. We
believe that this plan will accomplish our longstanding goal to separate the
tobacco and food businesses on a sound and beneficial basis and in a manner that
we believe is achievable.
On March 11, 1999, certain entities affiliated with Carl C. Icahn (the
"Icahn Group") announced their intention to propose a slate of directors (the
"Icahn Slate") for election to the Board. In this announcement, the Icahn Group
indicated that it approved of the international tobacco sale, but that, instead
of a tobacco spin-off, the Icahn Group would propose that the Company distribute
its 80.5% interest in Nabisco Holdings Corp. to the Company's stockholders. The
following day, the Icahn Group formally notified the Company of the nine members
of the Icahn Slate--six of whom are directors, officers or employees of entities
controlled by or affiliated with Mr. Icahn--whom it has nominated for election
to the Board at the Annual Meeting. In its notice, the Icahn Group indicated
that the Icahn Slate would run on a platform advocating a spin-off of the
Company's interest in Nabisco, in lieu of the tobacco spin-off.
We believe that there is a near certainty that tobacco plaintiffs would
challenge, perhaps in numerous courts across the country, any attempt by the
Company to pursue the Icahn Group's proposal. As one prominent tobacco
plaintiffs' attorney has recently said, "If you do it Icahn's way, I am sure
there would be people to challenge it."(1) We believe that court challenges to
the Icahn Group's proposal would involve unacceptable risks to the Company.
In our view, the Icahn Group's plan is not in the best interests of the
company or its stockholders because the plan is not achievable and would
jeopardize the Company's program to separate its businesses in a responsible and
value-enhancing manner. Accordingly, we believe that the company's stockholders
should not vote to elect any members of the Icahn Slate. THE BOARD RECOMMENDS
THAT STOCKHOLDERS VOTE FOR THE BOARD'S NOMINEES SET FORTH BELOW.
- --------------
(1) Quote of attorney Joe Rice taken from an article dated March 12, 1999 by
Constance L. Hays in THE NEW YORK TIMES. No permission has been sought or
received to quote from or refer to, published materials cited in this document.
2
<PAGE>
ITEM 1--ELECTION OF DIRECTORS
INFORMATION CONCERNING NOMINEES
At the upcoming Annual Meeting, a board of nine Directors will be elected to
hold office until the next Annual Meeting and until their successors have been
elected and qualified. 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. All of the Board's nominees are incumbent Directors of the Company
and its wholly-owned subsidiary, RJR Nabisco, Inc. ("RJRN"), and all of them
were elected to their present terms by the stockholders in May 1998 except Mr.
Langhammer, who was elected by the Board in May 1998.
Background information about the Board's nominees for election is set forth
below. See "Security Ownership of Management" and Appendix I for additional
information about the nominees, including their ownership, purchase and sale of
securities issued by the Company and its subsidiaries.
<TABLE>
<CAPTION>
YEAR FIRST BUSINESS EXPERIENCE DURING PAST FIVE YEARS
NAME AGE ELECTED AND OTHER INFORMATION
- ------------------------------------ --- ----------- ----------------------------------------------------------
<S> <C> <C> <C>
John T. Chain, Jr................... 64 1994 Chairman of Thomas Group, Inc. ("Thomas Group") since May
1998 and member of the Board of Thomas Group since May
1995; President of Quarterdeck Equity Partners, Inc., an
investor in the defense industry, since December 1996;
previously Special Assistant to the Chairman of Burlington
Northern Santa Fe Corporation from November 1995 to March
1996; Executive Vice President of Burlington Northern from
1991 to November 1995. For more than five years prior
thereto, General (Commander-in-Chief, Strategic Air
Command) in the United States Air Force. Member of the
Boards of Nabisco Holdings Corp. ("Nabisco"), Nabisco,
Inc., Northrop Grumman Corporation and Thomas Group.
Julius L. Chambers.................. 62 1994 Chancellor of North Carolina Central University since
1993. For more than five years prior thereto,
Director-Counsel of the NAACP Legal Defense and
Educational Fund, Inc. Member of the Advisory Board of
First Union National Bank (Durham, NC).
John L. Clendenin................... 64 1994 Chairman of the Board and Chief Executive Officer of
BellSouth Corporation for more than five years prior to
retirement in December 1997. Member of the Boards of
Coca-Cola Enterprises Inc., Equifax Inc., The Home Depot,
Inc., The Kroger Company, National Service Industries,
Inc., Powerwave Technologies, Inc., Springs Industries,
Inc. and Wachovia Corporation.
Steven F. Goldstone................. 53 1995 Chairman since May 1996 and Chief Executive Officer of the
Company since December 1995; President since October 1995;
General Counsel from March to December 1995. Partner with
the law firm of Davis Polk & Wardwell until October 1995
and for more than five years prior thereto. Member of the
Boards of Nabisco and Nabisco, Inc.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST BUSINESS EXPERIENCE DURING PAST FIVE YEARS
NAME AGE ELECTED AND OTHER INFORMATION
- ------------------------------------ --- ----------- ----------------------------------------------------------
<S> <C> <C> <C>
Ray J. Groves....................... 63 1995 Chairman of Legg Mason Merchant Banking, Inc. since
February 1995; previously Chairman and Chief Executive
Officer of the independent accounting firm of Ernst &
Young LLP until 1994 and for more than five years prior
thereto. Member of the Boards of Allegheny Teledyne
Incorporated, American Water Works Company, Inc.,
Consolidated Natural Gas Company, Electronic Data Systems
Corporation, LAI Worlwide, Inc. and Marsh & McLennan
Companies, Inc.
Fred H. Langhammer.................. 55 1998 President of The Estee Lauder Companies Inc. ("Estee
Lauder") since 1995 and Chief Operating Officer of Estee
Lauder since 1985; also Executive Vice President of Estee
Lauder from 1985 to 1995. Member of the Boards of Estee
Lauder and RSL Communications, Ltd.
H. Eugene Lockhart.................. 49 1997 Executive Vice President and Chief Marketing Officer of
AT&T Corp. since January 1999; previously President of
Global Retail Banking, BankAmerica Corp. from May 1997 to
October 1998; President and Chief Executive Officer of
MasterCard International Incorporated from 1994 to May
1997; Executive Vice President of First Manhattan Co. from
1992 to 1994. Member of the Boards of IMS Health
Corporation and First Republic Bank.
Theodore E. Martin.................. 59 1997 Chief Executive Officer and President of Barnes Group Inc.
("Barnes Group") from 1995 to retirement in December 1998;
Executive Vice President-Operations and Director of Barnes
Group from 1993 to 1995; Group Vice President of Barnes
Group from 1990 to 1993. Member of the Boards of
Ingersoll-Rand Company and Unisys Corporation.
Rozanne L. Ridgway.................. 63 1989 Co-Chair of the Atlantic Council of the United States
("Atlantic Council") from 1993 until retirement in 1996
and President of the Atlantic Council from 1989 through
1992; previously Assistant Secretary of State for European
and Canadian Affairs from 1985 to 1989. Member of the
Boards of Bell Atlantic Corporation, The Boeing Company,
Emerson Electric Co., Minnesota Mining and Manufacturing
Company, Sara Lee Corporation and Union Carbide Corp.
</TABLE>
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF EACH OF
ITS NOMINEES FOR DIRECTOR NAMED ABOVE.
4
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD
The Board met thirteen times during the 1998 fiscal year. During 1998, all
then incumbent Directors attended at least 75% of the meetings of the Board and
the Board committees on which they served.
The standing committees of the Board are the Executive Committee, the Audit
Committee, the Compensation Committee and the Corporate Governance and
Nominating Committee.
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 General Chain and Messrs. Goldstone (Chair)
and Groves, did not meet during the 1998 fiscal year but took one action by
written consent.
AUDIT COMMITTEE. The Audit Committee reviews the adequacy of the Company's
internal system of accounting controls, confers with the independent auditors
and the internal auditors concerning their examination of the books and records
of the Company and its subsidiaries, reviews actions taken to ensure compliance
with the Company's Code of Conduct, recommends to the Board the appointment of
independent auditors and considers other appropriate matters regarding the
financial affairs of the Company and its subsidiaries. The Audit Committee,
whose current members are Messrs. Chambers, Groves (Chair), Langhammer and
Lockhart, held five meetings during the 1998 fiscal year.
COMPENSATION COMMITTEE. The Compensation Committee makes recommendations to
the Board with respect to compensation and grants of stock options and other
long-term incentives 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 General Chain (Chair), Mr. Clendenin and Ms. Ridgway, met eight times during
the 1998 fiscal year.
CORPORATE GOVERNANCE AND NOMINATING COMMITTEE. The Corporate Governance and
Nominating Committee has responsibility for recruiting and nominating new
directors and for corporate governance issues, including Board self-evaluation
and chief executive officer evaluation. Only outside directors are eligible to
serve on this committee. The Corporate Governance and Nominating Committee,
whose current members are Messrs. Chambers and Martin and Ms. Ridgway (Chair),
held three meetings during the 1998 fiscal year.
The Corporate Governance and Nominating Committee will consider suggestions
for Board nominees made by stockholders. A stockholder may recommend a person
for nomination to the Board at the 2000 annual meeting of stockholders by giving
notice thereof and providing certain information set forth in the Company's
By-Laws, in writing, to the Secretary of the Company at 1301 Avenue of the
Americas, New York, NY 10019-6013 for receipt between February 12, 2000 and
March 13, 2000.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information, as of March 22, 1999,
regarding the beneficial ownership of (i) Common Stock and (ii) Nabisco's Class
A Common Stock, par value $.01 per share ("Nabisco Stock"), by each director of
the Company, by each of the five most highly compensated executive officers of
the Company (as required by SEC rules) and by all directors and executive
officers of the Company as a group. Most of these individuals have the
opportunity to become the beneficial owners of additional shares of Common Stock
as a result of stock options vesting or becoming exercisable. See "Executive
Compensation-Long Term Incentive Compensation" and "Directors' Compensation"
below. Otherwise, except as noted, the persons named in the table below do not
own, beneficially or of record, any
5
<PAGE>
other securities of the Company or its subsidiaries and have sole voting and
investment power over all securities for which they are shown as beneficial
owner.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF NUMBER OF SHARES OF
COMMON STOCK PERCENT OF NABISCO STOCK PERCENT OF
BENEFICIALLY OWNED COMMON BENEFICIALLY OWNED NABISCO
NAME OF BENEFICIAL OWNER (1)(2) STOCK (1)(3) STOCK
- ---------------------------------------- ----------------------- ----------- ----------------------- ---------------
<S> <C> <C> <C> <C>
John T. Chain, Jr....................... 13,333 * 10,100 *
Julius L. Chambers...................... 11,362 * 0 *
John L. Clendenin....................... 11,786 * 500 *
Steven F. Goldstone (4)................. 1,160,308 0.36% 214,981 *
Ray J. Groves........................... 11,246 * 0 *
James M. Kilts.......................... 82,565 * 1,000 *
Fred H. Langhammer...................... 6,495 * 0 *
H. Eugene Lockhart...................... 7,623 * 0 *
Theodore E. Martin...................... 6,891 * 0 *
David B. Rickard........................ 88,083 * 0 *
Rozanne L. Ridgway...................... 11,333 * 0 *
William L. Rosoff (5)................... 84,555 * 0 *
Andrew J. Schindler..................... 385,920 * 0 *
All Directors and Executive Officers as
a Group............................... 2,774,296 0.85% 321,690 *
</TABLE>
- ------------------------
* Less than 0.1%.
(1) For purposes of this table, a person 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 named above, any security that such person has the right to acquire
within 60 days is deemed to be outstanding, but it is not deemed to be
outstanding for the purpose of computing the percentage ownership of any
other person.
(2) The number of shares of Common Stock beneficially owned includes shares
subject to currently exercisable options in the following amounts: (i)
11,333 shares for each of General Chain and Messrs. Chambers and Clendenin
and Ms. Ridgway; (ii) 943,600 shares for Mr. Goldstone; (iii) 10,153 shares
for Mr. Groves; (iv) 82,500 shares for Mr. Kilts; (v) 6,495 shares for Mr.
Langhammer; (vi) 7,353 shares for Mr. Lockhart; (vii) 6,891 shares for Mr.
Martin; (viii) 66,000 shares for Mr. Rickard; (ix) 49,500 shares for Mr.
Rosoff; (x) 339,800 shares for Mr. Schindler; and (xi) 2,263,994 shares for
all directors and executive officers as a group. The number of shares of
Common Stock beneficially owned also includes: 179, 65, 83, 55, 646 and
5,081 shares of Common Stock currently issuable on the conversion of shares
of ESOP Preferred Stock owned by, respectively, Messrs. Goldstone, Kilts,
Rickard, Rosoff and Schindler and all directors and executive officers as a
group. The number of shares of Common Stock beneficially owned does not
include the following deferred stock units, which are common stock
equivalents received as equity incentives or as deferred fees and other
compensation: 30,000 units for Mr. Rickard; 3,382 units for each of General
Chain, Mr. Chambers and Ms. Ridgway; 14,186 units for Mr. Clendenin; 11,164
units for Mr. Groves; 1,061 units for Mr. Langhammer; 4,709 units for Mr.
Lockhart; and 4,683 units for Mr. Martin.
(3) The number of shares of Nabisco Stock beneficially owned includes shares
subject to currently exercisable options in the following amounts: (i) 9,100
shares for General Chain; (ii) 200,000 shares for Mr. Goldstone; and (iii)
301,408 shares for all directors and executive officers as a group. The
number of shares of Nabisco Stock beneficially owned does not include 50,000
restricted stock equivalents held by Mr. Kilts.
(4) Mr. Goldstone is also the holder of 200,000 performance stock units each
equal in value to one share of Common Stock which will be paid to Mr.
Goldstone only if (i) Mr. Goldstone remains employed by the Company through
December 31, 2001 (unless he is terminated by the Company without cause or
6
<PAGE>
he voluntarily terminates his employment with good reason) and (ii) the
market price for Common Stock averages $43.75 or more for any consecutive
30-day period ending on or prior to December 31, 2001.
(5) Mr. Rosoff has been Senior Vice President and General Counsel since January
15, 1998. Until December 31, 1997 and for more than five years prior
thereto, Mr. Rosoff was a partner at Davis Polk & Wardwell, a New York law
firm. Davis Polk & Wardwell has, from time to time, provided legal services
to the Company and its subsidiaries during the past few years for which the
law firm has been paid usual and customary fees.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Section 16(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires
the Company's officers and directors and persons who own more than ten percent
of a registered class of the Company's 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 the Company with the SEC and The New York Stock Exchange, Inc. Officers,
directors and greater than ten-percent stockholders are required by SEC
regulation to furnish the Company with copies of all such forms they file.
Based solely on a review of the copies of the forms that it has received,
and on written representations from certain reporting persons that no additional
forms were required, the Company believes that its officers, directors and
greater than ten-percent beneficial owners complied with all of these filing
requirements in 1998.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information, as of March 22, 1999,
regarding the beneficial ownership of persons known to the Company to be the
beneficial owners of more than five percent of any class of the Company's voting
securities. The information was obtained from Company records and information
supplied by the stockholders, including information on Schedules 13D and 13G.
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
NAME AND ADDRESS BENEFICIALLY PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER OWNED CLASS
- -------------------------------- ------------------------------------------------ ----------------- -----------
<S> <C> <C> <C>
Common Stock Carl C. Icahn (1) 25,725,700 7.9%
c/o Carl Icahn Associates Corp.
767 Fifth Avenue, 47(th) Floor
New York, NY 10153
Common Stock Capital Research and Management 22,910,000 7.0%
Company (2)
333 South Hope Street
Los Angeles, CA 90071
ESOP Convertible Preferred Stock Wachovia Bank, N.A. [12,630,583] 100%
(as Trustee)(3) update as of
Box 3075, Trust Operations Record Date
Winston-Salem, NC 27102
</TABLE>
- ------------------------
(1) On March 11, 1999, Carl Icahn, High River Limited Partnership ("High
River"), Riverdale LLC ("Riverdale"), American Real Estate Holdings L.P.
("AREH"), American Real Estate Partners, L.P. ("AREP"), American Property
Investors, Inc. ("American Property"), Beckton Corp. ("Beckton"),
7
<PAGE>
Meadow Walk Limited Partnership ("Meadow Walk") and Barberry Corp.
("Barberry" and, collectively, the "Icahn Affiliates") filed Amendment No. 3
to a Schedule 13D (the "Amended Schedule 13D"). According to the Amended
Schedule 13D, the Icahn Affiliates may be deemed to beneficially own, in the
aggregate, 25,725,700 shares of Common Stock. Mr. Icahn has shared voting
and dispositive power over the 25,725,700 shares. High River has sole and
Riverdale has shared voting and dispositive power over 18,020,800 of the
shares. AREH has sole and AREP, American Property and Beckton have shared
voting and dispositive power over 6,448,200 of the shares. Meadow Walk has
sole and Barberry has shared voting and dispositive power over 1,256,700 of
the shares.
(2) According to the Schedule 13G dated February 11, 1999 filed with the SEC by
Capital Research and Management Company ("Capital"), Capital, a registered
investment advisor, is deemed to be the beneficial owner of 22,910,000
shares of common stock as a result of acting as investment adviser to
various registered investment companies.
(3) Wachovia Bank, N.A. ("Wachovia") holds the ESOP Preferred Stock in its
capacity as trustee of the RJRN Defined Contribution Master Trust (the
"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 the 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
or beneficial ownership interest with respect to the ESOP Preferred Stock.
ITEM 2--RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Subject to stockholder ratification, the Board has appointed the firm of
Deloitte & Touche LLP ("Deloitte & Touche") as independent auditors for the
fiscal year ending December 31, 1999 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 the Company or its
subsidiaries.
A representative of Deloitte & Touche is expected to be present at the
Annual Meeting, will have the opportunity to make a statement if he or she
desires to do so and will be available to answer appropriate questions.
The Board considers Deloitte & Touche to be well qualified and recommends
that the stockholders vote FOR ratification of its appointment as independent
auditors of the Company for the upcoming fiscal year.
EXECUTIVE COMPENSATION
SUMMARY
The following pages describe the components of the total compensation of the
five most highly compensated executive officers (as defined under SEC rules) of
the Company at the end of the last completed fiscal year. The bonuses shown
represent amounts that the Compensation Committee and the Board approved for
each named individual based on company performance for the applicable year. The
long-term compensation shown in the Summary Compensation Table was provided
under the Company's 1990 Long Term Incentive Plan (the "LTIP") which provides
for various types of awards such as stock options, restricted stock, performance
unit awards and performance appreciation rights (PARs), as described below. Some
of the long-term compensation shown for Messrs. Goldstone and Kilts was provided
under a long-term incentive plan maintained by Nabisco. Also described below is
the future compensation such individuals may receive under the Company's
retirement plans or, following termination of employment under certain
circumstances, under individual agreements.
8
<PAGE>
SUMMARY COMPENSATION TABLE
The following table presents certain specific information regarding the
compensation of the most highly compensated executive officers of the Company.
Mr. Rosoff became employed by the Company on January 15, 1998, and the amounts
disclosed below reflect the portion of the year during which he was employed by
the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------- --------------------------------------------------
OTHER RESTRICTED LONG-TERM
ANNUAL STOCK RN STOCK NA STOCK INCENTIVE
NAME & PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION AWARD(X)(2) OPTIONS(#) OPTIONS(#) PAYOUTS
- -------------------------- --------- --------- --------- ------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STEVEN F. GOLDSTONE....... 1998 $ 800,000 $1,950,000 $ 2,005,247(4) $7,300,000 0 100,000 $ 0
CHAIRMAN & CEO 1997 $ 800,000 $1,950,000 $ 1,988,531 $ 0 460,000 60,000 $ 0
1996 $ 800,000 $2,200,000 $ 3,772,298 $ 0 400,000 200,000 $ 0
JAMES M. KILTS............ 1998 $ 900,000 $ 765,000 $ 132,831(5) $2,396,875 250,000 415,000 $ 0
PRESIDENT & CEO, 1997
NABISCO, INC. 1996
ANDREW J. SCHINDLER....... 1998 $ 616,667 $ 438,000 $ 72,376(6) $1,192,188 0 0 $ 0
PRESIDENT & CEO, R.J. 1997 $ 575,000 $ 403,000 $ 69,799 $ 0 0 0 $3,000,000
REYNOLDS TOBACCO CO..... 1996 $ 537,499 $ 465,000 $ 237,474 $ 0 200,000 0 $ 709,200
DAVID B. RICKARD.......... 1998 $ 595,833 $ 495,000 $ 64,747(6) $ 730,000 150,000 0 $ 0
SVP & CFO RJR NABISCO, 1997 $ 386,538 $ 350,000 $ 44,734 $ 975,000 100,000 0 $ 0
INC..................... 1996
WILLIAM L. ROSOFF......... 1998 $ 575,000 $ 462,000 $ 56,807(6) $1,273,125 150,000 0 $ 0
SVP & GENERAL COUNSEL 1997
RJR NABISCO, INC. 1996
<CAPTION>
ALL
OTHER
NAME & PRINCIPAL POSITION COMPENSATION(3)
- -------------------------- ----------------
<S> <C>
STEVEN F. GOLDSTONE....... $ 169,400
CHAIRMAN & CEO $ 176,900
$ 115,700
JAMES M. KILTS............ $ 49,435
PRESIDENT & CEO,
NABISCO, INC.
ANDREW J. SCHINDLER....... $ 33,246
PRESIDENT & CEO, R.J. $ 31,200
REYNOLDS TOBACCO CO..... $ 26,358
DAVID B. RICKARD.......... $ 28,375
SVP & CFO RJR NABISCO, $ 261,250
INC.....................
WILLIAM L. ROSOFF......... $ 16,500
SVP & GENERAL COUNSEL
RJR NABISCO, INC.
</TABLE>
- ------------------------------
(1) The bonus amounts shown for 1998 for all of the named executive officers
reflect annual cash bonus payments that were based on Company (or operating
company) performance during 1998. The amounts shown for Messrs. Kilts and
Schindler reflect adjustments made by the Committee to the applicable
performance measures. The bonus amounts for Messrs. Goldstone, Schindler,
Rickard and Rosoff were supplemented with Performance Notes equal to 20% of
their target bonus. The Performance Notes are described and set forth on
pages [13-14].
(2) All of the named executive officers were granted restricted stock or
restricted stock equivalents in 1998. The grants for Messrs. Goldstone,
Schindler, Rickard and Rosoff were in the form of Common Stock, and the
grant for Mr. Kilts was in the form of restricted stock equivalents of
Nabisco Stock. The 1998 grants were as follows:
<TABLE>
<CAPTION>
12/31/98
NAME # OF SHARES DATE OF GRANT VESTING DATE VALUE
- ------------------------------------------------ ------------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
Mr. Goldstone................................... 200,000 (RN) 2/6/98 xx/xx/2006 $ 5,937,400
Mr. Kilts....................................... 50,000 (NA) 1/2/98 1/2/2003 $ 2,075,000
Mr. Schindler................................... 35,000 (RN) 2/6/98 2/6/2003 $ 1,039,045
Mr. Rickard..................................... 20,000 (RN) 1/15/98 1/15/2003 $ 1,484,350
Mr. Rosoff...................................... 35,000 (RN) 1/15/98 1/15/2001 (33%)
1/15/2002 (33%)
1/15/2003 (34%) $ 1,039,045
</TABLE>
The 12/31/98 value shown for Mr. Rickard also includes the value of 30,000
restricted Common Stock units granted in a prior year. The awards may vest
earlier than the date shown in certain circumstances. Dividends are paid on
the restricted stock (or stock units) to the same extent as for unrestricted
shares of Common Stock or Nabisco Stock, as appropriate.
(3) The amounts shown in the table for 1998 reflect Company contributions made
on behalf of the named individuals under the Company's qualified and
non-qualified defined contribution plans as follows:
<TABLE>
<CAPTION>
COMPANY MATCHING
CONTRIBUTION COMPANY CONTRIBUTION
NAME (QUALIFIED PLAN) (NON-QUALIFIED PLAN)
- ------------------- ------------------- ---------------------
<S> <C> <C>
Mr. Goldstone...... $ 4,800 $ 91,200
Mr. Kilts.......... $ 4,800 $ 24,525
Mr. Schindler...... $ 4,800 $ 25,790
Mr. Rickard........ $ 4,800 $ 23,575
Mr. Rosoff......... $ 4,050 $ 12,450
</TABLE>
9
<PAGE>
The amount shown in the table for Mr. Goldstone for 1998 also includes
$73,400, which was the 1998 premium for the insurance policy referred to in
footnote (4). The amount shown in the table for Mr. Kilts for 1998 also
includes $20,110, which was the 1998 premium for the insurance policy
referred to in footnote (5). The amount shown in the table for Mr. Schindler
for 1998 also includes $2,651, in connection with the partial forgiveness of
Mr. Schindler's indebtedness to the Company (as discussed on page [11],
below).
(4) Most of the amount shown in the table for Mr. Goldstone for 1998 represents
amounts reimbursed by the Company to Mr. Goldstone for certain income tax
liabilities related to the funding of his retirement plan benefit (described
under "Retirement Plans") and to his life insurance policy. The amount shown
in the table also reflects amounts not paid to Mr. Goldstone but nonetheless
allocable to his personal use of Company facilities ($84,753) and amounts
attributable to Mr. Goldstone's participation in the Company's executive
perquisite program, which provides him with supplemental insurance, a leased
automobile and an annual allowance ($61,750) 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, automobile
and personal liability insurance.
(5) The amount shown in the table for Mr. Kilts for 1998 includes amounts
reimbursed to Mr. Kilts by Nabisco for certain income tax liabilities
related to his life insurance policy. The amount shown in the table also
reflects amounts attributable to his participation in the executive
perquisite program, which provides him with supplemental insurance, a leased
automobile and an annual allowance ($54,750) 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, automobile
and personal liability insurance. The amount shown in the table also
includes Nabisco's reimbursement to Mr. Kilts of certain country club
initiation fees ($37,363).
(6) The amounts shown in the table for Messrs. Schindler, Rickard and Rosoff for
1998 include amounts attributable to their participation in the Company's
executive perquisite program, which provides them with supplemental
insurance, a leased automobile and an annual allowance ($47,500) which may
be used to reimburse miscellaneous expenses and, to the extent not so used,
is paid in cash. The supplemental insurance consists of medical, dental,
business travel accident and, to the extent elected, life, spousal life,
automobile and personal liability insurance.
LONG-TERM INCENTIVE COMPENSATION
The Company maintains the LTIP to provide executives with long-term
performance-based incentive compensation. The Company has issued stock options,
restricted stock and other performance-based awards under the LTIP to the named
executive officers and to other key employees. The following table identifies
the grants of stock options made to named executive officers in 1998. For
Messrs. Goldstone and Kilts, the table includes options to purchase shares of
Nabisco Stock granted pursuant to a long-term incentive plan maintained by
Nabisco. All of the stock options identified on the following table have
exercise prices equal to the per-share fair market value of the covered
securities on the date of grant.
OPTIONS GRANTED IN FISCAL YEAR (1998)
<TABLE>
<CAPTION>
PERCENT OF TOTAL
NO. OF SECURITIES OPTIONS GRANTED TO EXERCISE GRANT DATE
UNDERLYING OPTIONS EMPLOYEES IN FISCAL PRICE PRESENT
NAME GRANTED (#) YEAR (1) ($/SHARE) EXPIRATION DATE VALUE (2)
- -------------------------------------------- ------------------- ------------------- --------- --------------- ----------
<S> <C> <C> <C> <C> <C>
S.F. Goldstone.............................. 100,000 NA(3) 3.54% $47.63 1/15/08 $1,578,000
J.M. Kilts.................................. 250,000 RN(4) 39.18% $37.38 1/2/08 $1,862,500
250,000 NA(3) 8.85% $47.94 1/2/08 $3,972,500
165,000 NA(3) 5.84% $45.06 2/5/08 $2,463,450
D.B. Rickard................................ 150,000 RN(4) 23.51% $36.50 1/15/08 $1,092,000
W.L. Rosoff................................. 150,000 RN(4) 23.51% $36.38 1/16/08 $1,087,500
</TABLE>
- ------------------------------
(1) The percentages shown in this column represent, in the case of those options
labeled "RN", the percentage these option represent of all options to
purchase Common Stock that were granted to employees in 1998 and, in the
case of those options labeled "NA", the percentage these option represent of
all options to purchase Nabisco Stock that were granted to employees in 1998
under the long-term incentive plan maintained by Nabisco. In total, options
to purchase 638,036 shares of Common Stock
10
<PAGE>
were granted in 1998 under the LTIP and options to purchase 2,825,3383
shares of Nabisco Stock were granted in 1998 under the long-term incentive
plan maintained by Nabisco.
(2) The grant date present values shown in the table were determined pursuant to
the Black-Scholes option valuation model (a widely used stock option
valuation methodology), using the following assumptions. For RN options:
stock price volatility factor of .3116; dividend yield of 6.08%; interest
rate of 5.46%; and a seven year term. For NA options: stock price volatility
factor of .2588; dividend yield of 1.62%; interest rate of 5.46% and a seven
year term. There were no adjustments made for non-transferability or risk of
forfeiture. The actual value, if any, that an executive officer may realize
from his or her stock options (assuming that they are exercised) will depend
solely on any gain in stock price over the exercise price when the shares
are sold.
(3) These stock options relate to shares of Nabisco Stock and were granted
pursuant to a long-term incentive plan maintained by Nabisco. The stock
option grant to Mr. Goldstone was made on January 15, 1998 and the stock
option grants to Mr. Kilts were made on January 2, 1998 (in connection with
the commencement of his employment with Nabisco) and February 5, 1998. The
Nabisco stock options vest over three years in accordance with the following
schedule: 33% on each of the first and second January 1 following the date
of grant and 34% on the third January 1 following the date of grant, but may
not be exercised until the third anniversary of the date of grant. The stock
options have a term of 10 years from the date of grant, but are subject to
earlier cancellation in certain circumstances.
(4) The stock option grants to Mr. Kilts (made on January 2, 1998) and Mr.
Rosoff (made on January 16, 1998) were made in connection with their
commencement of employment with Nabisco and the Company, respectively. These
stock options become vested and exercisable over three years in accordance
with the following schedule: 33% on each of the first and second
anniversaries of the date of grant and 34% on the third anniversary of the
date of grant. The stock option grant to Mr. Rickard was made on January 15,
1998 and becomes fully vested and exercisable on the fifth anniversary of
the date of grant. All of the stock options have 10 year terms, but are
subject to earlier cancellation in certain circumstances.
Certain options granted in prior years to Messrs. Goldstone and Schindler
under the LTIP were conditioned on the purchase by them of Common Stock. In
connection with the purchase of Common Stock under the LTIP, they were permitted
to borrow on a secured basis from the Company the purchase price for the shares
of the purchased stock, plus an additional amount to pay taxes, if any, due on
any taxable income recognized in connection with such purchases. In February
1998, Mr. Schindler's indebtedness was $343,276 and he sold the shares of Common
Stock that were used to secure the indebtedness and used the proceeds to repay
the indebtedness. The proceeds were sufficient to repay all but $2,651 of the
indebtedness and the Company, pursuant to a prior understanding under which Mr.
Schindler had earlier refrained from selling the shares, forgave the shortfall.
For Mr. Goldstone, the current annual interest rate is 6.26% (the applicable
federal rate for long-term loans as of December 1995). 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 March 31, 1999, Mr.
Goldstone's outstanding indebtedness in connection with his loan was $613,535.
During 1996, Nabisco permitted Mr. Goldstone to purchase Nabisco stock from
Nabisco under a long-term incentive plan maintained by Nabisco at a price equal
to the fair market value of such stock on the date of purchase. In connection
with the purchase, Mr. Goldstone was permitted to borrow on a secured basis from
Nabisco the purchase price for the shares of the purchased stock. The current
annual interest rate was set at 6.72%, the then applicable federal rate for
long-term loans. 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 March 31, 1999, Mr. Goldstone's outstanding indebtedness to
Nabisco in connection with his loan was $604,690.
The following table provides information relating to the number and value of
shares of Common Stock and Nabisco Stock subject to options held by the named
executive officers as of December 31, 1998. There were no stock option exercises
during 1998 by any of the named individuals.
11
<PAGE>
AGGREGATED OPTION VALUES AT
FISCAL YEAR-END (12/31/98)
<TABLE>
<CAPTION>
NO. OF SECURITIES VALUE OF UNEXERCISED,
UNDERLYING IN-THE-MONEY OPTIONS HELD
UNEXERCISED OPTIONS AT AT
FY-END(#)(1) FY-END($)(2)
-------------------------- --------------------------
NAME TYPE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------- --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
S.F. Goldstone................................... RN 711,800 548,200 $ 156,200 $ 0
NA 0 360,000 $ 0 $ 1,895,000
J.M. Kilts....................................... RN 0 250,000 $ 0 $ 0
NA 0 415,000 $ 0 $ 0
A. J. Schindler.................................. RN 287,800 120,000 $ 397,139 $ 0
D.B. Rickard..................................... RN 33,000 217,000 $ 0 $ 0
W.L. Rosoff...................................... RN 0 150,000 $ 0 $ 0
</TABLE>
- ------------------------
(1) Some of the unexercisable stock options are vested but not exercisable.
(2) Calculated based on the excess of the fair market value on December 31, 1998
of Common Stock ($29.687) or Nabisco Stock ($41.50), as appropriate, over
the option exercise price.
As noted in footnote (1) to the Summary Compensation Table, a portion of the
1998 annual bonus earned by Messrs. Goldstone, Schindler, Rickard and Rosoff is
denominated in the form of Performance Notes. Performance Notes are phantom
units whose value may fluctuate up and down based on attainment of financial
performance objectives that are derived from the Company's or an operating
company's long-term strategic plan. For 1998, Messrs. Goldstone, Rickard and
Rosoff were granted RJR Nabisco Performance Notes with an initial value of
$36.00 and a value of $43.96 on December 31, 1998, and Mr. Schindler was granted
R.J. Reynolds Tobacco Company Performance Notes with an initial value of $36.00
and a value of $39.08 on December 31, 1998. The Performance Notes do not vest
until December 31, 2000 and will be paid-out based on their value at that time.
The regular annual 1998 long-term incentive grants for Messrs. Schindler,
Rickard and Rosoff were made in the form of Performance Appreciation Rights
("PARs"), which are appreciation rights on the Performance Notes of the Company
and its operating companies. PARs granted to Mr. Schindler were a combination of
appreciation rights on R.J. Reynolds Tobacco Company Performance Notes (80%) and
RJR Nabisco Performance Notes (20%). PARs granted to Messrs. Rickard and Rosoff
were a combination of appreciation rights on RJR Nabisco Performance Notes
(55%), R.J. Reynolds Tobacco Company Performance Notes (15%), R.J. Reynolds
International Performance Notes (15%) and Nabisco Performance Notes (15%). The
Performance Notes had an initial value of $36.00 ($46.00 for Nabisco Performance
Notes) on January 1, 1998. Upon a change of control or a spin-off (as defined
below), the PARs will have a minimum value based on the value of the related
Performance Notes on the date of the change of control or a spin-off.
13
<PAGE>
The following table sets forth the Performance Notes and Performance
Appreciation Rights that were granted to the named executive officers in 1998.
Because the future value of Performance Notes and, consequently, the PARs will
depend solely on Company (or operating company) performance, there is no minimum
or maximum payout amount. The values of the Performance Notes and PARs on
December 31, 1998 are included in footnotes to the table.
LONG TERM INCENTIVE PLAN
AWARDS IN FISCAL YEAR 1998
<TABLE>
<CAPTION>
AWARDS
------------------------------------------------
<S> <C> <C> <C> <C>
PERFORMANCE NOTES/UNITS
------------------------------------------- PERFORMANCE APPRECIATION RIGHTS
PERFORMANCE OR OTHER ----------------------------------------------
PERIOD UNTIL NO. OF PERFORMANCE PERFORMANCE OR
NO. OF PERFORMANCE MATURATION APPRECIATION RIGHTS OTHER PERIOD UNTIL
NAME NOTES (#)(1) OR PAYOUT (#)(2) MATURATION OR PAYOUT
- ---------------------------- ------------------- ---------------------- ------------------------ --------------------
S.F. Goldstone.............. 6,944 12/31/00 0
A.J. Schindler (3).......... 2,430 12/31/00 160,000 12/31/02
D.B. Rickard (4)............ 2,392 12/31/00 146,000 12/31/02
W.L. Rosoff (4)............. 2,333 12/31/00 146,000 12/31/02
</TABLE>
- ------------------------------
(1) The December 31, 1998 value of RJR Nabisco Performance Notes earned by
Messrs. Goldstone, Rickard and Rosoff was $43.96. The December 31, 1998
value of R.J. Reynolds Tobacco Company Performance Notes earned by Mr.
Schindler was $39.08.
(2) The December 31, 1998 values of the PARs were as follows: RJR Nabisco PARs
$7.96; R.J. Reynolds Tobacco Company PARs $3.08; R.J. Reynolds International
PARs $0 and Nabisco PARs $0.
(3) The number shown in the table for Mr. Schindler represents a combination of
128,000 R.J. Reynolds Tobacco Company PARs and 32,000 RJR Nabisco PARs. The
PARs have a term of 5 years from the date of grant and vest over three years
in accordance with the following schedule: 33% on each of the first and
second December 31 following the date of grant and 34% on the third December
31 following the date of grant.
(4) The numbers shown in the table for Messrs. Rickard and Rosoff represent, for
each of them, a combination of 86,000 RJR Nabisco PARs, 24,000 R.J. Reynolds
Tobacco Company PARs, 24,000 R.J. Reynolds International PARs and 12,000
Nabisco PARs. The PARs have a term of 5 years from the date of grant and
vest over three years in accordance with the following schedule: 33% on each
of the first and second December 31 following the date of grant and 34% on
the third December 31 following the date of grant.
RETIREMENT PLANS
The named executive officers participate in noncontributory defined benefit
retirement plans maintained by the Company or its subsidiaries. Mr. Goldstone
and Mr. Schindler also participate in a Supplemental Executive Retirement Plan
(the "SERP"). Benefits under the SERP are payable only after a participant's
retirement at a specified retirement age or earlier retirement or termination in
certain circumstances.
The following table shows the estimated annual benefits payable upon
retirement under the SERP, as described in the preceding paragraph. The
retirement benefits shown are computed prior to being offset for Social Security
and are based upon retirement at age 60 and the payment of a single-life annuity
to the employee.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
YEARS OF SERVICE
AVERAGE ----------------------------------------
FINAL COMPENSATION 10 OR FEWER 15 20 OR MORE
- ---------------------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
$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
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
YEARS OF SERVICE
AVERAGE ----------------------------------------
FINAL COMPENSATION 10 OR FEWER 15 20 OR MORE
- ---------------------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
$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 $ 1,400,000
$3,200,000.......................................... $ 1,066,666 $ 1,200,000 $ 1,600,000
$3,600,000.......................................... $ 1,200,000 $ 1,350,000 $ 1,800,000
</TABLE>
For purposes of determining retirement benefits under this table, "Average
Final Compensation" consists of the annualized sum of base salary, bonus in the
year earned and pre-tax contributions to plans maintained under sections 401(k)
and 125 of the Code, and 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, 1998 was
$2,833,333 for Mr. Goldstone, and $995,750 for Mr. Schindler. Both Mr. Goldstone
and Mr. Schindler are expected to have more than 20 years of credited service at
age 60 (giving effect to individual arrangements).
The Company has purchased annuity contracts to provide retirement benefits
under the SERP for Mr. Goldstone. The annuity contracts cover Mr. Goldstone's
after-tax vested benefits, reduced by his vested benefit under the Company's
qualified pension plan. In 1998, the Company purchased annuity contracts to
cover the retirement benefits accrued in 1997 for Mr. Goldstone. The benefits to
be provided by the purchase of annuity contracts will not be available to Mr.
Goldstone until he retires or is otherwise eligible for benefits under the SERP.
Retirement benefits for Messrs. Kilts, Rickard and Rosoff are determined by
the formula under a non-contributory qualified defined benefit plan maintained
by RJRN that has no Social Security offset. The following table shows the
estimated annual single life annuity payable at age 65 under the plan.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
YEARS OF SERVICE
AVERAGE ------------------------------------------
FINAL COMPENSATION 10 15 20 25
- -------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
1,000,000......................................... 172,804 237,711 297,181 345,946
1,100,000......................................... 190,203 261,635 327,086 380,744
1,200,000......................................... 207,602 285,558 356,990 415,542
1,300,000......................................... 225,001 309,482 386,894 450,340
1,400,000......................................... 242,399 333,405 416,799 485,137
1,500,000......................................... 259,798 357,328 446,703 519,935
1,600,000......................................... 277,197 381,252 476,607 554,733
1,700,000......................................... 294,596 405,175 506,511 589,531
1,800,000......................................... 311,995 429,099 536,416 624,328
1,900,000......................................... 329,394 453,022 566,320 659,126
2,000,000......................................... 346,793 476,946 596,224 693,924
</TABLE>
15
<PAGE>
For plan purposes, compensation includes base salary, annual bonus (in the
year earned) and certain other payments. "Average Final Compensation" under the
plan is determined by considering the 36 consecutive months that yield the
highest average annual 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, 1998 was: for Mr.
Kilts $1,665,000; for Mr. Rickard $1,044,213; and for Mr. Rosoff $1,037,000.
Estimated years of credited service (rounded to the nearest year) at age 65 was:
for Mr. Kilts 15 years; for Mr. Rickard 15 years; and for Mr. Rosoff (giving
effect to his individual arrangement) 23 years. Mr. Kilts' employment agreement
provides him with a minimum annual pension equal to $200,000 (payable as a
single life annuity beginning at age 60) if he completes five years of service
or if he is involuntarily terminated prior thereto.
AGREEMENTS WITH CERTAIN OFFICERS
The Company and RJRN entered into an employment agreement with Mr. Goldstone
effective December 5, 1995, and most recently amended and restated effective as
of January 1, 1997, pursuant to which Mr. Goldstone serves as Chairman, Chief
Executive Officer and President of the Company and RJRN. Pursuant to the
employment agreement, Mr. Goldstone is entitled to receive an annual base salary
of at least $1.25 million per year and an annual target bonus opportunity of
100% of his base salary. The employment agreement provides that Mr. Goldstone is
eligible for retiree medical coverage, for which purpose he is deemed to be at
least age 55 with the maximum creditable years of service. The employment
agreement provides that in the event Mr. Goldstone becomes disabled, his
disability benefit will be equal to 100% of his base salary payable for a
maximum of two years, at which point Mr. Goldstone's employment will be
terminated and disability benefits will cease. The employment agreement also
provides that Mr. Goldstone will participate in the SERP, under which he is
credited with 13.5 years of service in addition to his actual service with RJRN
in order to address retirement benefits foregone from Mr. Goldstone's prior
employer. Mr. Goldstone's after-tax benefit under the SERP is required to be
funded on a current basis, and Mr. Goldstone is to be reimbursed for taxes
incurred as a result of funding this arrangement. Under the employment
agreement, Mr. Goldstone is to be provided with life insurance, on a
tax-reimbursed basis, with a face amount of $3 million.
The employment agreement provides that if the Company or RJRN terminates Mr.
Goldstone's employment without "cause" or if Mr. Goldstone terminates his
employment for "good reason", then Mr. Goldstone will receive compensation
continuance for three years. In addition, he is entitled to receive retirement
credits, welfare benefits and certain perquisites (collectively, "Continued
Benefits") for the same three year period. Compensation continuance will be
based on Mr. Goldstone's then current base salary and target annual bonus. The
employment agreement provides that in such event, or if Mr. Goldstone's
employment is terminated following his permanent disability, Mr. Goldstone will
be eligible for the maximum benefit under the SERP, payable upon such
termination. The benefit will be equal to the present value of the benefit that
would have been paid to Mr. Goldstone at the end of compensation continuance,
with no other reduction for commencement of payment prior to Mr. Goldstone's
normal retirement date under the SERP. "Cause" includes willful gross misconduct
or malfeasance, or substantial and continuing willful refusal by Mr. Goldstone
to perform his duties, in each case having a material adverse effect on the
Company or RJRN, or certain criminal conduct. "Good reason" includes a reduction
in Mr. Goldstone's duties or positions, a reduction in Mr. Goldstone's salary or
annual target bonus opportunity, relocation, a material breach of the contract
by RJRN or the Company or, following a Change of Control, a reduction in
compensation programs or benefits.
Upon a Change of Control, and if Mr. Goldstone's employment is terminated
during the 24-month period following a Change of Control or a spinoff of one of
the Company's major business units (a "Spin-off"), the employment agreement
provides for compensation and benefits consistent with the provisions applicable
to other headquarters employees as described below. A Change of Control includes
certain acquisitions of 30% or more of the combined voting power of the Company
securities, certain changes in
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the composition of the Company's Board of Directors, certain mergers or
consolidations of the Company or the disposition of substantially all the assets
of the Company. If a "parachute" excise tax is imposed on any payments to Mr.
Goldstone, he will be entitled to tax reimbursement payments.
On November 20, 1997, Nabisco and Nabisco, Inc. entered into an employment
agreement with Mr. Kilts pursuant to which Mr. Kilts agreed to serve as
President and Chief Executive Officer of Nabisco and as a member of the Board of
Directors of Nabisco and Nabisco, Inc., all as of January 1, 1998. Pursuant to
the employment agreement, Mr. Kilts is entitled to receive an annual base salary
of at least $900,000 per year and is eligible for an annual target bonus
opportunity of at least 85% of his base salary for the relevant year. Upon his
completion of five years of active service (or earlier involuntary termination
of employment), Mr. Kilts is entitled to a minimum annual pension of $200,000
(payable as a single life annuity beginning at age 60). Under the employment
agreement, Nabisco also provides Mr. Kilts with life insurance, on a
tax-reimbursed basis, with a face amount of $1 million and will provide Mr.
Kilts with retiree medical coverage (with minimum of 10 years credited service)
upon his retirement or after age 55).
The employment agreement provides that if Mr. Kilts' employment is
terminated without "cause" or if Mr. Kilts terminates his employment for "good
reason", then he will receive two times his annual salary and annual target
bonus opportunity payable over three years and continued benefits for the same
period during which time he is obligated to provide certain consulting services
to Nabisco. If the termination is following a change of control of Nabisco (as
defined in the employment agreement), the compensation will be paid in a
discounted lump-sum based on three times his annual salary and target bonus
opportunity as in effect immediately prior to such termination or, if higher,
immediately prior to the change of control. "Cause" includes criminal
dishonesty, misconduct materially damaging to Nabisco, RJRN or the Company, or
deliberate and continuing willful refusal by Mr. Kilts to perform his duties.
"Good reason" includes a reduction in Mr. Kilts' responsibilities, a reduction
in his salary and annual target bonus opportunity, relocation, or a change of
control or divestiture of Nabisco by the Company following which the Chairman of
Nabisco is anyone other than the Chairman of the Company. If a "parachute"
excise tax is imposed on any payments to Mr. Kilts, he will be entitled to tax
reimbursement payments.
In October 1988, RJRN entered into an agreement with Mr. Schindler which was
supplemented in December 1988 and December 1995, providing that if Mr.
Schindler's employment is terminated other than for "cause" or, within
twenty-four months following a Change of Control, for "good reason", he will be
entitled to an amount equal to two times his annual salary and target bonus,
payable over three years and Continued Benefits for the same period. Mr.
Schindler also participates in the SERP. "Cause" includes, generally, criminal
conduct, deliberate refusal to perform employment duties or deliberate
misconduct materially damaging to RJRN. "Good reason" includes a material
reduction in duties, reduction in pay, grade or bonus opportunity, reduction in
compensation programs or benefits, relocation or material breach of the
arrangement by the Company or RJRN. If a "parachute" excise tax is imposed on
any payments to Mr. Schindler, Mr. Schindler will also be entitled to tax
reimbursement payments. In addition, upon a Change of Control, restrictions on
restricted stock held by Mr. Schindler will lapse and all his outstanding stock
options under the LTIP and a predecessor plan will vest and be cashed-out at the
higher of the difference between the option price and the market price or the
value of the options using a specified Black-Scholes methodology. In addition,
upon termination of employment following a Change of Control, Mr. Schindler's
annual incentive awards would vest pro-rata and be paid in a lump sum and his
PARs would vest and be paid in a lump sum.
In March 1997, the Company and RJRN entered into an agreement with Mr.
Rickard which was amended and restated in June 1998, providing that if Mr.
Rickard's employment is terminated without "cause" or, within twenty-four months
following a Change of Control or a Spinoff, for "good reason," he will be
entitled to two times his annual salary and annual target bonus opportunity
payable over three years, and Continued Benefits for the same period. Upon a
Change of Control or a Spinoff, or if Mr. Rickard's employment is terminated by
the Company without "cause" or by Mr. Rickard for "good reason" during the
24-month period following a Change of Control or a Spinoff, the agreement
provides
17
<PAGE>
for compensation and benefits consistent with the provisions applicable to other
headquarters employees, as described below. If, during the 24-month period
following a Spinoff, Mr. Rickard's employment is terminated by the Company
without "cause" or by Mr. Rickard for "good reason," his agreement provides for
payment, in a lump sum, of the present value of his non-qualified retirement
benefits and for retiree health care benefits during his period of Continued
Benefits. "Cause" includes, generally, criminal conduct, deliberate refusal to
perform employment duties or deliberate misconduct materially damaging to the
Company or RJRN. "Good reason" includes a material reduction in duties,
reduction in pay, grade or annual target bonus opportunity, reduction in
compensation programs or benefits, relocation or material breach of the
arrangement by the Company or RJRN. In the event that a "parachute" excise tax
is imposed on any payments to Mr. Rickard, Mr. Rickard will also be entitled to
tax reimbursement payments.
The Company and RJRN entered into an employment agreement with Mr. Rosoff
effective January 15, 1998, pursuant to which Mr. Rosoff is entitled to receive
an annual base salary of at least $600,000 per year and an annual target bonus
opportunity of 70% of his base salary. The employment agreement provides that,
for pension calculation purposes, Mr. Rosoff will be credited with ten years of
additional service in addition to his actual service with RJRN in order to
address retirement benefits foregone from Mr. Rosoff's prior employer. The
employment agreement also provides that if Mr. Rosoff "s employment is
terminated without "cause" or for "good reason," he will be entitled to two
times his annual salary and annual target bonus opportunity payable over three
years, and Continued Benefits for the same period. Upon a Change of Control or a
Spinoff, or if Mr. Rosoff's employment is terminated by the Company without
"cause" or by Mr. Rosoff for "good reason" during the 24-month period following
a Change of Control or a Spinoff, the agreement provides for compensation and
benefits consistent with the provisions applicable to other headquarters
employees, as described below. If, during the 24-month period following a
Spinoff, Mr. Rosoff's employment is terminated by the Company without "cause" or
by Mr. Rosoff for "good reason," his agreement provides for payment, in a lump
sum, of the present value of his non-qualified retirement benefits and for
retiree health care benefits during his period of Continued Benefits. "Cause"
includes, generally, criminal conduct, deliberate refusal to perform employment
duties or deliberate misconduct materially damaging to the Company or RJRN.
"Good reason" includes a material reduction in duties, reduction in pay, grade
or annual target bonus opportunity, reduction in compensation programs or
benefits, relocation or material breach of the arrangement by the Company or
RJRN. If a "parachute" excise tax is imposed on any payments to Mr. Rosoff, Mr.
Rosoff will also be entitled to tax reimbursement payments.
As discussed in prior proxy statements, the Company maintains a retention
program (the "Retention Program") for corporate headquarters employees and
certain other key employees in the event of certain corporate transactions. The
Retention Program provides benefits to eligible employees whose employment is
terminated within twenty-four months following a Change of Control or a Spinoff,
and provides for certain other payments upon a Change of Control. Messrs.
Goldstone, Rickard and Rosoff are entitled to these benefits under the terms of
their respective employment agreements. For example, upon a Change of Control
annual incentive awards will be paid on a pro-rata basis, restrictions on
restricted stock will lapse and all outstanding stock options under the LTIP and
a predecessor plan (whether held by headquarters employees or certain others)
will vest and be cashed-out at the higher of the difference between the option
price and the market price or the value of the options using a specified
Black-Scholes methodology. In addition, upon the termination of employment of a
headquarters employee, including Messrs. Goldstone, Rickard and Rosoff, during
the 24-month period following a Change of Control or a Spinoff (in the case of
Messrs. Rickard and Rosoff), annual incentive awards will vest pro-rata and be
paid in a lump sum and PARs held by headquarters employees, including Messrs.
Rickard and Rosoff, will vest and be paid in a lump sum. Upon termination of
employment following a Change of Control, severance and Continued Benefits for
the severance period will be paid in a lump sum payment equal to the present
value of such amounts (except to the extent certain Continued Benefits continue
to be provided by RJRN or the Company). If "parachute" excise taxes would be
imposed on any payments to participants in the Retention Program, such
participants will be entitled to tax reimbursement payments.
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<PAGE>
DIRECTORS' COMPENSATION
Directors who are not employees of the Company or its subsidiaries ("Outside
Directors") receive an annual retainer fee of $50,000 per year, plus attendance
fees of $1,250 for each meeting, including certain designated days during which
the Board (or a committee of the Board) conducts Company business. In addition,
Outside Directors who are committee members receive committee attendance fees of
$1,250 for each meeting and committee chairs each receive a $5,000 annual
retainer. The Company offers Outside Directors life insurance having a death
benefit of up to $100,000, participation in a charitable giving program
(pursuant to which directors with at least three years of service may direct
that up to $1 million be contributed to eligible charitable institutions
following the director's death), a matching grants program and supplemental
insurance programs. Each Outside Director, upon becoming a director, is granted
an option pursuant to a stock option plan to purchase 6,000 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. They cannot be exercised for six months
following the date of grant but, thereafter, are exercisable for ten years from
the date of grant. In addition, an Outside Director receives an annual grant of
stock options which is made on the date of the director's election or
re-election to the Board of Directors determined pursuant to a formula set forth
in the applicable plan. In 1998, each eligible director as of the May 1998
annual meeting received an annual stock option to purchase 1,500 shares of
Common Stock at an exercise price of $27.44 (the fair market price of Common
Stock on the date of grant). The annually granted stock options have a ten year
term and vest over three years (33% on the first and second anniversaries of the
date of grant and 34% on the third anniversary). In addition, in lieu of an
annual accrual under the Directors Retirement Plan (which was terminated in
1996), each Outside Director receives an annual grant of 1,000 common stock
units that are not paid until termination of the director's services. This stock
unit grant is made on the date of the director's election or re-election to the
Board of Directors.
No compensation is paid to directors who are employees of the Company or its
subsidiaries in their capacity as directors.
RJR NABISCO HOLDINGS CORP, S&P 500 INDEX, AND S&P FOOD/TOBACCO
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
RN COMMON STOCK S&P 500 INDEX S&P FOOD/TOBACCO
<S> <C> <C> <C>
12/31/93 100 100 100
12/31/94 86 101 111
12/31/95 101 139 163
12/31/96 119 171 203
12/31/97 139 228 266
12/31/98 119 294 313
</TABLE>
- ------------------------
1. 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 the
Company's subsidiaries before restructuring
19
<PAGE>
charges, initial upfront tobacco settlement and related expenses, and
amortization of trademarks and goodwill. For the year ended December 31,
1998, 66% of the Company's operating income before restructuring charges and
amortization of trademarks and goodwill came from tobacco operations and 34%
came from food operations.
2. Total returns assume $100 invested on December 31, 1993 in Common Stock, the
S&P 500 Index and the S&P Food/Tobacco Index with reinvestment of dividends.
20
<PAGE>
COMPENSATION COMMITTEE REPORT
This report has been submitted to the stockholders by the Compensation
Committee (the "Committee") of the Board of Directors and reflects the executive
compensation policies and practices of the Company and its subsidiaries during
1998. The Committee is responsible for executive compensation and oversees the
administration of the Company's executive compensation programs and plans. The
Committee reports regularly to the Board of Directors, and the Board is
periodically asked to ratify Committee actions. During 1998, the Committee
consisted of Directors who were not employees of the Company or any of its
subsidiaries, and who, therefore, were not eligible to participate in any of the
Company's executive compensation programs or plans.
EXECUTIVE COMPENSATION PRINCIPLES AND POLICIES
In determining the amounts, composition, and terms and conditions of the
compensation for executive officers of the Company, the Committee is guided by
two principles: (1) compensation opportunities must enable the Company to
attract and retain individuals with the high caliber of talent and skills
critical to the Company's success and (2) a substantial portion of each
executive officer's compensation must be tied to quantifiable measures of the
Company's financial results from operations and/or stock price performance.
These principles are reflected in the actions discussed below relating to
salaries, annual incentives and long-term incentives.
As noted in previous reports, federal tax law limits the ability of
publicly-traded companies to secure an income tax deduction for compensation
paid to certain highly compensated individuals. Although the Committee has taken
actions to limit the impact of this law, the Committee believes that the tax
deduction limitation should not be permitted to compromise the Company's ability
to design and maintain executive compensation agreements that will attract and
retain the executive talent required to compete successfully on a global basis.
Accordingly, achieving the desired flexibility in the design and delivery of
compensation may occasionally result in some compensation that is not deductible
for federal income tax purposes. For example, as discussed below (under "Annual
Compensation") Nabisco revised its annual operating objectives during 1998. The
Committee modified Nabisco's incentive compensation objectives accordingly to
ensure that compensation incentives support Nabisco's operating objectives, even
though, as a result, 1998 annual bonus payouts for affected named executive
officers are subject to the deduction limitation.
MAJOR COMPENSATION COMPONENTS
The compensation program for executive officers is composed of annual
compensation, long-term compensation and benefits. In determining appropriate
compensation plans and levels, the Committee relies on independent outside
consultants who provide survey and other data regarding the compensation
practices of companies that are representative of the size and type of company
with which the Company competes in the marketplace for executive talent. This is
a broader and more diverse group of companies than used for the peer company
index in the Performance Graph mandated by the Securities and Exchange
Commission which appears on page [19]. The base salary and targeted incentive
compensation levels of the comparator companies are used by the Committee in
determining base salary and targeted incentive compensation levels of executive
officers of the Company, as described below.
ANNUAL COMPENSATION
The annual compensation for each of the named executive officers is composed
of salary and an annual target bonus opportunity. In general, executive officers
salaries are targeted to reflect the median of competitive practices, as
reflected in salary survey data used by the Committee for comparison purposes.
Annual compensation levels (salary plus annual target bonus opportunity) are
generally set to reflect the 75th percentile of the compensation practices of
comparator companies. A senior executive will receive an increase in salary
and/or annual target bonus opportunity only when performance warrants or the
21
<PAGE>
Committee determines that either a change in the individual's responsibilities
or market conditions warrant such an action. Messrs. Schindler and Rickard
received salary increases in 1998.
The bonus amounts shown in the summary compensation table were based on
performance ratings for the financial performance of the businesses for which
the individual is responsible or performs services. The measure of financial
performance for the Company's bonus-eligible headquarters employees (including
Messrs. Goldstone, Rickard and Rosoff) was the Company's cash net income. The
measure of financial performance for Nabisco's bonus-eligible headquarters
employees (including Mr. Kilts) was a combination of Nabisco's cash net income,
free cash flow and sales. The measure for RJRT's bonus-eligible employees
(including Mr. Schindler) was a combination of RJRT's operating company
contribution and free cash flow.
Performance objectives for the Company and its operating companies were
established in early 1998. The performance objectives for the Company and for
Nabisco were prepared subject to the results of a reassessment of Nabisco's
operating objectives undertaken in connection with the retention of Mr. Kilts as
Chief Executive Officer of Nabisco. When the reassessment was completed,
performance objectives for the Company's and Nabisco's headquarters employees
(including Messrs. Goldstone, Kilts, Rickard and Rosoff) were revised to conform
to Nabisco's revised annual operating objectives. The performance objectives for
RJRT's bonus-eligible employees (including Mr. Schindler) were established in
early 1998, and originally included a market share element that was not
ultimately utilized in determining the financial scoring.
For 1998, the annual bonus program for most of the Company's bonus-eligible
employees (including all of the named executive officers) included a maximum
cash bonus opportunity of 120% of the target annual bonus opportunity,
supplemented with Performance Notes equal to 20% of the target bonus opportunity
if targeted financial performance was achieved or exceeded. Performance Notes
are phantom units whose value may fluctuate up or down based on attainment of
predetermined long-term financial performance objectives that are derived from
the Company's or an operating company's strategic plan. Each of the Company and
each operating company has its own Performance Notes utilizing its own financial
performance objectives. The Performance Notes, which do not vest for two years,
are intended to provide a longer-term incentive to participants. All of the
named executive officers (with the exception of Mr. Kilts) received supplemental
Performance Notes for 1998. The Performance Notes are explained on pages
[13-14].
LONG-TERM COMPENSATION
The Committee has historically relied on a mix of various forms of
stock-based grants and multi-year incentive opportunities to motivate executives
to maintain a longer-term perspective. In 1998, the Company's regular long-term
incentive grants were made in the form of Performance Appreciation Rights,
except that the grant for Mr. Goldstone was made in a combination of stock
options and restricted stock (as described below under Chief Executive Officer's
Compensation) and the grant for Mr. Kilts was made in the form of stock options.
Performance Appreciation Rights are appreciation rights on the Performance Notes
of a mix of the Company and its operating companies, as explained on page [13].
The amount of compensation that will be earned by the executive will depend
solely on the increase in value of the underlying Performance Notes. The
Committee believes that this performance based incentive vehicle will enable the
Committee to focus long-term incentives on specific strategic operating and
financial objectives. Messrs. Kilts and Rosoff were also granted stock options
and restricted stock in connection with their initial employment and Mr. Rickard
received a special grant of stock options to increase the portion of his
incentive compensation that is based on stock price.
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<PAGE>
In determining the size of the regular long-term incentive grants, the
Committee targets the 75(th) percentile of combined competitive stock options
and other long-term incentive opportunities at comparator companies. In making
such grants, the Committee does not take into account whether an executive has
exercised or continues to hold previously granted stock options.
During 1998, the Company faced unprecedented threats from both litigation
and legislation, which raised uncertainty about the Company's ability to attract
and retain executives in this environment. Concerned that the Company had no
meaningful retention devices in place, during 1998 the Committee implemented two
retention programs: one stock-based and one cash-based. In February 1998, the
Committee made restricted stock grants to executives at the Company's
headquarters and to selected executives at its tobacco operating companies. The
restricted stock vests after five years but may vest earlier in certain
circumstances. In May 1998, the Committee established a trust and funded a cash
retention program for executives at the Company's headquarters and selected
executives at its tobacco operating companies. Under the cash retention program,
if the executive remains employed for three years, he or she will receive a
designated amount based on a multiple (between 1 and 2.5) of base salary and
target bonus. The cash retention amount may vest during the three-year period if
the executive is involuntarily terminated in certain circumstances. Mr.
Goldstone does not participate in either program.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Mr. Goldstone's compensation for 1998 was determined by his performance and
by the terms of his employment agreement with the Company. The terms of Mr.
Goldstone's employment agreement are discussed in detail beginning on page [16].
Mr. Goldstone's contractual annual compensation, comprised of annual base
salary of $1,250,000 and an annual target bonus opportunity of 100% of his
annual base salary, is intended to be consistent with the Committee's targeted
annual compensation levels, which are generally set to reflect the 75th
percentile of the compensation practices of comparator companies. As in prior
years, Mr. Goldstone agreed to a reduction of his annual salary to $800,000 in
exchange for an increase in his annual target bonus opportunity to reflect the
reduction. This action was intended to subject more of Mr. Goldstone's
compensation to Company performance and to enable the Company to deduct, for
federal income tax purposes, all of Mr. Goldstone's 1998 salary and ultimate
annual bonus award.
Mr. Goldstone's 1998 annual bonus award was based on a performance schedule
adopted by the Committee in early 1998 (and revised during 1998 to conform to
Nabisco's revised annual operating objectives), using the Company's annual cash
net income as the performance measure. Mr. Goldstone's 1998 cash bonus award
also reflects the Committee's assessment of his critical role in guiding the
Company through a difficult legal and political environment, while maintaining
the Company's focus on producing consistent and improving operating results,
specifically including the Company's 1998 cash net income performance. Because
the Company's 1998 cash net income target was exceeded, Mr. Goldstone also
received a supplemental grant of Performance Notes (as described above under
"Annual Compensation").
As in prior years, Mr. Goldstone's 1998 long-term incentive grants were in a
combination of Common Stock incentives and Nabisco Stock incentives, in
recognition of Mr. Goldstone's oversight role with respect to Nabisco. Mr.
Goldstone was granted a stock option (under a plan maintained by Nabisco) to
purchase 100,000 shares of Nabisco Stock with an exercise price of $47.63 (the
market price of Nabisco Stock on the date of Grant). In lieu of options to
purchase Common Stock, Mr. Goldstone was granted 200,000 shares of restricted
Common Stock as a long-term retention vehicle. The restricted stock is scheduled
to vest when Mr. Goldstone attains age 60 (in 2006). Because of the restricted
stock grant, the size of Mr. Goldstone's 1998 long-term incentive grants
exceeded the targeted 75th percentile of competitive long-term grants. The
Committee also extended the performance period for previously granted Contingent
Performance Shares, under which Mr. Goldstone will earn 200,000 shares of Common
Stock if
23
<PAGE>
the average closing price of Common Stock is at least $43.75 for 30 consecutive
days. The opportunity, which was scheduled to expire at the end of 1998, was
extended to December 31, 2001.
SUMMARY
The Committee believes that the Company's executive compensation program
must continually provide compensation potential of such significance that
individuals of exceptional talent and skills are motivated to join and remain
with the Company and to perform in an exceptional manner. By ensuring that such
persons are managing the Company's operations, the long-term interests of
stockholders will be best served. The actions taken by the Committee for 1998
were consistent with this focus and the principles outlined above.
John T. Chain, Jr. (Chairman)
John L. Clendenin
Rozanne L. Ridgway
STOCKHOLDER PROPOSALS
Certain stockholders have submitted the two proposals set forth below. The
Company will furnish, orally or in writing as requested, the names, addresses
and claimed share ownership positions of the proponents of these proposals
promptly upon written or oral request directed to the Secretary of the Company.
The following proposals have been carefully considered by the Board, which has
concluded that their adoption would not be in the best interests of the Company
or its stockholders. For the reasons stated after each proposal and its
supporting statement, the Board recommends a vote AGAINST each proposal.
Proposals of stockholders intended to be included in the Company's 2000
Annual Meeting Proxy Statement must be received by the Secretary of the Company
no later than November 27, 1999 at the Company's principal executive offices:
RJR Nabisco Holdings Corp., 1301 Avenue of the Americas, New York, NY
10019-6013. Other stockholder proposals intended to be presented at the
Company's 2000 Annual Meeting but not in the Annual Meeting Proxy Statement,
must be received in writing at the same address, together with other required
information as set forth in the Company's By-Laws, between February 12, 2000 and
March 13, 2000. Board nominations are subject to a later deadline and other
requirements. See "Meetings and Committees of the Board--Corporate Governance
and Nominating Committee" above.
ITEM 3--STOCKHOLDER PROPOSAL ON
TOBACCO ADVERTISING AND YOUTH
Two stockholders have submitted the following proposal, which will be voted
upon at the Annual Meeting if presented by its proponents:
"WHEREAS, even though our company uses focus groups to test and market its
non-tobacco products to children, it insists that it does not market its
cigarettes to children;
"An internal company memo stated--as early as 1976: 'Evidence is now
available to indicate that the 14-to-18 year-old group is an increasing segment
of the smoking population. RJRT must soon establish a successful new brand in
this market if our position in the industry is to be maintained over the long
run.'
"Rather than create a new brand appealing to the 14-to-18 year-old group,
RJR Tobacco created the "Joe Camel' campaign. Within a short time its success
became clear. At least one study showed youth smoking increased from .05% to 33%
in the five years after its launch.
"After extreme pressure from shareholders and other publics, RJR
discontinued this campaign in the United States in 1997, and throughout the
world in 1998.
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<PAGE>
"As it discontinued its Joe Camel campaign in the U.S., RJR International
launched its European equivalent through a characterization of a camel in the
'Tips Camel Campaign.' In this campaign the camel character gives 'tips' about
what to do with a camel in ways paralleling what smokers can do regarding their
Camel cigarette. For instance, it shows the camel character surrounded in lights
with a bus down the street. The copy says: 'Lighting up a Camel always makes the
bus come.' Others are more sexual in overtone, such as a bed and side table with
the 'tip' to 'keep one for later.'
"This 'Tips Campaign' has already drawn outrage from parents, the press and
other groups in Europe as to its impact on young people.
"Although a European Vice President of RJR International compared the
campaign character to the cartoon character, the Pink Panther, he insisted the
camel featured in the 'Tips Campaign' is not a cartoon. However, when the 'Tips
Camel' was shown to the only teenager at last year's shareholders meeting, he
said it looked to him like a cartoon. It is this perception that concerns us who
are proposing this resolution;
"RESOLVED, that shareholders request the Board to implement the following
policy for our Company: that, before any promotional, marketing, and/or
advertising campaign presently running continues or is inaugurated in the
future, it must be submitted to independent and certifiable testing to insure
that it is not equally or more appealing to the 14-to-18 age group than groups
over 18."
The proponent has submitted the following statement in support of this
proposal:
"We suggest that, in creating this approach to testing, that the testing
entity be independent of the company and the tobacco industry, with no possible
conflict of interest. Its task will be to determine the effectiveness of the
campaign in making a positive impression on two age groups: those 18 and under,
and those spread evenly between 18 and 45. If the test results on the younger
focus group show the campaign is equal to or exceeds the effectiveness of the
older group, the (proposed) campaign shall be terminated."
THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
Reynolds' has policies and practices in place to assure that its advertising
is responsible, and directed to adult and not underage smokers. Reynolds' policy
prohibits any advertising research involving subjects under the age of 21. In
their research about proposed new advertising, consistent with good qualitative
research practices, Reynolds' researchers ask study participants whether the
proposed ads are perceived as being for persons younger or older than or about
the same age as the study participants. If an ad is thought to have particular
interest to persons younger than 21, it is not used. Reynolds does not believe
that any "independent" certification of its advertising target age would give
more accurate or credible results or that such certification would satisfy
critics of cigarette advertising.
Reynolds' policy permits it to develop advertising materials which it
believes will motivate its prospective audience: those 21 and older who already
smoke brands manufactured by its competitors. At the same time, by virtue of its
research practices, it can be reasonably sure that proposed ads are not of more
interest to persons under the legal age to smoke than to persons who are over
that age.
THEREFORE, YOUR BOARD URGES STOCKHOLDERS TO VOTE AGAINST THIS PROPOSAL.
ITEM 4--STOCKHOLDER PROPOSAL ON SMUGGLING
A stockholder has submitted the following proposal, which will be voted upon
at the Annual Meeting if presented by its proponent:
"WHEREAS, a few days before last year's stockholders' meeting, THE NEW YORK
TIMES carried a front-page story with allegations about our Company's
involvement in smuggling. It noted that the European Union's anti-fraud unit had
asked the Treasury Department of the United States to help it investigate our
company regarding its involvement in smuggling.
25
<PAGE>
"This followed another expose in THE NEW YORK TIMES that noted that the
'tobacco giants deny" any "role in illegal trade," but that "inquiries show
there may be one.' In fact, one quarter to one third of all cigarettes exported
by our company and the others in the industry end up being smuggled.
"The article highlighted the role of Michael Hanggi, one of Europe's biggest
cigarette traders. He noted he '...has been a Reynolds customer for 15 years and
has frequently been a supplier to smugglers' of Reynolds cigarettes. It also
noted that 'Reynolds had decided to keep Mr. Hanggi as a customer even after Mr.
Hanggi told THE NEW YORK TIMES last summer (1997) that he sold to clients he
knew to be smugglers;'
"At last year's annual meeting, when asked if Mr. Hanggi was still a
customer of Reynolds, the CEO of RJR Nabisco said he did not know, an
indication, we believe, that the smuggling is 'business as usual' with R.J.R.
Nabisco.
"The article states that '...the largest tobacco companies are selling
billions of dollars of cigarettes each year to traders and dealers who funnel
them into black markets in many countries, say law enforcement officials and
participants in the trade. In the last decade, the volume of cigarette smuggling
around the world has nearly tripled, according to a leading tobacco research
organization. This reflects a general surge in cigarette sales abroad,
especially for American brands.'
"The article also noted that '...the companies say they do nothing to
encourage the smuggling and do not condone it. But recent criminal
investigations in several countries show that people in the tobacco industry
have played a significant role at times in stimulating and fueling it.'
"Our company, with the tobacco industry, has run full-page ads in the United
States arguing against cigarette tax increases under the guise that such will
increase the possibility of smuggling and a 'black market.' As proponents of
this resolution, we believe such advertising posturing is undermined by serious
allegations showing our company knowingly has done and may continue doing
business directly with one of the largest smugglers in Europe.
"RESOLVED: the shareholders request the Board to establish a committee of
independent directors to investigate and determine the extent of our Company's
involvement directly or indirectly in smuggling its cigarettes throughout the
world and to make appropriate recommendations to ensure that our Company is not
involved in any way in selling its cigarettes in ways that assist smuggling. The
committee shall report its findings and recommendations to the shareholders
prior to the 2000 annual meeting."
THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
The Company does not believe that its effectiveness in deterring cigarette
smuggling would be enhanced by the creation of another independent committee of
the Board, as recommended by this shareholder proposal. Such a committee and its
report, also recommended by the proposal, would result in unnecessary
duplication of policies, procedures and reporting already in existence at the
Company and in each of its subsidiaries. There is no reason to believe that the
creation of a new layer of review and reporting will add anything to the
effectiveness of this process.
There are three types of compliance-oriented procedures currently in place.
First, the Company maintains legal compliance training and certification
programs throughout the corporate group supervised by the general counsel of the
Company and of each operating subsidiary and overseen by the Audit Committee of
the Board of Directors (a committee composed exclusively of independent
directors). Compliance training materials clearly state the Company's policy "to
comply in all respects with all applicable federal, state and local laws and
regulations in the U.S. and in all jurisdictions in which the Company does
business." Employees are prohibited from engaging in smuggling or other
violations of law. Each employee identified as performing a function sensitive
to legal compliance certifies annually that he or she has read and complied with
the Company's (or Nabisco's) Code of Conduct, which sets forth this and other
compliance requirements. The results of the certification program are reported
to the Audit Committee of the Board of Directors each year.
26
<PAGE>
Second, the Company has an active internal audit function headed by a senior
vice president. The internal audit team, among other things, regularly reviews
internal control systems related to operating company sales and distribution
practices and reports its activities to the Company's senior management and to
the Audit Committee during the course of each year. In addition to its annual
internal audit program, the internal audit team responds to special inquiries
from the Audit Committee as appropriate.
Finally, designated senior managers of the operating companies have clear
responsibilities to assure that their company's employees perform their jobs in
accordance with law. In particular, certain senior managers make periodic
reports to the Audit Committee on the status of the Company's compliance with
applicable laws and regulations.
Anti-smuggling programs and reporting on connected foreign sales issues are
a part of each of these three categories of compliance activity. The independent
Audit Committee oversees and reviews, with the Board, the Company's and its
subsidiaries' procedures, controls, organization, staffing and resources to
ensure they are complying with all appropriate laws and regulations including
laws relating to smuggling.
Although Northern Brands International (NBI), a now inactive subsidiary of
the Company, recently pled guilty to aiding and abetting certain customers in
bringing cigarettes into the United States improperly, the conduct, in 1994 and
1995 of NBI's now-terminated employees does not discredit the Company's
compliance program. No corporate policy can eliminate the risk that dishonest
individuals, including company employees, will find ways to circumvent controls
for their own personal benefit.
This proposal, which seeks the creation of an independent committee to
conduct an investigation concerning cigarette smuggling, would merely create an
additional investigative body whose responsibilities would needlessly duplicate
those of the audit team, management and the Audit Committee. The Company's
confidence in the powers and duties of its existing Audit Committee is confirmed
by a recent report from the "Blue Ribbon Committee on Improving the
Effectiveness of Corporate Audit Committees" to the New York Stock Exchange and
the National Association of Securities Dealers. This report singles out the
charter of the Company's Audit Committee as a model for other reporting
companies.
THEREFORE, YOUR BOARD URGES STOCKHOLDERS TO VOTE AGAINST THIS PROPOSAL.
COST AND METHOD OF SOLICITATION
The Company will bear the cost of this solicitation. While no precise
estimate of this cost can be made at the present time, the Company currently
estimates that it will spend less than $2,000,000 for its solicitation of
proxies, including expenditures for attorneys, solicitors, and public relations
advisors and advertising, printing, transportation, litigation and related
expenses, but excluding the salaries and wages of regular employees and officers
and the normal expenses of an uncontested proxy solicitation for the election of
directors. We estimate that the solicitation expenses incurred by the Company to
date are less than $10,000. In addition to soliciting proxies by mail,
directors, officers and regular corporate headquarters employees of the Company
may solicit proxies in person or by telephone or telecopy. The Company will pay
for the cost of these solicitations, but these individuals will receive no
additional compensation for the solicitation services. The Company has retained
MacKenzie Partners, Inc. ("MacKenzie") at an estimated fee of not more than
$300,000 in the aggregate, plus reasonable out-of-pocket expenses, to
participate in the solicitation of proxies and proxy revocations. The Company
has also agreed to indemnify MacKenzie against certain liabilities and expenses.
The Company estimates that approximately 30 employees of MacKenzie will be
involved in the solicitation of proxies on behalf of the Company. The Company
will also reimburse brokers, fiduciaries, custodians and other nominees, as well
as persons holding stock for others who have the right to give voting
instructions, for out-of-pocket expenses incurred in forwarding this proxy
statement and related materials to, and obtaining instructions or authorizations
relating to such materials from, beneficial owners of the Company's capital
stock.
27
<PAGE>
OTHER MATTERS
The Board 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 on them according to their best judgment.
YOUR VOTE IS VERY IMPORTANT. YOUR BOARD URGES YOU TO MARK, DATE, SIGN AND
RETURN THE ENCLOSED WHITE PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE AS
SOON AS POSSIBLE.
RJR NABISCO HOLDINGS CORP.
If you have any questions or need assistance in voting your shares, please
contact MacKenzie Partners, Inc. at their toll free number: 1-800-322-2885.
New York, New York
March [31], 1999
28
<PAGE>
APPENDIX I
SUPPLEMENTAL DIRECTOR INFORMATION
Set forth below is (a) the name and business address of each of the
participants and their associates (except the Company) in the solicitation made
pursuant to this Proxy Statement, and (b) the dates, types and amounts of each
participant's purchases and sales of the Company's debt and equity securities
within the past two years. Except for the Company, the only participants are the
Company's Directors.
<TABLE>
<CAPTION>
NAME AND DATE OF PURCHASE(P) TYPE AND
BUSINESS ADDRESS(1) TRANSACTION OR SALES(S) AMOUNT(2)
--------------------- ---------------------- -------------- --------------
<S> <C> <C> <C>
John T. Chain, Jr........................................ None
Chairman
Thomas Group, Inc.
5221 North O'Connor Boulevard
Suite 500
Irving, TX 75039-3714
Julius L. Chambers....................................... None
Chancellor
North Carolina Central University
P. O. Box 19617
Durham, NC 27707
John L. Clendenin........................................ None
c/o RJR Nabisco, Inc.
1301 Avenue of the Americas
New York, NY 10019-6013
Steven F. Goldstone...................................... None
Chairman & CEO
RJR Nabisco, Inc.
1301 Avenue of the Americas
New York, NY 10019-6013
Ray J. Groves............................................ December 31, 1998* P 93 shares
Chairman
Legg Mason Merchant Banking, Inc.
100 Light Street
Baltimore, MD 21202
Fred H. Langhammer....................................... None
President & COO
The Estee Lauder
Companies Inc.
767 Fifth Avenue
New York, NY 10153
H. Eugene Lockhart....................................... March 4, 1997 P 270 shares
Executive Vice President & Chief Marketing Officer
AT&T
295 North Maple Avenue
Basking Ridge, NJ 07920
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
NAME AND DATE OF PURCHASE(P) TYPE AND
BUSINESS ADDRESS(1) TRANSACTION OR SALES(S) AMOUNT(2)
--------------------- ---------------------- -------------- --------------
<S> <C> <C> <C>
Theodore E. Martin....................................... None
c/o RJR Nabisco, Inc.
1301 Avenue of the Americas
New York, NY 10019-6013
Rozanne L. Ridgway....................................... None
c/o RJR Nabisco, Inc.
1301 Avenue of the Americas
New York, NY 10019-6013
</TABLE>
- ------------------------
* Shares acquired during 1998 under the Company's dividend reinvestment plan.
(1) The companies named in the table above, to the extent that the participants
are officers of such companies, are deemed to be associates of such
participants. The addresses of such associates are as given above.
(2) All of the Company securities purchased and sold were shares of Common
Stock.
Except as set forth in the Proxy Statement or this Appendix, to the best of
the Company's knowledge, none of the directors or, in the case of clause (a)
only, any of their associates, (a) owns of record or has direct or indirect
beneficial ownership of any securities issued by the Company or any of its
subsidiaries; (b) has purchased or sold any securities issued by the Company
within the past two years; (c) has incurred any outstanding indebtedness to
acquire or hold securities issued by the Company; or (d) has been a party to any
contract, arrangement or understanding with respect to any securities of the
Company during the past year.
Except as set forth in the Proxy Statement or this Appendix, to the best of
the Company's knowledge, (a) none of the participants or any of their associates
has any arrangement or understanding with respect to any future employment or
any future transactions with the Company or any of its affiliates, and (b) none
of the participants, executive officers of the Company, any person known to the
Company to own beneficially or of record more than five percent of any class of
Company voting securities, or any of their associates has entered into any
transaction or series of similar transactions with the Company or any of its
subsidiaries since the beginning of the Company's last fiscal year in which such
person had or will have a direct or indirect material interest, and no such
transactions are currently proposed.
30
<PAGE>
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
1. If your shares are registered in your own name(s), please sign, date and
promptly mail the enclosed Proxy Card, using the postage-paid envelope
provided.
2. If your shares are held in the name of a brokerage firm, bank nominee or
other institution, only it can sign a Proxy Card with respect to your shares
and only after receiving your specific instructions. Accordingly, please
sign, date and mail the enclosed Proxy Card in the postage-paid envelope
provided. You may also contact the person responsible for your account and
give instructions for a Proxy Card to be issued representing your shares.
If you have any questions about voting your Proxy Card or require
assistance, please call:
MACKENZIE PARTNERS, INC.
156 FIFTH AVENUE
NEW YORK, NY 10010
(212) 929-5500 (COLLECT)
OR
(800) 322-2885 (TOLL FREE)
----------------------------------------------------------------------------
31
<PAGE>
P R O X Y [COMMON]
RJR NABISCO HOLDINGS CORP.
ANNUAL MEETING OF STOCKHOLDERS -- MAY 12, 1999
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby, with respect to all shares of Common Stock of RJR
Nabisco Holdings Corp. (the "Company") which the undersigned may be entitled to
vote, constitutes and appoints each of Steven F. Goldstone, William L. Rosoff
and H. Colin McBride as his true and lawful agent and proxy, with full power of
substitution in each, to represent the undersigned and directs First Chicago
Trust Company of New York, as Depositary, in each case at the 1999 Annual
Meeting of Stockholders of the Company to be held at The M.C. Benton, Jr.
Convention and Civic Center, 301 West Fifth Street, Winston-Salem, North
Carolina, on Wednesday, May 12, 1999 at 9:00 a.m., and at any adjournments or
postponements thereof, to vote such stock on all matters coming before said
meeting as set forth below.
Election of Directors. Nominees:
J.T. Chain, Jr.; J.L. Chambers; J.L. Clendenin; S.F. Goldstone; R.J. Groves;
F.H. Langhammer; H.E. Lockhart; T.E. Martin and R.L. Ridgway.
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 AND 4. PLEASE MARK THIS
PROXY CARD, FILL IN THE DATE, SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN
THE ACCOMPANYING ENVELOPE. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED
STATES.
(SEE REVERSE SIDE)
<PAGE>
/X/ Please mark your votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITS NOMINEES AND FOR PROPOSAL
2.
<TABLE>
<C> <S> <C> <C> <C>
1. Election of Directors (see reverse) For, FOR / / WITHHELD / /
except withheld from the following
nominee(s):
---------------------------------------------
2. Ratify the appointment of Deloitte & Touche FOR / / AGAINST / / ABSTAIN / /
LLP as independent auditors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 3 AND 4.
3. Stockholder proposal on tobacco advertising FOR / / AGAINST / / ABSTAIN / /
and growth
4. Stockholder proposal on smuggling FOR / / AGAINST / / ABSTAIN / /
SPECIAL ACTION
Change of address on Reverse Side / /
Discontinue Annual Report Mailing for
this Account / /
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 Title
</TABLE>
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
RJR NABISCO HOLDINGS CORP.
MAY 12, 1999
IF YOU HAVE ANY QUESTIONS OR REQUIRE ASSISTANCE, PLEASE CALL:
MACKENZIE PARTNERS, INC.
(212) 929-5500 (COLLECT)
OR
(800) 322-2885 (TOLL-FREE)
<PAGE>
P R O X Y [COMMON/BENEFICIAL]
RJR NABISCO HOLDINGS CORP.
ANNUAL MEETING OF STOCKHOLDERS -- MAY 12, 1999
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby, with respect to all shares of Common Stock of RJR
Nabisco Holdings Corp. (the "Company") which the undersigned may be entitled to
vote, constitutes and appoints each of Steven F. Goldstone, William L. Rosoff
and H. Colin McBride as his true and lawful agent and proxy, with full power of
substitution in each, to represent the undersigned and directs First Chicago
Trust Company of New York, as Depositary, in each case at the 1999 Annual
Meeting of Stockholders of the Company to be held at The M.C. Benton, Jr.
Convention and Civic Center, 301 West Fifth Street, Winston-Salem, North
Carolina, on Wednesday, May 12, 1999 at 9:00 a.m., and at any adjournments or
postponements thereof, to vote such stock on all matters coming before said
meeting as set forth below.
Election of Directors. Nominees:
J.T. Chain, Jr.; J.L. Chambers; J.L. Clendenin; S.F. Goldstone; R.J. Groves;
F.H. Langhammer; H.E. Lockhart; T.E. Martin and R.L. Ridgway.
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 AND 4. PLEASE MARK THIS
PROXY CARD, FILL IN THE DATE, SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN
THE ACCOMPANYING ENVELOPE. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED
STATES.
(SEE REVERSE SIDE)
<PAGE>
/X/ Please mark your votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITS NOMINEES AND FOR PROPOSAL
2.
<TABLE>
<C> <S> <C> <C> <C>
1. Election of Directors (see reverse) For, FOR / / WITHHELD / /
except withheld from the following
nominee(s):
---------------------------------------------
2. Ratify the appointment of Deloitte & Touche FOR / / AGAINST / / ABSTAIN / /
LLP as independent auditors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 3 AND 4.
3. Stockholder proposal on tobacco advertising FOR / / AGAINST / / ABSTAIN / /
and youth
4. Stockholder proposal on smuggling 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 Title
</TABLE>
<PAGE>
P R O X Y [COMMON/$.835 DEPOSITARY SHARES]
RJR NABISCO HOLDINGS CORP.
ANNUAL MEETING OF STOCKHOLDERS -- MAY 12, 1999
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby, with respect to all shares of Common Stock of RJR
Nabisco Holdings Corp. (the "Company") which the undersigned may be entitled to
vote, constitutes and appoints each of Steven F. Goldstone, William L. Rosoff
and H. Colin McBride as his true and lawful agent and proxy, with full power of
substitution in each, to represent the undersigned and directs First Chicago
Trust Company of New York, as Depositary, in each case at the 1999 Annual
Meeting of Stockholders of the Company to be held at The M.C. Benton Convention
& Civic Center, 301 West Fifth Street, Winston-Salem, North Carolina, on
Wednesday, May 12, 1999 at 9:00 a.m., and at any adjournments or postponements
thereof, to vote such stock on all matters coming before said meeting as set
forth below.
Election of Directors. Nominees:
J.T. Chain, Jr.; J.L. Chambers; J.L. Clendenin; S.F. Goldstone; R.J. Groves;
F.H. Langhammer; H.E. Lockhart; T.E. Martin and R.L. Ridgway.
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 AND 4. PLEASE MARK THIS
PROXY CARD, FILL IN THE DATE, SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN
THE ACCOMPANYING ENVELOPE. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED
STATES.
<TABLE>
<S> <C>
Change of address:
- ---------------------------------------------
- ---------------------------------------------
(If you have written in the above space,
please mark the corresponding box on the
reverse side of this card.)
</TABLE>
(SEE REVERSE SIDE)
IMPORTANT MESSAGE!
TO FORMER HOLDERS OF $.835 DEPOSITARY SHARES:
- - You are entitled to vote at the RJR Nabisco Holdings Corp. Annual Meeting of
Stockholders to be held on May 12, 1999
- - You may use the proxy card attached above to vote. Please vote early!
- - If you have any questions about voting, please call MacKenzie Partners, Inc.
toll free at 1-800-322-2885.
- - Each $.835 Depositary Share formerly owned by you has been converted into
one-fifth of a share of RJR Nabisco Common Stock, after adjustment to reflect
the Company's April 1995 reverse Common Stock split. The number of shares
printed on the reverse side of this card is the number of shares of RJR
Nabisco Common Stock that you are entitled to receive upon exchange of your
certificate(s) representing $.835 Depositary Shares.
- - UNTIL THE CERTIFICATES REPRESENTING YOUR $.835 DEPOSITARY SHARES ARE EXCHANGED
FOR RJR NABISCO COMMON STOCK, WE CANNOT SEND YOU ANY RJR NABISCO COMMON STOCK
DIVIDENDS. TO DATE, DIVIDENDS AGGREGATING APPROXIMATELY $7.6025 PER SHARE OF
RJR NABISCO COMMON STOCK HAVE ACCRUED ON YOUR ACCOUNT.
- - If you need assistance exchanging your $.835 Depositary Share certificate(s),
please call the Exchange Agent, First Chicago Trust Company of New York,
toll-free at 1-800-317-4432 and ask for the Tenders & Exchanges Department.
Thank you for acting promptly.
RJR NABISCO HOLDINGS CORP.
<PAGE>
/X/ Please mark your votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITS NOMINEES AND FOR PROPOSAL
2.
<TABLE>
<C> <S> <C> <C> <C>
1. Election of Directors (see reverse) For, FOR / / WITHHELD / /
except withheld from the following
nominee(s):
---------------------------------------------
2. Ratify the appointment of Deloitte & Touche FOR / / AGAINST / / ABSTAIN / /
LLP as independent auditors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 3 AND 4.
3. Stockholder proposal on tobacco advertising FOR / / AGAINST / / ABSTAIN / /
and youth
4. Stockholder proposal on smuggling FOR / / AGAINST / / ABSTAIN / /
SPECIAL ACTION
Change of address on Reverse Side / /
Discontinue Annual Report Mailing for
this Account / /
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 Title
</TABLE>
(See Reverse Side for Instructions)
<PAGE>
P R O X Y [COMMON/BORDEN]
RJR NABISCO HOLDINGS CORP.
ANNUAL MEETING OF STOCKHOLDERS -- MAY 12, 1999
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby, with respect to all shares of Common Stock of RJR
Nabisco Holdings Corp. (the "Company") which the undersigned may be entitled to
vote, constitutes and appoints each of Steven F. Goldstone, William L. Rosoff
and H. Colin McBride as his true and lawful agent and proxy, with full power of
substitution in each, to represent the undersigned and directs First Chicago
Trust Company of New York, as Depositary, in each case at the 1999 Annual
Meeting of Stockholders of the Company to be held at The M.C. Benton, Jr.
Convention & Civic Center, 301 West Fifth Street, Winston-Salem, North Carolina,
on Wednesday, May 12, 1999 at 9:00 a.m., and at any adjournments or
postponements thereof, to vote such stock on all matters coming before said
meeting as set forth below.
Election of Directors. Nominees:
J.T. Chain, Jr.; J.L. Chambers; J.L. Clendenin; S.F. Goldstone; R.J. Groves;
F.H. Langhammer; H.E. Lockhart; T.E. Martin and R.L. Ridgway.
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 AND 4. PLEASE MARK THIS
PROXY CARD, FILL IN THE DATE, SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN
THE ACCOMPANYING ENVELOPE. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED
STATES.
<TABLE>
<S> <C>
Change of address:
- ---------------------------------------------
- ---------------------------------------------
(If you have written in the above space,
please mark the corresponding box on the
reverse side of this card.)
</TABLE>
(SEE REVERSE SIDE)
IMPORTANT MESSAGE!
TO FORMER HOLDERS OF BORDEN, INC. COMMON STOCK:
- - You are entitled to vote at the RJR Nabisco Holdings Corp. Annual Meeting of
Stockholders to be held on May 12, 1999.
- - You may use the proxy card attached above to vote. Please vote early!
- - If you have any questions about voting, please call MacKenzie Partners, Inc.
toll free at 1-800-322-2885.
- - Each share of Borden common stock reflected in your account is exchangeable
for .45829 of a share of RJR Nabisco Common Stock, after adjustment to reflect
RJR Nabisco's April 1995 reverse Common Stock split. The number of shares
printed on the reverse side of this card is the number of shares of RJR
Nabisco Common Stock that you are entitled to receive upon exchange of your
Borden common stock.
- - UNTIL THE CERTIFICATES REPRESENTING YOUR BORDEN COMMON STOCK ARE EXCHANGED FOR
RJR NABISCO COMMON STOCK, WE CANNOT SEND YOU ANY RJR NABISCO COMMON STOCK
DIVIDENDS. TO DATE, DIVIDENDS AGGREGATING APPROXIMATELY $7.5875 PER SHARE OF
RJR NABISCO COMMON STOCK HAVE ACCRUED ON YOUR ACCOUNT.
- - If you need assistance exchanging your Borden common stock certificate(s),
please call the Exchange Agent, First Chicago Trust Company of New York,
toll-free at 1-800-619-1696 and ask for the Tenders & Exchanges Department.
Thank you for acting promptly.
RJR NABISCO HOLDINGS CORP.
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
/X/ Please mark your votes as in
this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITS NOMINEES
AND FOR PROPOSAL 2.
1. Election of Directors (see FOR / / WITHHELD
reverse) For, except / /
withheld from the following
nominee(s):
----------------------------
2. Ratify the appointment of FOR / / AGAINST ABSTAIN
Deloitte & Touche LLP as / / / /
Independent Auditors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS
3 AND 4.
3. Stockholder proposal on FOR / / AGAINST ABSTAIN
tobacco advertising and / / / /
youth
4. Stockholder proposal on FOR / / AGAINST ABSTAIN
smuggling / / / /
SPECIAL ACTION
Change of address on Reverse
Side / /
Discontinue Annual Report
Mailing for this Account / /
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 Title
</TABLE>
(See Reverse Side for Instructions)
<PAGE>
P R O X Y [COMMON/SERIES C DEPOSITARY SHARES]
RJR NABISCO HOLDINGS CORP.
ANNUAL MEETING OF STOCKHOLDERS -- MAY 12, 1999
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby, with respect to all shares of Common Stock of RJR
Nabisco Holdings Corp. (the "Company") which the undersigned may be entitled to
vote, constitutes and appoints each of Steven F. Goldstone, William L. Rosoff
and H. Colin McBride as his true and lawful agent and proxy, with full power of
substitution in each, to represent the undersigned and directs First Chicago
Trust Company of New York, as Depositary, in each case at the 1999 Annual
Meeting of Stockholders of the Company to be held at The M.C. Benton Convention
& Civic Center, 301 West Fifth Street, Winston-Salem, North Carolina, on
Wednesday, May 12, 1999 at 9:00 a.m., and at any adjournments or postponements
thereof, to vote such stock on all matters coming before said meeting as set
forth below.
Election of Directors. Nominees:
J.T. Chain, Jr.; J.L. Chambers; J.L. Clendenin; S.F. Goldstone; R.J. Groves;
F.H. Langhammer; H.E. Lockhart; T.E. Martin and R.L. Ridgway.
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 AND 4. PLEASE MARK THIS
PROXY CARD, FILL IN THE DATE, SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN
THE ACCOMPANYING ENVELOPE. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED
STATES.
<TABLE>
<S> <C>
Change of address:
- ---------------------------------------------
- ---------------------------------------------
(If you have written in the above space,
please mark the corresponding box on the
reverse side of this card.)
</TABLE>
(SEE REVERSE SIDE)
IMPORTANT MESSAGE!
TO FORMER HOLDERS OF SERIES C DEPOSITARY SHARES:
- - You are entitled to vote at the RJR Nabisco Holdings Corp. Annual Meeting of
Stockholders to be held on May 12, 1999.
- - You may use the proxy card attached above to vote. Please vote early!
- - If you have any questions about voting, please call MacKenzie Partners, Inc.
toll free at 1-800-322-2885.
- - Each Series C Depositary Share formerly owned by you has been converted into
one-fifth of a share of RJR Nabisco Common Stock, after adjustment to reflect
the Company's April 1995 reverse Common Stock split. The number of shares
printed on the reverse side of this card is the number of shares of RJR
Nabisco Common Stock that you are entitled to receive upon exchange of your
certificate(s) representing Series C Depositary Shares.
- - UNTIL THE CERTIFICATES REPRESENTING YOUR SERIES C DEPOSITARY SHARES ARE
EXCHANGED FOR RJR NABISCO COMMON STOCK, WE CANNOT SEND YOU ANY RJR NABISCO
COMMON STOCK DIVIDENDS. TO DATE, DIVIDENDS AGGREGATING APPROXIMATELY $4.10 PER
SHARE OF RJR NABISCO COMMON STOCK HAVE ACCRUED ON YOUR ACCOUNT.
- - If you need assistance exchanging your Series C Depositary Share
certificate(s), please call the Exchange Agent, First Chicago Trust Company of
New York, toll-free at 1-800-317-4432 and ask for the Tenders & Exchanges
Department.
Thank you for acting promptly.
RJR NABISCO HOLDINGS CORP.
<PAGE>
/X/ Please mark your votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITS NOMINEES AND FOR PROPOSAL
2.
<TABLE>
<C> <S> <C> <C> <C>
1. Election of Directors (see reverse) For, FOR / / WITHHELD / /
except withheld from the following
nominee(s):
---------------------------------------------
2. Ratify the appointment of Deloitte & Touche FOR / / AGAINST / / ABSTAIN / /
LLP as independent auditors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 3 AND 4.
3. Stockholder proposal on tobacco advertising FOR / / AGAINST / / ABSTAIN / /
and youth
4. Stockholder proposal on smuggling FOR / / AGAINST / / ABSTAIN / /
SPECIAL ACTION
Change of address on Reverse Side / /
Discontinue Annual Report Mailing for
this Account / /
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 Title
</TABLE>
(See Reverse Side for Instructions)
<PAGE>
P R O X Y [ ESOP ]
RJR NABISCO HOLDINGS CORP.
ANNUAL MEETING OF STOCKHOLDERS--MAY 12, 1999
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints each of Steven F. Goldstone,
William L. Rosoff, and H. Colin McBride as his true and lawful agent and proxy,
with full power of substitution, to represent the undersigned at the 1999 Annual
Meeting of Stockholders of RJR Nabisco Holdings Corp. (the "Company") to be held
at The M.C. Benton, Jr. Convention & Civic Center, 301 West Fifth Street,
Winston-Salem, North Carolina, on Wednesday, May 12, 1999 at 9:00 a.m., and at
any adjournments or postponements thereof and to vote all the shares of ESOP
Convertible Preferred Stock of the Company on all matters coming before the
meeting as set forth below.
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 AND 4. PLEASE MARK THIS
PROXY CARD, FILL IN THE DATE, 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 ITS NOMINEES AND FOR PROPOSAL 2.
1. Election of Directors
<TABLE>
<CAPTION>
FOR WITHHELD
<S> <C> <C>
J.T. Chain, Jr.
---------------------- ----------------------
J.L. Chambers
---------------------- ----------------------
J.L. Clendenin
---------------------- ----------------------
S.F. Goldstone
---------------------- ----------------------
R.J. Groves
---------------------- ----------------------
F.H. Langhammer
---------------------- ----------------------
H.E. Lockhart
---------------------- ----------------------
T.E. Martin
---------------------- ----------------------
R.L. Ridgway
---------------------- ----------------------
</TABLE>
2. Ratify the appointment and restatement of Deloitte & Touche LLP as
Independent Auditors
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C>
- ---------------------- ---------------------- ----------------------
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 3 AND 4.
3. Stockholder proposal on tobacco advertising and youth
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C>
- ---------------------- ---------------------- ----------------------
</TABLE>
4. Stockholder proposal on smuggling
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C>
- ---------------------- ---------------------- ----------------------
</TABLE>
[ CONTINUED ON REVERSE ]
<PAGE>
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, N.A.
Box 3075, Trust Operations
Winston-Salem, NC 27102
Holder of record of [12,630,583 update as of Record Date] shares
of ESOP Convertible Preferred Stock
<PAGE>
P R O X Y
VOTING INSTRUCTION CARD
RJR NABISCO HOLDINGS CORP.
ANNUAL MEETING OF STOCKHOLDERS -- MAY 12, 1999
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Wachovia Bank, N.A., as
Trustee, his true and lawful agent and proxy, to represent the undersigned at
the 1999 Annual Meeting of Stockholders of RJR Nabisco Holdings Corp. (the
"Company"), to be held at The M.C. Benton, Jr. Convention & Civic Center, 301
West Fifth Street, Winston-Salem, North Carolina, on Wednesday, May 12, 1999 at
9:00 a.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. Chambers; J.L. Clendenin; S.F. Goldstone; R.J. Groves;
F.H. Langhammer; H.E. Lockhart; T.E. Martin and R.L. Ridgway.
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 AND 4. PLEASE MARK THIS
PROXY CARD, FILL IN THE DATE, SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN
THE ACCOMPANYING ENVELOPE. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED
STATES.
(SEE REVERSE SIDE)
WACHOVIA
- --------------------------------------------------------------------------------
Employee Benefit Trust Services
301 North Main Street
Winston-Salem, NC 27150-3099
March 1999
To: Participants in the RJR Nabisco Capital Investment Plan
As a participant in a Company sponsored employee benefit savings plan that
requires pass through voting, you are entitled to instruct Wachovia Bank, N.A.,
in its capacity as Trustee of the above named plan, how to vote shares of Common
Stock and Matching Stock allocated to your plan account. Enclosed are the
following:
1. Notice of Annual Meeting of Stockholders to be held on May 12, 1999 and the
accompanying Proxy Statement.
2. This Proxy/Voting Instruction Card.
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, 1998.
These shares will be voted as you direct if this card is completed by you and
received by First Chicago Trust Company of New York on or before May 7, 1999.
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 card above and returning
it promptly in the postage-paid return envelope.
Cordially yours,
Wachovia Bank, N.A.
Trustee
Enclosures
<PAGE>
/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
and 4.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITS NOMINEES AND FOR PROPOSAL
2.
<TABLE>
<C> <S> <C> <C> <C>
1. Election of Directors (see reverse) For, FOR / / WITHHELD / /
except withheld from the following
nominee(s):
---------------------------------------------
2. Ratify the appointment of Deloitte & Touche FOR / / AGAINST / / ABSTAIN / /
LLP as independent auditors
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 3 AND 4.
<TABLE>
<C> <S> <C> <C> <C>
3. Stockholder proposal on tobacco advertising FOR / / AGAINST / / ABSTAIN / /
and youth
4. Stockholder proposal on smuggling FOR / / AGAINST / / ABSTAIN / /
NOTE: 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 Title
</TABLE>
(SEE REVERSE SIDE FOR INSTRUCTIONS)
<PAGE>
P R O X Y
VOTING INSTRUCTION CARD
RJR NABISCO HOLDINGS CORP.
ANNUAL MEETING OF STOCKHOLDERS -- MAY 12, 1999
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Wachovia Bank, N.A., as
Trustee, his true and lawful agent and proxy, to represent the undersigned at
the 1999 Annual Meeting of Stockholders of RJR Nabisco Holdings Corp. (the
"Company"), to be held at The M.C. Benton, Jr. Convention & Civic Center, 301
West Fifth Street, Winston-Salem, North Carolina, on Wednesday, May 12, 1999 at
9:00 a.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. Chambers; J.L. Clendenin; S.F. Goldstone; R.J. Groves;
F.H. Langhammer; H.E. Lockhart; T.E. Martin and R.L. Ridgway.
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 AND 4. PLEASE MARK THIS
PROXY CARD, FILL IN THE DATE, SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN
THE ACCOMPANYING ENVELOPE. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED
STATES.
(SEE REVERSE SIDE)
WACHOVIA
- --------------------------------------------------------------------------------
Employee Benefit Trust Services
301 North Main Street
Winston-Salem, NC 27150-3099
March 1999
To: Participants in the Nabisco Employee Savings Plan
As a participant in a Company sponsored employee benefit savings plan that
requires pass through voting, you are entitled to instruct Wachovia Bank, N.A.,
in its capacity as Trustee of the above named plan how to vote shares of Common
Stock allocated to your plan account. Enclosed are the following:
1. Notice of Annual Meeting of Stockholders to be held on May 12, 1999 and the
accompanying Proxy Statement.
2. This Proxy/Voting Instruction Card.
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, 1998.
The number of shares you hold in your plan account as of the most recent date
available is printed on the reverse side of this proxy card. These shares will
be voted as you direct if this card is completed by you and received by First
Chicago Trust Company of New York on or before May 7, 1999. 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 card above and returning
it promptly in the postage-paid return envelope.
Cordially yours,
Wachovia Bank, N.A.
Trustee
Enclosures
(SEE REVERSE SIDE)
<PAGE>
/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 and
4.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITS NOMINEES AND FOR PROPOSAL
2.
<TABLE>
<C> <S> <C> <C> <C>
1. Election of Directors (see reverse) For, FOR / / WITHHELD / /
except withheld from the following
nominee(s):
---------------------------------------------
2. Ratify the appointment of Deloitte & Touche FOR / / AGAINST / / ABSTAIN / /
LLP as independent auditors
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 3 AND 4.
<TABLE>
<C> <S> <C> <C> <C>
3. Stockholder proposal on tobacco advertising FOR / / AGAINST / / ABSTAIN / /
and youth
4. Stockholder proposal on smuggling FOR / / AGAINST / / ABSTAIN / /
NOTE: 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 Title
</TABLE>
(SEE REVERSE SIDE FOR INSTRUCTIONS)
<PAGE>
P R O X Y
VOTING INSTRUCTION CARD
RJR NABISCO HOLDINGS CORP.
ANNUAL MEETING OF STOCKHOLDERS -- MAY 12, 1999
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Vanguard Group, Custodian
under the Nabisco/Life Savers Puerto Rico Capital Accumulation Plan and
Custodian under the Savings and Investment Plan for Employees of R.J. Reynolds
Tobacco Company in Puerto Rico, his true and lawful agent and proxy, to
represent the undersigned at the 1999 Annual Meeting of Stockholders of RJR
Nabisco Holdings Corp. (the "Company"), to be held at the M.C. Benton, Jr.
Convention & Civic Center, 301 West Fifth Street, Winston-Salem, North Carolina,
on Wednesday, May 12, 1999 at 9:00 a.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. Chambers; J.L. Clendenin; S.F. Goldstone; R.J. Groves;
F.H. Langhammer; H.E. Lockhart; T.E. Martin and R.L. Ridgway.
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 AND 4. PLEASE MARK THIS
PROXY CARD, FILL IN THE DATE, SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN
THE ACCOMPANYING ENVELOPE. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED
STATES.
(SEE REVERSE SIDE)
VANGUARD
- --------------------------------------------------------------------------------
Vanguard Group
100 Vanguard Boulevard
Malvern, PA 19355
DE TENER ALGUNA DUDA RELATIVO A ESTOS DOCUMENTOS FAVOR DE COMUNICARSE COM EL
DEPARTAMENTO DE RECURSOS HUMANOS.
March 1999
To: Participants in the Nabisco/Life Savers Puerto Rico Capital Accumulation
Plan
Participants in the Savings and Investment Plan for Employees of R. J.
Reynolds Tobacco Company in Puerto Rico
As a participant in a Company sponsored employee benefit savings plan that
requires pass through voting, you are entitled to instruct Vanguard, in its
capacity as Custodian of the above named plans, how to vote shares of Common
Stock allocated to your plan account. Enclosed are the following:
1. Notice of Annual Meeting of Stockholders to be held on May 12, 1999 and the
accompanying Proxy Statement.
2. This Proxy/Voting Instruction Card.
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, 1998.
The number of shares you hold in your plan account as of the most recent date
available is printed on the reverse side of this card. These shares will be
voted as you direct if this card is completed by you and received by First
Chicago Trust Company of New York on or before May 7, 1999. 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 card above and returning
it promptly in the postage-paid return envelope.
Cordially yours,
Vanguard Group
Custodian
Enclosures
<PAGE>
/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
and 4.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITS NOMINEES AND FOR PROPOSAL
2.
<TABLE>
<C> <S> <C> <C> <C>
1. Election of Directors (see reverse) For, FOR / / WITHHELD / /
except withheld from the following
nominee(s):
---------------------------------------------
2. Ratify the appointment of Deloitte & Touche FOR / / AGAINST / / ABSTAIN / /
LLP as independent auditors
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 3 AND 4.
<TABLE>
<C> <S> <C> <C> <C>
3. Stockholder proposal on tobacco advertising FOR / / AGAINST / / ABSTAIN / /
and youth
4. Stockholder proposal on smuggling FOR / / AGAINST / / ABSTAIN / /
NOTE: 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 Title
</TABLE>
(SEE REVERSE SIDE FOR INSTRUCTIONS)
