<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a- 6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
</TABLE>
RUBBERMAID INCORPORATED
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
RUBBERMAID INCORPORATED
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:___________
(2) Aggregate number of securities to which transaction applies:______________
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):______________________________
(4) Proposed maximum aggregate value of transaction:__________________________
(5) Total fee paid:___________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:___________________________________________________
(2) Form, Schedule or Registration Statement No.:_____________________________
(3) Filing Party:_____________________________________________________________
(4) Date Filed:_______________________________________________________________
================================================================================
<PAGE> 2
[RUBBERMAID LOGO]
RUBBERMAID INCORPORATED
1147 AKRON ROAD
WOOSTER, OHIO 44691
DEAR SHAREHOLDER:
- ----------------
You are cordially invited to attend the Annual Meeting of Shareholders
to be held at Fisher Auditorium, Ohio Agricultural Research and Development
Center, Wooster, Ohio at 9:00 a.m., on April 22, 1997.
The Notice of Annual Meeting of Shareholders and the Proxy Statement
describe the matters to be acted upon at the meeting. Regardless of the number
of shares you own, your vote on these matters is important. Whether or not you
plan to attend the meeting, we urge you to mark your choices on the enclosed
proxy card and to sign and return it in the envelope provided. If you later
decide to vote in person at the meeting, you will have an opportunity to revoke
your proxy and vote by ballot.
Admission to the meeting will only be by admission ticket which you
will find attached to the enclosed proxy card. If you do plan to attend, please
so indicate by checking the appropriate box on the proxy card. If you are a
stockholder whose shares are not registered in your own name please write the
Corporate Secretary, 1147 Akron Road, Wooster, Ohio 44691 to request an
admission ticket furnishing proof of shareholder status, such as a bank or
brokerage firm account number.
We look forward to seeing you at the meeting.
Sincerely yours,
/s/Wolfgang R. Schmitt
WOLFGANG R. SCHMITT
Chairman of the Board
and Chief Executive Officer
<PAGE> 3
[RUBBERMAID LOGO]
RUBBERMAID INCORPORATED
1147 AKRON ROAD
WOOSTER, OHIO 44691
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS -- April 22, 1997
- ----------------------------------------------------------
The Annual Meeting of the Shareholders of Rubbermaid Incorporated will
be held at the Fisher Auditorium, Ohio Agricultural Research and Development
Center, Wooster, Ohio, at 9:00 a.m., April 22, 1997, for the following
purposes:
1. To elect Directors.
2. Approval of the 1997 Management Incentive Plan.
3. Approval of the Amended and Restated 1989 Stock Incentive
and Option Plan.
4. To transact such other business as may properly come before
the meeting and any adjournments or postponements thereof.
Shareholders of record at the close of business on February 21, 1997,
will be entitled to vote at the Annual Meeting and any adjournments thereof.
By order of the Board of Directors.
JAMES A. MORGAN
Secretary
Wooster, Ohio
March 7, 1997
Approximate date of mailing to shareholders
<PAGE> 4
[RUBBERMAID LOGO]
RUBBERMAID INCORPORATED
PROXY STATEMENT
March 7, 1997
SOLICITATION AND REVOCATION OF PROXIES
- --------------------------------------
The accompanying Proxy is solicited by the Board of Directors for use
at the Annual Meeting of Shareholders to be held on April 22, 1997. A Proxy may
be revoked by the maker by notice to the Company in writing or in open meeting
without affecting any vote previously taken. A Proxy is not revoked by the
death or incompetency of the maker unless, before the authority granted
thereunder is exercised, written notice of such death or incompetency is
received by the Company from the executor or administrator of the estate or
from a fiduciary having control of the shares represented by such Proxy.
The expense of solicitation of proxies will be borne by the Company.
Solicitation will be made only by mail, except that, if necessary, shareholder
relations employees of the Company without additional compensation therefor may
make solicitation by telephone or telecopy. The Company has also engaged a
professional proxy solicitation firm, Corporate Investor Communications, Inc.,
to aid in the solicitation of proxies, for whose services the Company will pay
a fee of not more than $10,000.
The matters to be considered and acted upon at the Annual Meeting are
referred to in the preceding Notice. If the enclosed Proxy is properly executed
and returned to the Company, all shares represented thereby will be voted as
indicated thereon.
ANNUAL REPORT
- -------------
The Annual Report of the Company for the year ended December 31, 1996,
is being mailed to shareholders with this Proxy Statement.
VOTING SECURITIES
- -----------------
As of February 21, 1997, there were outstanding 149,975,560 Common
Shares of the Company, which is the only class of stock outstanding and
entitled to vote at the Annual Meeting or any adjournment thereof. The holders
of such shares will be entitled to cast one vote for each share held of record
as of the record date. A quorum for the transaction of business at the Annual
Meeting requires representation, in person or by proxy, of a majority of the
issued and outstanding shares entitled to vote. Abstentions and, unless a
broker's authority to vote on a particular matter is limited, broker non-votes
are tabulated in determining the votes present at a meeting. Consequently, an
abstention or a broker non-vote (assuming the broker's authority to vote on the
matter is not limited) has the same effect as a vote against certain proposals
or a director nominee, as each such abstention or broker non-vote would be one
less vote in favor of such a proposal or for a director nominee.
1
<PAGE> 5
If notice in writing shall be given by any shareholder to the
President, a Vice President, or the Secretary, not less than 48 hours before
the time fixed for the holding of the meeting, that such shareholder desires
that the voting for Directors be cumulative, and if an announcement of the
giving of such notice is made upon the convening of the meeting by the
President or Secretary or by or on behalf of the shareholder giving such
notice, each shareholder shall have the right to cumulate such voting power as
the shareholder possesses at such election and to give one candidate as many
votes as the number of Directors to be elected multiplied by the number of such
votes equals, or to distribute the votes on the same principle among two or
more candidates, as the shareholder sees fit. The accompanying proxy solicits
the discretionary authority for the Proxy Committee to cumulate votes should
cumulative voting be effective for this meeting.
ELECTION OF DIRECTORS
- ---------------------
The Board is divided into three classes of Directors. At each Annual
Meeting of Shareholders, members of one of the classes, on a rotating basis,
are elected for a three year term.
The terms of four incumbent Directors, Mss. Horn and Nicholson and
Messrs. Marohn and Schmitt expire at the forthcoming Annual Meeting of
Shareholders and are nominees for election to the class of Directors whose
terms expire in 2000.
Previously, pursuant to the Company's Code of Regulations, the Board
provided that the size of the Board of Directors be set at 11 until further
action by the Board. Pursuant to the Code of Regulations, the Board has the
authority to determine the number of Directors within a range of 10 to 14.
The Board at its meeting on January 16, 1997 determined, pursuant to
the Code of Regulations, to increase the size of the Board from 11 to 12
effective with this Annual Meeting of Shareholders. Since the size of any class
of directors may not exceed the number of directors of any other class by more
than one, a vacancy will be created in the class whose terms expire in 1999.
The Board has nominated Scott S. Cowen to stand for election to fill this
vacancy at the forthcoming Annual Meeting of Shareholders.
It is intended that proxies for the Board of Directors containing no
designation to the contrary will be voted for the election of Mss. Horn and
Nicholson and Messrs. Marohn and Schmitt to the class of Directors whose terms
will expire in 2000 and Mr. Cowen for election to the class of Directors whose
terms will expire in 1999. Pursuant to the Company's Code of Regulations, the
nominees receiving the greatest number of votes at the Annual meeting will be
elected.
If for any reason any nominee is not available when the election
occurs, the Proxy Committee will vote in accordance with its best judgment. The
Board of Directors has no reason to believe that any nominee will not be
available.
APPROVAL OF THE 1997 MANAGEMENT INCENTIVE PLAN
- ----------------------------------------------
At the 1994 Annual Meeting of Shareholders, the Management Incentive
Plan (MIP Plan) and the Chief Executive Officer Incentive Plan were approved.
These plans provided for annual cash awards to key management personnel (in
excess of 300 persons) including the Chief Executive Officer and the other
persons shown in the Summary Compensation Table on Page 18, when the Company's
return on net assets (RONA) exceeded 4% with total awards not to exceed 5% of
earnings before income taxes. The size of individual awards varied depending
upon weighting factors based on salary range, experience, individual business
unit performance and other factors. While the Chief Executive Officer did not
participate in the MIP Plan, it had been the practice to pay him a bonus based
upon an assumed participation in that Plan. A payment fund for the Chief
Executive Officer, not to exceed 1% of earnings before income taxes, was
created using the same formula contained in
2
<PAGE> 6
the MIP Plan with the amount of payout being determined by non-employee
Directors. The plans were structured to comply with the Omnibus Budget
Reconciliation Act of 1993 which required, among other things,
shareholder approval of performance based variable compensation
arrangements to assure tax deductibility of compensation in excess of $1
million paid to persons shown in the Summary Compensation Table
contained in the Proxy.
While the Board believes that the foregoing Plans have served the
Company well, the Board has approved and is recommending to the
Shareholders the adoption of a new plan which it believes is less
complex and will better align with shareholder interests.
The following summary is a brief description of the material features
of the new Plan which is known as the 1997 Management Incentive Plan
(the "1997 Plan").
The 1997 Plan has also been structured to comply with the Omnibus
Budget Reconciliation Act of 1993.
The 1997 Plan will be administered by the Compensation and Management
Development Committee of the Board of Directors (the "Committee") which
in conjunction with the Chairman and Chief Executive Officer of the
Company will determine participants in the plan. The Committee
interprets the plan, sets performance goals and is authorized to make
all determinations and decisions thereunder. All officers as well as
other key employees regularly employed on a full time basis by
Rubbermaid or its subsidiaries are eligible to be selected to
participate in the 1997 plan.
Under the 1997 Plan, annual cash bonus targets (ranging from 10% to
105% of base salary) are established for each executive salary band. The
targets are competitive with bonuses paid to executives of similarly
sized, high performing consumer product companies. Payment of the bonus
will depend upon the achievement of performance goals that are linked to
the long range performance objectives of the Company. These performance
goals are established annually from performance measures selected from
the plan and approved by the Committee. The bonus can range from 0% to
200% (300% in the case of certain senior executive participants) of the
target bonus, depending upon how well the Company and its various
business units perform against the performance goals established by the
Committee. The 1997 Plan contains a per-participant limit of $3 million
on the amount of bonus which can be paid for any plan year. The
performance measures will be based on one or more of the following:
return on net assets, return on capital employed, economic value added,
level of sales, earnings per share, income before income taxes and
cumulative effect of accounting changes, net income, return on equity,
total shareholder return, market valuation, cash flow and completion of
acquisitions. The foregoing criteria will have any reasonable
definitions that the Committee may specify, which may include or exclude
any or all of the following items, as the Committee may specify:
extraordinary, unusual, or non-recurring items; effects of accounting
changes; effects of currency fluctuations; effects of financing
activities (e.g., effect on earnings per share of issuing convertible
debt securities); expenses for restructuring or productivity
initiatives; non-operating items; acquisition expenses (e.g., pooling of
interests); and effects of divestitures. Any such performance criterion
or combination of such criteria may apply to the participant's award
opportunity in its entirety or to any designated portion or portions of
the opportunity, as the Committee may specify.
These performance measures provide flexibility to the Committee in
setting performance goals which it believes will create shareholder
value. For example, goals for 1997 are based primarily on change in
Economic Value Added (EVA*) and sales growth measured at Corporate and
business unit levels. The Company has adopted EVA as the key measure of
financial performance in the belief that it provides a consistent
framework for the use of resources, accountability and decision making.
VOTE REQUIRED
Approval of the 1997 Plan will require the affirmative vote of holders
of a majority of the shares present at the meeting and entitled to vote
on this proposal. The Board of Directors recommends a vote "FOR"
approval of the Plan.
-----------------------
* EVA is a registered trademark of Stern Stewart and Co.
3
<PAGE> 7
APPROVAL OF THE AMENDED AND RESTATED 1989 STOCK INCENTIVE AND OPTION PLAN
- -------------------------------------------------------------------------
On January 16, 1997, the Board of Directors adopted, subject to
shareholder approval, certain amendments to, and a restatement of, the
Rubbermaid Incorporated Amended 1989 Restricted Stock Incentive and Option Plan
(the "Plan"). The effectiveness of the amended and restated Plan is contingent
on shareholder approval at the Annual Meeting.
The objective of the Plan, which is being renamed the "Amended and
Restated 1989 Stock Incentive and Option Plan," is to reward performance and
build each participant's equity interest in the stock of Rubbermaid by
providing long term incentives and rewards to directors and officers and other
key employees of the Company and its subsidiaries who contribute to its
continuing success by their innovation, ability, industry, loyalty and
exceptional service.
Effective November 1996, the Securities and Exchange Commission amended
Rule 16b-3 under the Securities Exchange Act of 1934, as amended ("SEC Rule
16b-3"), which exempts certain transactions under employee benefit plans such
as the Plan from the short-swing trading rules of federal securities
legislation. Certain of the amendments to the Plan have been made to comply
with SEC Rule 16b-3.
The following summary is a brief description of the material features
to the Plan, as amended and restated, and of the material amendments to the
Plan. This summary is qualified in its entirety by reference to the Plan, as
amended and restated, a copy of which is attached as Appendix A.
AMENDED AND RESTATED PLAN SUMMARY
TYPES OF STOCK INCENTIVES. The Plan provides for the grant of options (which
may be "incentive stock options," within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or non-qualified stock
options), Stock Appreciation Rights, Restricted Stock and Performance Awards.
ADMINISTRATION. The Plan is administered by the Compensation and Management
Development Committee of the Board of Directors (the "Committee"), which
determines the participants to whom Stock Incentives will be granted, the type
and amount of Stock Incentives to be granted and the terms and conditions of
Stock Incentives under the Plan, including any applicable performance goals.
The Committee interprets the Plan and is authorized to make all determinations
and decisions thereunder. Unless the Board of Directors determines otherwise,
under the amended and restated terms of the Plan, the Committee will be
comprised solely of "outside directors" within the meaning of Section 162(m) of
the Internal Revenue Code of 1986, as amended, and the treasury regulations
thereunder ("Section 162(m)") and constituted in a manner that satisfies the
new "non-employee" director standard in SEC Rule 16b-3.
PARTICIPANTS. All officers as well as other key employees regularly employed
on a full-time basis by Rubbermaid or its subsidiaries are eligible to be
selected to participate in the Plan. In light of the recent amendments to SEC
Rule 16b-3 and to continue to attract and retain outstanding directors and to
provide for the ability to build a director's equity interest in Rubbermaid,
the Plan is being amended to permit the participation in the Plan of
non-employee directors. The Committee will continue to be authorized to select
the participants, including non-employee directors, who will be granted Stock
Incentives. At the present time, Rubbermaid and its subsidiaries employ
approximately 13,900 persons on a full-time basis and the Board of Directors
has 11 members.
NUMBER OF COMMON SHARES AVAILABLE UNDER THE PLAN. The Plan is being amended to
limit the total number of Common Shares as to which options, stock appreciation
rights, Performance Awards and Restricted Stock Awards (collectively, the
"Stock Incentives") may be granted under the Plan in any calendar year to 1% of
the total outstanding Common Shares as of the first day of such year, an
increase from the current limit of .5% of the total outstanding Common Shares
as of the first day of such calendar year.
4
<PAGE> 8
RESTRICTED STOCK. The Committee may grant to participants Common Shares
that are forfeitable to the Company if the participant terminates
employment with the Company (for any reason other than death, disability
or retirement) or other contingencies specified by the Committee at the
time of grant are not satisfied, unless the Committee determines
otherwise ("Restricted Stock"). Recipients of Restricted Stock become
shareholders of the Company with full dividend and voting rights except
to the extent the Committee provides otherwise. Upon satisfaction of the
contingencies specified by the Committee, stock certificates evidencing
the Restricted Stock will be delivered to the participant free and clear
of any restrictions upon the payment of required taxes.
The Plan, as amended and restated, contains a per-participant limit on
the number of shares of Restricted Stock that may be granted during any
calendar year to that number of shares with a value at the time of grant
equal to the lesser of 500% of the participant's base salary or
$2,000,000.
PERFORMANCE AWARDS. The Committee may grant to participants performance
awards ("Performance Awards") that may be earned over a specified period
of time and are contingent upon the attainment of one or more
performance goals by Rubbermaid or any subsidiary or affiliate of
Rubbermaid. The Committee has full discretion to specify the performance
goals with respect to each Performance Award. In addition to any
specific provisions on forfeiture provided for in any award instrument,
Performance Awards will be forfeited if the participant terminates
employment (other than upon death, disability or retirement) with
Rubbermaid or any subsidiary or affiliate of Rubbermaid prior to the
completion of the performance period; provided that the Committee may
provide for full or partial payment of the Performance Award that would
have been payable if the participant had continued employment for the
entire performance period as long as the Performance Award is not
prevented from qualifying as "performance based" within the meaning of
Section 162(m). The Committee, in its discretion, may elect to make the
payment of Performance Awards in Restricted Shares, Common Shares, cash
or any combination of the foregoing. Recipients of Performance Awards
payable in Common Shares or Restricted Shares become shareholders of the
Company at the time of grant with full dividend and voting rights except
to the extent the Committee provides otherwise.
For purposes of complying with Section 162(m), the Plan, as amended
and restated, contains a per-participant limit on the number of
Performance Shares that may be granted during any calendar year to that
number of shares with a value at the time of grant equal to the lesser
of 500% of the participant's base salary or $2,000,000.
The Plan has been amended to clarify, for administrative purposes
only, the distinction between Restricted Stock (i.e., shares which are
subject to forfeiture based on reasons other than performance) and
Performance Shares (i.e., shares which are subject to forfeiture based
on performance based factors and are intended, absent a Committee
determination to the contrary, to qualify as performance based
compensation for purposes of Section 162(m)). Rubbermaid has
traditionally granted shares of "restricted stock" which has been
subject to forfeiture based on performance based factors, rather than
mere continuation of employment as discussed more fully in the Report of
the Compensation Committee appearing later in this Proxy Statement.
The Plan has also been amended to include a list of specific
performance factors as to which the Committee may condition the receipt
of Performance Shares. Included in this list are: return on net assets,
return on capital employed, economic value added, level of sales,
earnings per share, income before taxes and cumulative effect of
accounting changes, net income, return on equity, total shareholder
return, market valuation, cash flow and completion of acquisitions. The
foregoing criteria will have any reasonable definitions that the
Committee may specify, which may include or exclude any or all of the
following items, as the Committee may specify: extraordinary, unusual,
or non-recurring items; effects of accounting changes; effects of
currency fluctuations; effects of financing activities (e.g., effect on
earnings per share of issuing convertible debt securities); expenses for
restructuring or productivity initiatives; non-operating items;
acquisition expenses (e.g., pooling of interests); and effects of
divestitures. The Committee retains the discretion to set
5
<PAGE> 9
the performance targets applicable to any such performance factor as to
which a Performance Award may be conditioned.
STOCK OPTIONS. The exercise price of each incentive stock option (an
"ISO") or non-qualified stock option (an "NQSO") will be not less than
the fair market value of a Common Share on the date the ISO or NQSO is
granted. The maximum number of Common Shares that may be issued or
transferred in respect of ISOs granted under the Plan is 5,000,000
Common Shares. The aggregate fair market value of the shares for which
ISOs granted to any employee may be exercisable for the first time by
such employee during any calendar year (under all stock option plans of
Rubbermaid and its subsidiaries) may not exceed $100,000. The closing
market price of Rubbermaid Common Shares as reported on the New York
Stock Exchange on February 14, 1997, was $24.875 per share.
The exercise price of an option may be paid in cash, in Common Shares
or other property, by the surrender of all or part of the option being
exercised, by the immediate sale through a broker of that number of
shares being acquired sufficient to pay the purchase price, or by a
combination of these methods, as and to the extent permitted by the
Committee.
Under the Plan, the Committee may permit participants to transfer
options to eligible transferees (as such eligibility is determined by
the Committee). Each option may be exercised during the holder's
lifetime, only by the holder or the holder's guardian or legal
representative, and after death only by the holder's beneficiary or,
absent a beneficiary, by the estate or by a person who acquired the
right to exercise the option by will or the laws of descent and
distribution. Options may become exercisable in full at the time of
grant or at such other times and in such installments as the Committee
determines. Options may be exercised during such periods before and
after the participant terminates employment or ceases to serve as a
director, as the case may be. However, no option may be exercised after
the tenth anniversary of the date the option was granted. The Committee
may, at any time and without additional consideration, accelerate the
date on which an option becomes exercisable.
Options may be granted for such lawful consideration as the Committee
may determine when the options are granted. Such consideration may
consist of money or other property, tangible or intangible, or labor or
services received or to be received by Rubbermaid.
For purposes of complying with Section 162(m), the Plan contains a
per-participant limit on the number of shares which may be subject to
options granted during any fiscal year of 500,000.
STOCK APPRECIATION RIGHTS. A stock appreciation right (an "SAR") may be
granted alone or in tandem with options, either at the time the options
are granted or at any time thereafter while the options are outstanding.
Tandem SARs may supplement the options to which they relate, in which
case the holder may exercise the SAR if and when the holder exercises
the related option, or they may be alternatives to the options to which
they relate, in which case upon exercise of the SAR, the holder must
surrender the related option unexercised, and vice versa. Under the
Plan, the Committee may permit participants to transfer SARs to eligible
transferees (as such eligibility is determined by the Committee). Under
the Plan, SARs may be granted for the same consideration as options, and
may become exercisable at the same time or times, and may remain
exercisable during the same periods before and after the participant
terminates employment or ceases to serve as a director, as the case may
be, as options.
Upon exercise of SARs, the holder will receive cash or Common Shares
or a combination of each, as the Committee may determine, equal in value
to the difference between the fair market value per Common Share on the
date of exercise of the SARs and the exercise price of the SARs,
multiplied by the number of shares subject to the SARs or related
option. However, the Committee may provide if any holder exercises SARs
during the thirty-day period following a Change in Control (as defined
in the Plan), the holder will receive the difference between the highest
fair market value of a Common Share during such thirty-day period and
the exercise price of the SARs, multiplied by the number of shares
subject to the SARs or related option. In the case of tandem SARs, the
exercise price is the price at which shares may be purchased under the
related option. In the case of SARs that are not
6
<PAGE> 10
granted in tandem with an option, the exercise price will be the fair
market value of a Common Share on the date the SAR is granted.
For purposes of complying with Section 162(m), the Plan contains a
per-participant limit on the number of shares which may be subject to
SARs granted during any fiscal year of 500,000.
EFFECT OF CHANGE IN CONTROL. In the event of a Change in Control, each
outstanding Restricted Stock Award and Performance Award will become
fully vested as of the day before such event occurs. This will result in
the lapse of all restrictions on such Restricted Stock Awards and
Performance Awards, regardless, in the case of Performance Awards, of
any unachieved performance goal. Any option or SAR which is outstanding
but not yet exercisable at the time of a Change in Control will become
exercisable and remain exercisable until it expires or terminates
pursuant to its terms and conditions. In addition, the Plan authorizes
the Committee to grant options and SARS which become exercisable only in
the event of a Change in Control, provide for SARs to be exercised
automatically and only in case of such an event, and provide for cash to
be paid in settlement of any Stock Incentive in such event.
TERM OF THE PLAN. The Plan, as amended and restated, will become
effective on the date on which it is approved by the shareholders of
Rubbermaid. If not so approved, the Plan and any Stock Incentives
granted thereunder and contingent upon such approval shall be null and
void. If the amended and restated Plan is approved by shareholders, it
will remain in effect until all shares authorized to be issued or
transferred under the Plan have been exhausted or until the Plan is
sooner terminated by the Board of Directors, and will continue in effect
with respect to any Stock Incentives outstanding at the time of such
termination.
AMENDMENT PROCEDURES. Among other changes, in November 1996, SEC Rule
16b-3 was amended to eliminate certain restrictions on a board of
director's ability to amend an employee benefit plan without shareholder
approval. In connection with this change, new amendment procedures have
been included in the Plan. Specifically, subject to any applicable
shareholder approval requirements of applicable law or the rules of the
New York Stock Exchange, the Plan may be amended by the Board of
Directors, provided that, without shareholder approval, no amendment may
increase the number of shares which may be issued under ISOs or change
the material terms of a performance goal that were previously approved
by shareholders, unless the Board determines that such approval is not
necessary to avoid loss of a deduction under Section 162(m), will not
avoid such loss of deduction, or is not advisable.
STOCK INCENTIVES GRANTED UNDER THE PLAN AS AMENDED AND RESTATED. The
following table presents information with respect to certain Performance
Shares granted to date under the amended and restated Plan. Each such
award was made contingent upon shareholder approval of the Plan as
amended and restated, and if not so approved, these awards will be null
and void. The number and value of Stock Incentives that will be granted
in the future under the amended and restated Plan is not determinable as
such determinations are to be made by the Committee in its sole
discretion.
7
<PAGE> 11
NEW PLAN BENEFITS -- AMENDED AND RESTATED 1989
STOCK INCENTIVE AND OPTION PLAN
<TABLE>
<CAPTION>
NAME AND POSITION NUMBER OF PERFORMANCE SHARES
------------------------------------------------------ ----------------------------
<S> <C>
WOLFGANG R. SCHMITT................................... 22,000
Chairman of the Board and Chief Executive Officer
CHARLES A. CARROLL.................................... 10,000
President and Chief Operating Officer
DAVID T. GIBBONS...................................... 3,200
President, Home Products Division
JOSEPH M. RAMOS....................................... 2,000
President, Rubbermaid Commercial Products Inc.
GARY F. MATTISON...................................... 2,100
President, Global Transformation Team
Executive Group....................................... 67,194
Non-Executive Officer Employee Group.................. 36,388
</TABLE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following brief
description of the tax consequences of awards under the amended and
restated Plan is based on federal income tax laws currently in effect
and does not purport to be a complete description of such federal income
tax consequences.
RESTRICTED STOCK AWARDS AND PERFORMANCE AWARDS. A participant who has
been awarded Restricted Stock or Performance Shares and does not make an
election under Section 83(b) of the Code will not recognize taxable
income at the time of the award. At the time any transfer or forfeiture
restrictions applicable to the Restricted Stock Award or Performance
Award lapse, the recipient will recognize ordinary income and Rubbermaid
will be entitled to a corresponding deduction equal to the excess of the
fair market value of such stock at such time over the amount paid
therefor. Any dividends paid to the recipient on the Restricted Stock or
Performance Award at or prior to such time will be ordinary compensation
income to the recipient and deductible as such by Rubbermaid.
An employee who has been awarded Restricted Stock or Performance
Shares and makes an election under Section 83(b) of the Code will
recognize ordinary income at the time of the award and Rubbermaid will
be entitled to a corresponding deduction equal to the fair market value
of such stock at such time over the amount paid therefor. Any dividends
subsequently paid to the recipient on the Restricted Stock or
Performance Award will be dividend income to the recipient and not
deductible by Rubbermaid. There are no federal income tax consequences
either to the recipient or Rubbermaid at the time any transfer or
forfeiture restrictions applicable to the Restricted Stock Award or
Performance Award lapse.
OPTIONS. There are no federal income tax consequences either to the
optionee or to Rubbermaid upon the grant of an ISO or a NQSO. On the
exercise of an ISO during employment or within three months thereafter,
the optionee will not recognize any income and Rubbermaid will not be
entitled to a deduction, although the excess of the fair market value of
the shares on the date of exercise over the option price is includible
in the optionee's alternative minimum taxable income, which may give
rise to alternative minimum tax liability for the optionee. Generally,
if the optionee disposes of shares acquired upon exercise of an ISO
within two years of the date of grant or one year of the date of
exercise, the optionee will recognize ordinary income, and Rubbermaid
will be entitled to a deduction, equal to the excess of the fair market
value of the shares on the date of exercise over the option price
(limited generally to the gain on the sale). The balance of any gain or
loss will be treated as a capital gain or loss to the optionee. If the
shares are disposed of after the two year and one year periods mentioned
above, Rubbermaid will not be entitled to any deduction, and the entire
gain or loss for the optionee will be treated as a capital gain or loss.
8
<PAGE> 12
On exercise of a NQSO, the excess of the date-of-exercise fair market
value of the shares acquired over the option price will generally be taxable to
the optionee as ordinary income and deductible by Rubbermaid, provided
Rubbermaid properly withholds taxes in respect of the exercise. This
disposition of shares acquired upon the exercise of a NQSO will generally
result in a capital gain or loss for the optionee, but will have no tax
consequences for Rubbermaid.
STOCK APPRECIATION RIGHTS. There are no federal income tax consequences either
to the grantee or Rubbermaid upon the grant of SARs. The amount of any cash (or
the fair market value of any Common Share) received by the holder upon the
exercise of SARs under the Plan will be subject to ordinary income tax in the
year of receipt and Rubbermaid will be entitled to a deduction for such amount.
VOTE REQUIRED
Approval of the amended and restated Plan will require the affirmative
vote of holders of a majority of the shares present at the meeting and entitled
to vote on this proposal. The Board of Directors recommends a vote FOR approval
of the amended and restated Plan.
INFORMATION AS TO BOARD OF DIRECTORS AND NOMINEES
- -------------------------------------------------
<TABLE>
<S> <C>
TOM H. BARRETT
Age: 66
[TOM H. BARRETT PHOTO] Director Since 1984
Expiration of Present Term: 1998
Partner, American Industrial Partners. Former Chairman and Chief
Executive Officer, The Goodyear Tire & Rubber Company, Akron, OH
(1989-1991), manufacturer of tires, chemicals, plastic film and other
rubber products. Previously from 1988, President and Chief Executive
Officer. Prior thereto and from 1982 President and Chief Operating
Officer. Also Director of Air Products and Chemicals Inc., Easco
Corporation, Mutual Life Insurance Company of New York and A. O. Smith
Corporation.
--------------------------------------------------------------------------------------------------------
CHARLES A. CARROLL
Age: 47
[CHARLES A. CARROLL PHOTO] Director Since 1993
Expiration of Present Term: 1998
President and Chief Operating Officer of the Company since September
1993. From 1990 until May 1994 he served as President of the Home
Products Division. Prior thereto and from 1988, he was President of
Rubbermaid Specialty Products. He has been employed by the Company in
various sales and management capacities since 1971.
--------------------------------------------------------------------------------------------------------
SCOTT S. COWEN
Age: 50
[SCOTT S. COWEN PHOTO] Nominee for Election
Expiration of Proposed Term: 1999
Dean & Albert J. Weatherhead, III Professor of Management, Weatherhead
School of Management, Case Western Reserve University since 1984. He
has been associated with the University in various capacities since
1976. He is currently a Director of American Greetings Corp., Forest
City Enterprises, Fabri Centers of America and Key Bank N.A.
--------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 13
<TABLE>
<S> <C>
ROBERT O. EBERT
Age: 69
[Robert O. Ebert Photo] Director Since 1976
Expiration of Present Term: 1998
Investor.
--------------------------------------------------------------------------------------------------------
ROBERT M. GERRITY
Age: 59
[Robert M. Gerrity Photo] Director Since 1993
Expiration of Present Term: 1999
Corporate Director. Previously from 1994-1996, Senior Advisor,
Investment Banking to Everen Securities Inc., Chicago, IL. Former Vice
Chairman (1991-1993) of New Holland, n.v., London, England, a worldwide
manufacturer of agricultural and industrial equipment which was formed
by Fiat Geotech and Ford New Holland Inc., of which Mr. Gerrity was
President and Chief Executive Officer from 1982. He had been associated
with Ford Motor Company since 1965 spending much of his career in
international operations in Latin America and Europe. Also a Director
of Harnischfeger Industries Inc., Libralter Plastics Inc. and Standard
Motor Products Inc.
--------------------------------------------------------------------------------------------------------
KAREN N. HORN
[Karen N. Horn Photo] Age: 53
Director Since 1987
Expiration of Proposed Term: 2000
Senior Managing Director, Bankers Trust Company, New York, NY since
October 1996. Previously Chairman, Bank One, Cleveland, N.A.,
Cleveland, OH, 1987-1996, Prior thereto and from 1982, President,
Federal Reserve Bank of Cleveland. Also a director of British Petroleum
Company P.L.C., Eli Lilly and Company and TRW Inc.
--------------------------------------------------------------------------------------------------------
WILLIAM D. MAROHN
[William D. Marohn Photo] Age: 56
Director Since 1993
Expiration of Proposed Term: 2000
Vice Chairman of the Board, Whirlpool Corporation (February 1997), a
manufacturer and marketer of major home appliances. Previously
President and Chief Operating Officer from October 1992 and from
January 1992, President and Chief Executive Officer, Whirlpool Europe,
B.V. Prior thereto, Executive Vice President, North American Appliance
Group from 1989 and previously President Kenmore Appliance Group from
1988. He has been associated with Whirlpool since 1964.
--------------------------------------------------------------------------------------------------------
STEVEN A. MINTER
[Steven A. Minter Photo] Age: 58
Director Since 1990
Expiration of Present Term: 1998
Executive Director and President, The Cleveland Foundation since 1984.
Also a director of Consolidated Natural Gas Company, The Goodyear Tire
& Rubber Company and KeyCorp.
--------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 14
<TABLE>
<S> <C>
JAN NICHOLSON
Age: 51
[JAN NICHOLSON PHOTO] Director Since 1992
Expiration of Proposed Term: 2000
Since May 1994, Managing Director, Capital Markets Assurance
Corporation. Previously Vice President, Citibank from 1981 and from
1991 to 1994, Senior Credit Officer and head of the Northeast
Department of Citicorp Real Estate. Previously from 1988, Managing
Director of Capital Markets Assurance Corporation, a surety company
founded by Citicorp. Also a director of Ball Corporation.
- ---------------------------------------------------------------------------------------------------------
PAUL G. SCHLOEMER
Age: 68
[PAUL G. SCHLOEMER PHOTO] Director Since 1989
Expiration of Present Term: 1999
Retired President and Chief Executive Officer of Parker Hannifin
Corporation, Cleveland, Ohio (1984-1993), a manufacturer of motion
control systems and components for the industrial aviation, space and
marine markets. Also director of Parker Hannifin Corporation, AMP Inc.
and Esterline Technologies.
- ---------------------------------------------------------------------------------------------------------
WOLFGANG R. SCHMITT
Age: 52
[WOLFGANG R. SCHMITT PHOTO] Director Since 1987
Expiration of Proposed Term: 2000
Chairman (since September 1993) and Chief Executive Officer (since
November 1992) of the Company. From May 1991, President and Chief
Operating Officer, Executive Vice President (1987-1991) and President
of the Home Products Division (1984-1990). Employed by the Company in
various marketing and research and development assignments since 1966.
Also director of Kimberly Clark Corporation and Parker Hannifin
Corporation.
- ---------------------------------------------------------------------------------------------------------
GORDON R. SULLIVAN
Age: 59
[GORDON R. SULLIVAN PHOTO] Director Since 1995
Expiration of Present Term: 1999
Corporate Vice President (since September 1995), Coleman Research
Corporation, Washington, D.C., a systems engineering company and a
subsidiary of Thermo Electron Corporation. From 1991 until 1995, Chief
of Staff of the United States Army and prior thereto, Vice Chief of
Staff and Deputy Chief of Staff for Operations and Plans. During his
Army career, he served in a variety of command and staff positions with
extensive overseas tours in Europe, Vietnam and Korea. Also a director
of Shell Oil Company, General Dynamics Corporation and Army National
Bank.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS
- --------------------------------------------------------
BOARD COMMITTEES
The Audit and Environmental Committee currently composed of Ms.
Nicholson (Chair) and Messrs. Gerrity, Marohn, and Sullivan held two meetings
during 1996. This Committee reviews with the independent auditors the scope and
results of audits, their other activities for the Company as well as their fees
and selection; reviews the activities of the internal audit staff; the adequacy
of
11
<PAGE> 15
internal accounting and control procedures of the Company; environmental
issues; and the administration of the retirement funds of the Company.
The Compensation and Management Development Committee comprised of all
outside Directors and currently chaired by Mr. Marohn, held three meetings
during 1996. The Committee reviews policies and programs for the development of
management personnel; approves the election as well as the compensation of the
officers and key employees of the Company, and executes the functions of the
Committees specified in the current bonus and stock incentive plans of the
Company, the 1993 Deferred Compensation Plan and the Supplemental Executive
Retirement Plan.
The Nominating and Directors' Activity Committee currently comprised of
Mr. Barrett (Chair) and Messrs. Ebert, Minter and Schloemer and Ms. Horn held
three meetings during 1996. The Committee reviews and recommends to the Board
candidates for election to the Board of Directors, the types and functions of
Board committees and assignment of Directors thereto, the structure of the
Board and Directors' compensation. In carrying out its functions in regard to
Board membership, the Committee will consider nominees recommended by
shareholders upon written submission of pertinent data to the attention of the
Corporate Secretary. Such data should include complete information as to the
identity of the proposed nominee, including name, address, present and prior
business and/or professional affiliations, education and experience, particular
field or fields of expertise, and reasons why, in the opinion of the
recommending shareholder, the proposed nominee is qualified and suited to be a
Director of the Company as well as what particular contribution to the success
of the Company such person could be expected to make.
In addition to the committee meetings set out above, the Board of
Directors held seven meetings during 1996.
REMUNERATION OF DIRECTORS
- -------------------------
The Board of Directors establishes the fees paid to Directors and Board
Committee members for services in those capacities. The current schedule of
Director fees is as follows:
(1) For service as a member of the Board, $26,000 per annum,
payable quarterly, plus $1,100 for attendance at each meeting of the
Board;
(2) For service as a Board Committee member, $1,100 for attendance
at each Committee meeting held on a date other than a date on which
the Board of Directors meets or $550 for attendance at any
additional Committee meeting held on such date or a Committee
meeting held on the same date on which the Board of Directors meets;
(3) For service as Chairman of a Committee of the Board, a fee of
$3,000 per annum, payable quarterly.
(4) The Board has adopted a policy which requires that a minimum
of 50% of the fees earned by a Director be deferred into the
Rubbermaid Stock Account of the 1993 Deferred Compensation Plan.
Pursuant to the Plan, Rubbermaid Common Shares credited to a
Directors account are distributed following termination of service
as a Director.
These fees are payable only to non-management Directors. Management
Directors receive no additional compensation for service as a Director. All
Directors receive reimbursement from the Company for expenses incurred in
connection with service in that capacity.
The Company has a Charitable Award Plan for Directors pursuant to which
it will contribute a total of $500,000 in a Director's name, after death, to
not more than two educational institutions recommended by the Director. The
contributions will be paid with the proceeds of insurance on the lives of
Directors participating in the Plan. The insurance is purchased and owned by
the Company which is also the beneficiary thereof. New Directors are required
to serve three years to become eligible for this program. All current Directors
except Mr. Sullivan are participants in the Plan. The Company also provides
non-management Directors with accidental death and dismemberment insurance of
up to $250,000 for a covered loss.
12
<PAGE> 16
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
- -----------------------------------------------
The following tabulation presents information derived from Schedules
13-G filed with the Securities and Exchange Commission by persons beneficially
owning more than five percent of the Company's Common Shares outstanding as of
December 31,1996.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
----------------------------------- -------------------- ----------
<S> <C> <C>
FMR Corp. and Affiliated Entities 13,950,783* 9.3
82 Devonshire St. (Indirect)
Boston, Massachusetts 02109
State Farm Mutual Automobile 10,652,200 7.1
Insurance Company and (Direct)
Related Entities
One State Farm Plaza
Bloomington, Illinois 61710
</TABLE>
- -----------------------
*Fidelity Management & Research Company, a registered investment adviser and a
wholly-owned subsidiary of FMR Corp., is the beneficial owner of 13,950,783
Common Shares of Rubbermaid Incorporated (sole power to dispose or
direct the disposition of 13,950,783 shares and sole power to vote or direct
the vote of 586,784 shares) as a result of acting as investment adviser to
various investment companies, none of which individually owns more than five
percent of the total outstanding shares.
OWNERSHIP BY MANAGEMENT OF COMMON SHARES
- ----------------------------------------
The following table sets forth information as of January 31, 1997, with
respect to the beneficial ownership of the Company's Common Shares by
Directors, nominees, and certain executive officers and as a group, all
directors, nominees and executive officers:
<TABLE>
<CAPTION>
AMOUNT PERCENT
BENEFICIALLY OF
NAME OWNED CLASS
------------------------------------------ ------------ -------
<S> <C> <C>
Directors
Tom H. Barrett (a)(b)................... 24,102 *
Robert O. Ebert (a)(b).................. 1,403,481 0.7
Scott S. Cowen.......................... 500 *
Robert M. Gerrity (b)................... 5,305 *
Karen N. Horn (b)....................... 2,583 *
William D. Marohn (b)................... 3,410 *
Steven A. Minter (b).................... 7,136 *
Jan Nicholson (b)....................... 1,072,596 0.7
Paul G. Schloemer (b)................... 7,916 *
Gordon R. Sullivan (b).................. 756 *
Executive Officers
Wolfgang R. Schmitt (a)(c).............. 261,140 *
Charles A. Carroll (a)(c)............... 103,055 *
David T. Gibbons (c).................... 11,595 *
Joseph M. Ramos (b)(c).................. 38,805 *
Gary F. Mattison (a)(c)................. 29,222 *
All of the above and other Executive
Officers as a Group.................. 3,306,437 2.2
</TABLE>
13
<PAGE> 17
- -----------------------
* Less than 1%
(a) Does not include shares held by or in trust by members and
immediate families of Messrs. Barrett (76), Ebert (2,840), Schmitt
(22,990), Carroll (230) and Mattison (20,068) as to which beneficial
ownership is disclaimed.
(b) Includes shares held under trust agreements -- Ebert (sole investment
power 87,469, shared investment power 155,795), Horn (918) and Schmitt
(4,000) as to which beneficial ownership is disclaimed. Includes shares
held by the Rubbermaid Incorporated 1993 Deferred Compensation Plan which
has sole voting power -- Barrett (17,251), Ebert (993), Gerrity (1,005),
Horn (977), Marohn (2,210), Minter (5,876), Nicholson (1,062), Ramos
(14,331), Schloemer (6,716) and Sullivan (756).
(c) Includes performance based shares issued pursuant to the Company's Stock
Incentive and Option Plan as follows -- Schmitt (138,424), Carroll
(77,297), Gibbons (11,595), Ramos (24,474) and Mattison (17,081).
EXECUTIVE COMPENSATION-REPORT OF COMPENSATION COMMITTEE
- -------------------------------------------------------
The Compensation and Management Development Committee of the Board of
Directors is composed of all the Company's outside directors.
For many years the company has modified its existing compensation
programs for executive officers as conditions required. As a consequence, the
programs have become complicated and difficult to understand. The Company will
make significant changes to its executive officer compensation program in 1997
to address this issue. The revised program will be simplified and will
strengthen the company's long-standing and strongly held belief in the principle
of performance-oriented compensation. This report discusses the compensation
program which was in effect for 1996 and the changes to that program which are
contemplated for 1997 and beyond.
COMPENSATION PHILOSOPHY
The design and operation of the Company's executive compensation plans
are based upon three premises:
- Compensation must reward value creation, innovation, and growth.
Rubbermaid's success depends on its ability to create lasting value
and develop, market, and sell innovative new products. When value is
created, it should be rewarded.
- Compensation programs must encourage and reward appropriate
behaviors. Compensation must support behaviors that enhance
Rubbermaid's strategic vision. Superior performance should be
rewarded, the lack of performance should not.
- Rubbermaid must competitively reward performance. In order to
attract and retain high-performing people Rubbermaid must offer
total cash opportunities that are competitive with similarly sized,
high-performing consumer products companies.
COMPENSATION ELEMENTS
BASE SALARY
Prior to 1997 salary grades were assigned to each executive officer
position based on a comparison of Rubbermaid positions with comparable positions
at companies of similar size in the durable and non-durable goods category of
national executive compensation surveys. Studies have shown that the base
salaries determined by this process were significantly below the competitive
market of high performing consumer product companies which created significant
recruiting issues. Actual salaries
14
<PAGE> 18
within the appropriate grade depended upon an assessment of individual
performance, experience, and internal equity.
Following a detailed analysis of the company's compensation structure,
a new base salary program for executive officers and other key managers
has been developed. Beginning in 1997 salary bands are assigned to each
executive officer position based on a comparison of Rubbermaid positions
with comparable positions in similar sized high performing consumer
products companies. Base salaries are targeted for executive officer
positions at 10% below the 50th percentile. Each band has a base salary
minimum, midpoint, and maximum. The Company has adjusted existing base
salaries to reflect a closer correlation with the competitive
marketplace.
ANNUAL INCENTIVE COMPENSATION
Under the annual incentive plan utilized prior to 1997, awards were
payable only if the Company's return on net assets ("RONA") exceeded 4%
after which a bonus pool was funded in an amount not to exceed 5% of the
Companys' earnings before tax. The size of individual participant awards
varied based upon a subjective weighting of factors which accounted for
salary range, position responsibility, and individual and business unit
performance (mainly earnings and return on net assets). The target
payout for executive officers was significantly above comparable
positions at companies of similar size to compensate for below market
base salaries. The Company's 1996 return on net assets was 9.9% which
created a bonus pool larger than the bonuses which were actually paid
for 1996.
The maximum amount of annual incentive cash compensation paid to any
executive officer for any year was limited to 60% of the executive's
targeted payout with the remainder required to be taken in the form of a
three-year performance-based restricted stock grant described below. For
1996, the Committee limited the annual incentive cash compensation for
executive officers to levels below the aforementioned 60% targeted
payout.
The Company is seeking shareholder approval of the 1997 Management
Incentive Plan ("1997 Plan"), which will replace the aforementioned
plan. Under the new Plan annual incentive payments are targeted as a
percentage of base pay (10%-105%) established by reference to incentive
payments made by other high performing, predominately consumer products
companies. The actual bonus for executive officers can range from 0% to
200% (300% in the case of certain senior executive participants) of the
targeted amount, depending on the achievement of annual performance
targets established by the Committee. For 1997, performance measures
will be Economic Value Added (EVA) and Corporate/Division sales growth.
EVA is a method used to measure the value Rubbermaid produces for its
shareholders which is the amount remaining after deducting a capital
charge (average capital employed in the business times the cost of
capital) from net operating profit after taxes. Value for shareholders
is provided by producing a positive and growing EVA. Empirical studies
have shown a high positive correlation of improvement in EVA to
improvements in share price.
LONG-TERM INCENTIVE COMPENSATION
PERFORMANCE BASED RESTRICTED STOCK
Since 1979, long-term incentive compensation has been predominately
comprised of the Restricted Stock Incentive Program which was tied to
the financial performance of the Company as measured by RONA.
On an annual basis, three and five-year restricted stock grants were
made to Company executive officers and other key management personnel.
The number of shares ultimately received from awards under the plan
depended entirely on the extent to which after-tax average RONA targets
measured over periods ranging from three to five years were achieved.
Individual five year awards were determined by a formula utilizing a
percentage of base salary arrived at by application of a subjective
weighting of factors including position responsibility and individual
performance. The amount thus determined was divided by a 30-day average
Rubbermaid stock price to arrive at the
15
<PAGE> 19
number of shares to be awarded. Three year share awards were similarly
determined using the amount of annual incentive compensation above
targeted payout (usually 60%). All shares were forfeited if the
Company's RONA did not average 6% over the performance period. Between
6% and the 12.5% target RONA, a pro rata formula determined the number
of shares to be received, with all shares being received if the target
was achieved. If the 12.5% target RONA was exceeded, supplemental cash
awards, not to exceed 83% of the value of the shares originally awarded
were paid.
For 1996 the Company's RONA was below target as it was in 1995,
however, because of above average performance in prior years the average
RONA for the 3 and 5 year cycles ending in 1996 exceeded the target
(14.50 and 12.57 v. 12.50) resulting in lapse of restrictions for all of
the shares in those cycles. The cash award attached to the five year
cycle will be reduced and the award for the three year cycle will be
less than $1.00 per share. For award cycles ending after 1996 which
include 1995 and 1996 in the performance measurement period, awards will
be similarly impacted unless RONA improves.
STOCK OPTION AWARDS
Beginning in 1994 the Company began to incorporate stock option grants
into its long-term incentive compensation program in the belief that
stock options more closely aligns the interests of management and
shareholders. Option grants had a duration of ten years with 25% vesting
after two years and 15% vesting each year thereafter through year seven.
In order to achieve the appropriate balance among compensation
elements, the number of shares in five year restricted stock awards made
to executives, who also receive stock options, was reduced.
REVISED LONG TERM INCENTIVE PROGRAM
Under the revised long-term Incentive Plan for 1997 and subsequent
years, all participants except Corporate and Division senior executives
will receive stock options rather than performance based restricted
stock. The program is designed to increase the competitiveness of the
Company's long term compensation program, to more closely align
long-term executive compensation with shareholder interests, and to
build executives' equity interest in the Company. The competitive
objective of the new plan is to target long-term compensation at the
50th percentile, except for executive officers who are targeted at the
75th percentile of the comparator companies to compensate for their
lower than market base salaries.
For Corporate and Division senior executives, the weighting of long
term compensation will be 70% stock options and 30% performance shares.
A performance share award established by salary band and reference to
comparator companies will be made each year and the actual number of
shares earned will vary from 0% to 200% of the shares initially awarded
based on the Company's EVA performance over a three (3) year period as
established by the Committee. During such period the shares will be held
in escrow, dividends are paid and the shares can be voted by the holder.
Option awards under the revised plan will continue to have a duration
of ten years and will vest over a three (3) year period at a rate of 33%
per year which is more marketplace competitive. Previous stock option
awards have been amended to conform with the new vesting schedule. The
size of stock option grants will be established by salary band and
reference to the comparator companies.
CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation program for Mr. Schmitt, including salary, annual
bonus, restricted stock and stock options, was determined for 1996 using
the criteria stated above for executive officers. The specifics of Mr.
Schmitt's compensation package, like that of other executive officers,
is determined, in the case of salary, by reference to national
marketplace data for similar positions. Mr. Schmitt's
16
<PAGE> 20
base salary was increased in February of 1996, the first such adjustment
since December of 1994. His base salary for 1996 remained considerably
below that for similarly placed executives.
The annual and long-term target awards for Mr. Schmitt are based upon
a comparison of his position to the competitive marketplace. The actual
payments to Mr. Schmitt are based upon his achievement of objectives
established by the Committee. The annual bonus paid to Mr. Schmitt for
1996 reflects an increase over 1995 but both years are considerably
below 1993 and 1994. The increase for 1996 reflects the attainment of
specific performance objectives which include improved cash flow,
enhanced inventory and cash management, improvements in service levels
to customers, simplification of the company's product lines and the
continued development of global markets. Absent attainment of these
objectives, the Company's financial performance would have been below
what was achieved and the Committee expects them to favorably impact
performance in 1997 and beyond. The Committee is mindful of the less
than objective 1996 financial performance but considers the payment
appropriate in light of the achievement of these performance objectives.
A major portion of Mr. Schmitt's compensation continues to be in the
form of stock incentives which will not result in value to him unless
the financial performance of the Company improves and is reflected in a
higher price for the Company's stock. Approximately 75% of Mr. Schmitt's
1996 compensation was incentive based. Significant portions of cash
compensation received by Mr. Schmitt in 1996 reflect the conclusion of
restricted stock cycles which began in 1991 and 1993. Those plan cycles
concluded on December 31, 1995 and the payments provided for under their
terms were made in 1996. The payments reflected the company's
performance from 1991 through 1995 rather than the performance of the
company in 1996. It is anticipated that in future years, compensation
received on previously granted performance based restricted stock will
be significantly lower as the performance period includes 1995 and 1996.
For example, there will be less than a $1.00 per share cash payment
component of the 1994-1996 three year restricted stock award.
The Committee has previously established, and will retain, executive
share-ownership guidelines that establish minimum values of Rubbermaid
stock (a multiple of base salary) each executive officer is expected to
hold (Chief Executive Officer-5 times; Chief Operating Officer-3 times;
other Executive Officers-2 times). These holding requirements are
exclusive of shares in existing restricted stock and performance share
awards and unvested or vested but unexercised stock options.
The Internal Revenue Code, as amended by the Omnibus Budget
Reconciliation Act of 1993, limits the deductibility of
"nonperformance-based" compensation to certain persons shown in the
Summary Compensation Table to $1 million. To qualify as
"performance-based" compensation, payments must be made from a plan that
meets several criteria. The Committee intends for all performance based
compensation to meet the criteria for deductibility.
THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
<TABLE>
<S> <C>
William D. Marohn (Chair) Steven A. Minter
Tom H. Barrett Jan Nicholson
Robert O. Ebert Paul G. Schloemer
Robert M. Gerrity Gordon R. Sullivan
Karen N. Horn
</TABLE>
17
<PAGE> 21
SUMMARY COMPENSATION TABLE
- --------------------------
The following table sets forth the compensation received for the three
years ended December 31, 1996 by the persons who were at December 31, 1996 the
Company's Chief Executive Officer and the four other most highly paid Executive
Officers.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------------- -------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING
NAME AND SALARY BONUS COMPENSATION* AWARDS** OPTIONS
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#)
--------------------------- ----- -------- -------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
WOLFGANG R. SCHMITT........ 1996 448,265 434,368 471,333 867,402 40,000
Chairman of the Board...... 1995 427,440 365,461 431,580 863,156 33,000
and Chief Executive........ 1994 395,060 656,123 351,775 844,608 196,000
Officer
CHARLES A. CARROLL......... 1996 302,107 256,791 182,368 541,624 20,000
President and Chief........ 1995 286,203 233,542 100,741 486,984 16,500
Operating Officer.......... 1994 270,208 373,025 79,720 361,624 60,500
DAVID T. GIBBONS........... 1996 227,081 181,665 0 51,937 5,000
President.................. 1995 25,962
Home Products Division..... 1994
JOSEPH M. RAMOS............ 1996 183,943 179,344 23,289 132,924 4,500
President, Rubbermaid...... 1995 178,073 164,718 8,455 79,650 4,000
Commercial Products Inc.... 1994 173,377 187,247 87,082 4,200
GARY F. MATTISON........... 1996 155,083 174,183 55,369 123,415 4,000
President, Global.......... 1995 148,525 141,099 28,824 110,588 5,310
Transformation Team........ 1994 141,180 166,710 26,478 99,616 3,850
<CAPTION>
ALL OTHER
NAME AND COMPENSATION***
PRINCIPAL POSITION ($)
--------------------------- ---------------
<S> <C>
WOLFGANG R. SCHMITT........ 289,172
Chairman of the Board...... 269,725
and Chief Executive........ 300,783
Officer
CHARLES A. CARROLL......... 157,839
President and Chief........ 150,781
Operating Officer.......... 159,490
DAVID T. GIBBONS........... 66,295
President.................. 39
Home Products Division.....
JOSEPH M. RAMOS............ 68,451
President, Rubbermaid...... 61,370
Commercial Products Inc.... 56,730
GARY F. MATTISON........... 98,235
President, Global.......... 94,762
Transformation Team........ 96,165
</TABLE>
- -----------------------
* Cash award paid in 1996 for Company exceeding Restricted Stock
Performance Target for three year (1993-1995) and five year (1991-1995) award
cycle. The value of perquisites and other personal benefits is not included
since the value of such compensation is below minimum required disclosure
thresholds.
** These amounts represent the value of shares awarded in 1996 for three year
(1995-1997) and five year (1996-2000) award cycles. Failure to improve the
company's 1996 RONA performance will result in a 21% reduction in the 1996
restricted stock award listed in column 4 (1996 Restricted Stock Awards) and
a 100% reduction in the other annual compensation listed in column 3 (Other
Annual Compensation) payable to executives in 1999 and 2001. In the case of
Mr. Schmitt these reductions will be approximately $930,000 per year.
Shares and any cash ultimately received after the award cycles are
completed depends upon achievement of pre-determined financial objectives
over such period. Dividends are paid on restricted stock at the same rate as
unrestricted shares. Year end 1996 restricted stock holdings and the value
thereof based on the year-end closing price of Rubbermaid stock is as
follows: Schmitt -- 83,633 shares ($1,892,197); Carroll -- 47,912 shares
($1,084,009); Gibbons -- 4,738 shares ($107,197); Ramos -- 17,600 shares
($398,200); and Mattison -- 12,820 shares ($290,053). Shares which will vest
in under three years, assuming achievement of financial objectives, are as
follows: Schmitt (21,865, 1997; 24,229, 1998); Carroll (12,431, 1997;
15,483, 1998); Ramos (1,085, 1997; 2,912, 1998); and Mattison (2,043, 1997;
2,494, 1998). Shares awarded to Mr. Ramos in 1992 included shares to replace
long term incentives forfeited upon leaving a previous employer.
18
<PAGE> 22
*** The amounts disclosed in this column include:
(a) Company paid premiums for excess group term life insurance on behalf
of Schmitt (1996- $823, 1995-$1,981, 1994-$1,302); Carroll
(1996-$583, 1995-$774, 1994-$896); Gibbons (1996-$472, 1995-$39);
Ramos (1996-$407, 1995-$1,133, 1994-$847); and Mattison (1996-$366,
1995-$541, 1994-$412).
(b) Contributions or accruals pursuant to defined contribution
retirement plans on behalf of Schmitt,
(1996-$241,126,1995-$220,586,1994-$248,821); Carroll,
(1996-$144,750,1995-$137,405,1994-$144,794); Gibbons, (1996-$65,823);
Ramos, (1996-$65,551,1995-$58,022,1994-$53,771); and Mattison
(1996-$54,026,1995-$50,811,1994-$49,823). Vesting is on a graduated
schedule commencing after three years of service with 100% vesting
after seven years.
(c) Interest accrued on deferred compensation in excess of a "fair
market rate" established by S.E.C. rules (120% of applicable federal
long-term rate, which for 1996 was 8.128%; 1995-8.690%; and
1994-8.743%) on behalf of Schmitt
(1996-$47,226,1995-$47,158,1994-$50,660); Carroll 1996
$12,506;1995-$12,602,1994-$13,800); Ramos
(1996-$2,493,1995-$2,215,1994-$2,112); and Mattison
(1996-$43,843,1995-$43,410,1994-$45,930).
OPTION GRANTS IN LAST FISCAL YEAR
- ---------------------------------
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------- VALUE AT ASSUMED ANNUAL
% OF TOTAL RATES OF STOCK PRICE
NUMBER OF OPTIONS APPRECIATION FOR OPTION
SECURITIES GRANTED TO TERM
UNDERLYING EMPLOYEES EXERCISE OR ------------------------
OPTIONS IN FISCAL BASE PRICE EXPIRATION
NAME GRANTED(#) YEAR ($/SH) DATE 5%($) 10%($)
--------------- --------- ------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Mr. Schmitt.... 40,000 6.71% 26.1250 1/10/2006 1,703,350 2,706,550
Mr. Carroll.... 20,000 3.36% 26.1250 1/10/2006 851,675 1,353,275
Mr. Gibbons.... 5,000 0.84% 26.1250 1/10/2006 212,919 338,319
Mr. Ramos...... 4,500 0.75% 26.1250 1/10/2006 191,628 304,488
Mr. Mattison... 4,000 0.67% 26.1250 1/10/2006 170,335 270,655
</TABLE>
All options are granted at the fair market price of Rubbermaid Common
Shares on the grant date and expire ten years from the grant date. Options vest
over a three year period with one-third of the shares becoming exercisable on
each of the first three anniversaries of the grant date.
The dollar amounts under the potential realizable value column are the
result of calculations of assumed annual compound rates of appreciation over
the ten-year life of the options in accordance with the proxy regulations of
the Securities and Exchange Commission and are not intended to forecast
possible future appreciation, if any, of the Company's Common Shares. The
actual value, if any, an executive may realize will depend on the excess of the
market price of the shares over the exercise price on the date the option is
exercised.
OPTION EXERCISES AND VALUES
- ---------------------------
This table presents information regarding options exercised for the
Company's Common Shares during fiscal 1996 and the value of unexercised options
held at December 31, 1996. There were no options exercised by the named
executives and no SARs outstanding during fiscal 1996.
19
<PAGE> 23
AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND 1996 FISCAL YEAR-END
OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END AT FY-END
SHARES ACQUIRED VALUE (#) ($)(2)
ON EXERCISE REALIZED ------------------------- -------------------------
(#) ($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
--------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Mr. Schmitt.......... 0 0 141,666/269,000 0/0
Mr. Carroll.......... 0 0 45,833/97,000 0/0
Mr. Gibbons.......... 0 0 0/5,000 0/0
Mr. Ramos............ 0 0 4,133/12,700 0/0
Mr. Mattison......... 0 0 4,336/13,160 0/0
</TABLE>
- -----------------------
(1) Value Realized is calculated as follows: [(Per Share Closing Sale Price
on Date of Exercise)--(Per Share Exercise Price)] x Number of Shares for
Which the Option was Exercised.
(2) Value of Unexercised, In-the-Money Options at December 31, 1996 is
calculated as follows: [(Per Share Closing Sale Price on 12/31/96) -- (Per
Share Exercise Price)] x Number of Shares subject to Unexercised Options.
The per share closing sale price on 12/31/96 was $22.6250.
DEFINED BENEFIT RETIREMENT PLANS
- --------------------------------
SALARIED EMPLOYEES' RETIREMENT PLAN
The following table shows the estimated annual retirement benefit
payable to participants in the Rubbermaid Incorporated Salaried Employees'
Retirement Plan at age 65 for 120 months, irrespective of how long the
participant lives. Other actuarially equivalent value of forms of pension
income may be requested. Only employees hired prior to October 1, 1972, are
participants in this Plan.
ESTIMATED ANNUAL BENEFITS - DEFINED BENEFIT PENSION PLAN
<TABLE>
<CAPTION>
YEARS OF SERVICE
ANNUAL ---------------------------------------------
BASE SALARY 10 15 20 25
----------- -------- -------- -------- ---------
<S> <C> <C> <C> <C>
$ 150,000 $15,000 $22,500 $30,000 $37,500
200,000 20,000 30,000 40,000 50,000
250,000 25,000 37,500 50,000 62,500
300,000 30,000 45,000 60,000 75,000
350,000 35,000 52,500 70,000 87,500
400,000 40,000 60,000 80,000 100,000
450,000 45,000 67,500 90,000 112,500
</TABLE>
Benefits are based on a formula which provides for payment of 1% of
base salary for each year of service, to a maximum of 25 years. Messrs.
Schmitt, Carroll and Mattison are participants in the Plan with 31, 26 and 29
years of credited years respectively, however, benefit accruals (salary
increases and years of service) for them have been suspended since 1989 because
of government regulations affecting "highly compensated employees". As a
result, they will receive a significantly reduced benefit from the Plan.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The following table shows the benefit which would be received by a
participant in the Rubbermaid Supplemental Executive Retirement Plan with at
least five years of service and election of a
20
<PAGE> 24
single life annuity, which benefit is reduced by (1) any benefits
provided under any other retirement plans (including defined contribution
retirement plans) of the Company; (2) primary Social Security benefits; and (3)
amounts payable from any prior employer retirement plans.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL COMBINED BENEFIT
PAYABLE AT
FINAL AVERAGE ----------------------------------
COMPENSATION* AGE 55 AGE 60 AGE 65
------------- -------- -------- --------
<S> <C> <C> <C>
$ 600,000 $297,000 $313,500 $330,000
800,000 396,000 418,000 440,000
1,000,000 495,000 522,500 550,000
1,200,000 594,000 627,000 660,000
1,400,000 693,000 731,500 770,000
1,600,000 792,000 836,000 880,000
</TABLE>
- -----------------------
* Salary, bonus and five-year restricted stock award value.
Benefits under the Rubbermaid Incorporated Supplemental Executive
Retirement Plan are payable for life, equal to 55% of the average of salary,
bonus and five-year restricted stock award value earned during the highest five
years of the final ten years of employment, less payments from other Company
retirement plans, social security and prior employer plans.
Covered compensation includes annual salary and bonus, including, with
respect to the latter, any amount of bonus paid in the form of restricted
stock awards with vesting schedules less than three years. Mr. Schmitt is a
participant in the Plan with 31 years of credited service. Participants may
retire, with reduced benefits, at age 60 or prior thereto beginning at age 55
with the approval of the Chief Executive Officer. In 1988, pursuant to a Plan
amendment providing for the funding of benefits for vested participants, the
Company adopted the practice of purchasing annuities on behalf of vested Plan
participants which will provide the after-tax equivalent of the required
benefit. Death benefits are provided to the surviving spouse of a participant
age 55 or older with five years' service. This age requirement has been waived
for Mr. Schmitt. Plan benefits are not vested in the event of termination of
employment prior to qualification for normal, early, or disability retirement
except in the event of change of control of the Company when special vesting
occurs. With regard to Mr. Schmitt, provision has been made for voluntary
retirement at any time after age 50 with benefits, 55% of covered compensation,
reduced 2% for each year retirement is prior to age 60. In the event of
involuntary termination of employment after age 50, but before age 60, benefits
would commence at age 60 based upon 55% of covered compensation at the time of
involuntary termination of employment.
EXECUTIVE OFFICER CONTRACTS
- ---------------------------
The Company's Executive Officers have employment agreements with the
Company which become effective only in the event any person becomes the
beneficial owner, directly or indirectly, of 15% or more of the outstanding
shares of the Company, the Company is merged or substantially all of its assets
are sold and Rubbermaid shareholders do not retain at least two-thirds of the
voting power in the new corporation or a majority of the Company's Board of
Directors is replaced. The agreements provide for continuing such executives in
the employment of the Company for a period of five years following such a
change of control or until attainment of normal retirement age, whichever first
occurs. During such five year period, the executive will receive salary, bonus
and benefits no less than those in effect at the time of a change of control.
The employment of such executives may however be terminated, voluntarily or
involuntarily, within two years of such change of control in which event they
would receive a severance award equal to the value of three years salary, bonus
and stock awards and the continuation of benefits for three years, and would be
indemnified by the Company for any excise tax imposed on such award. Following
such two year period the executives may be terminated only for cause and/or
they have the right to terminate
21
<PAGE> 25
employment in the event their duties are materially changed or their
salaries or benefits, etc., are reduced. In either such event they would be
entitled to receive a severance amount equal to that described above.
The Company has an employment agreement with Mr. Gibbons which provides
for a severance payment equal to two years of salary and targeted bonus in the
event of involuntary termination of employment within three years of the date
of employment.
RUBBERMAID STOCK PERFORMANCE
- ----------------------------
Following is a graph which compares the five year cumulative return
from investing $100 at the end of 1991 in Rubbermaid Common Shares, the S&P 500
index of companies and the S&P Industrials index of companies, with dividends
assumed to be reinvested when received. The S&P Industrials index includes a
broad range of manufacturers.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) RUBBERMAID INC. S&P 500 S&P Industrials
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 83.91 107.62 105.70
1993 92.98 118.46 115.24
1994 78.19 120.03 119.64
1995 70.55 165.13 161.02
1996 63.96 203.05 198.06
</TABLE>
Assumes $100 invested on December 31, 1991 and reinvestment of dividends.
INDEPENDENT AUDITORS
- --------------------
As recommended by the Audit Committee, the Board of Directors appointed
KPMG Peat Marwick LLP as the independent auditors to audit the books and
records of the Company for the year ending December 31, 1997. This firm has
been the independent auditors of record continuously since 1934. It is expected
that a representative of Peat Marwick will be in attendance at the Annual
Meeting to respond to appropriate oral questions of shareholders and to make
such statement as may be desired.
1998 PROPOSALS OF SECURITY HOLDERS
- ----------------------------------
Pursuant to rules of the Securities and Exchange Commission, a
shareholder may present a proposal to be voted on at the 1998 annual meeting of
shareholders; and, provided such proposal meets all of the requirements of the
rules and is received by the Company prior to November 7, 1997, it will be
included in the proxy statement and form of proxy relating to such meeting.
22
<PAGE> 26
OTHER BUSINESS
- --------------
The Annual Meeting is called for the purposes set forth in the Notice.
The Board of Directors does not know of any matter for action by the
shareholders at the meeting other than the matters described in the Notice.
However, the enclosed Proxy confers discretionary authority with respect to
matters which are not known to the Board at the date of printing hereof and
which may properly come before the meeting. It is the intention of the persons
named in the Proxy to vote the Proxy in accordance with their best judgment on
any such matter.
By order of the Board of Directors.
JAMES A. MORGAN
Secretary
23
<PAGE> 27
APPENDIX A
RUBBERMAID INCORPORATED
AMENDED AND RESTATED
1989 STOCK INCENTIVE AND OPTION PLAN
PREAMBLE
The purpose of this Plan is to reward performance and to build each
Participant's equity interest in the stock of Rubbermaid Incorporated by
providing long term incentives and rewards to directors and officers and other
key employees of the Company and its subsidiaries who contribute to its
continuing success by their innovation, ability, industry, loyalty and
exceptional service. This Plan was originally approved by shareholders at the
1989 Annual Meeting and subsequently amended and approved by shareholders at the
1994 Annual Meeting.
SECTION I
DEFINITIONS
BENEFICIARY
1.01 "Beneficiary" means a person or entity (including a trust or estate),
designated in writing by a Holder on such forms and in accordance with such
terms and conditions as the Committee may prescribe, to whom the Holder's
Stock Incentives and related rights and privileges under the Plan shall
pass in the event of the death of the Holder.
BOARD OR BOARD OF DIRECTORS
1.02 "Board" or "Board of Directors" means the Board of Directors of Rubbermaid
Incorporated, as constituted from time to time.
CHANGE IN CONTROL
1.03 "Change in Control" means the occurrence of any of the following events:
(i) The Company is merged, consolidated or reorganized into or with
another corporation or other legal person, and as a result of such merger,
consolidation or reorganization less than two-thirds of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders
of the combined voting power of the then-outstanding securities entitled to
vote generally in the election of directors ("Voting Stock") of the Company
immediately prior to such transaction;
(ii) The Company sells or otherwise transfers all or substantially all
of its assets to another corporation or other legal entity, and as a result
of such sale or transfer less than two-thirds of the combined voting power
of the then-outstanding securities of such corporation or entity
immediately after such sale or transfer is held in the aggregate by the
holders of Voting Stock of the Company immediately prior to such sale or
transfer;
(iii) There is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated pursuant to
the Exchange Act, disclosing that any person (as the term "person" is used
in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is defined under Rule
13d-3 or any successor rule or regulation promulgated under the Exchange
Act) of securities representing 15% or more of the Voting Stock of the
Company;
(iv) The Company files a report or proxy statement with the Securities
and Exchange Commission pursuant to the Exchange Act disclosing in response
to Form 8-K or Schedule 14A (or any successor schedule, form or report or
item therein) that a Change in Control of the Company has occurred or will
occur in the future pursuant to any then-existing contract or transaction;
or
(v) If, during any period of two consecutive years, individuals who at
the beginning of any such period constitute the Directors of the Company
cease for any reason to constitute at least a majority
A-1
<PAGE> 28
thereof; provided, however, that for purposes of this clause (v) each
Director who is first elected, or first nominated for election by the
holders of the Voting Stock, by a vote of at least two-thirds of the
Directors of the Company (or a committee thereof) then still in office who
were Directors of the Company at the beginning of any such period will be
deemed to have been a Director of the Company at the beginning of such
period.
Notwithstanding the foregoing provisions of Sections 1.03(iii) or
1.03(iv), unless otherwise determined in a specific case by majority vote
of the Board, a Change in Control shall not be deemed to have occurred for
purposes of Sections 1.03(iii) or 1.03(iv) solely because (1) the Company,
(2) a Subsidiary, or (3) any employee stock ownership plan or any other
employee benefit plan of the Company or any Subsidiary either files or
becomes obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) under the Exchange Act
disclosing beneficial ownership by it of shares of Voting Stock, whether in
excess of 15% or otherwise, or because the Company reports that a change in
control of the Company has occurred or will occur in the future by reason
of such beneficial ownership.
CODE
1.04 "Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time. References to a particular Section of the Code shall
include references to any related Treasury Regulations and to successor
Sections of the Code.
COMMITTEE
1.05 "Committee" means the Compensation and Management Development Committee of
the Board of Directors or such other committee or subcommittee designated
by the Board of Directors to administer the Plan.
COMMON SHARES
1.06 "Common Shares" means common stock of the Company, par value $1.00 per
share.
COMPANY
1.07 "Company" means Rubbermaid Incorporated, an Ohio corporation, its
successors and assigns.
DIRECTOR
1.08 "Director" means a director of the Company.
EMPLOYEE
1.09 "Employee" means a key employee of the Company or a Subsidiary, regularly
employed on a full-time basis, including an officer or Director if he is
such an employee.
EXCHANGE ACT
1.10 "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
FAIR MARKET VALUE
1.11 "Fair Market Value" on a particular date means the mean between the high
and low sales price of a Common Share on the New York Stock Exchange on
such date as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New
York Stock Exchange. If there were no sales on such date reported as
provided above, the respective prices on the most recent prior day on which
a sale was so reported.
In the case of an Incentive Stock Option, if the foregoing method of
determining fair market value should be inconsistent with Section 422 of
the Code, "Fair Market Value" shall be determined by the Committee in a
manner consistent with such Section of the Code and shall mean the value as
so determined.
A-2
<PAGE> 29
HOLDER
1.12 "Holder" means the Participant or eligible transferee (as such eligibility
may be determined from time to time by the Committee) who holds a Stock
Incentive.
INCENTIVE STOCK OPTION
1.13 "Incentive Stock Option" means an Option intended to meet the requirements
of Section 422 of the Code.
NON-STATUTORY STOCK OPTION
1.14 "Non-Statutory Stock Option" means an Option which is not intended to be an
Incentive Stock Option.
OPTION
1.15 "Option" means an option granted under this Plan to purchase Common Shares.
Options may be Incentive Stock Options or Non-Statutory Stock Options.
PARTICIPANT
1.16 "Participant" means a Director, officer or other Employee selected by the
Committee to participate in this Plan.
PERFORMANCE AWARD
1.17 "Performance Award" means an award of Performance Shares to a Participant,
which is contingent upon the attainment of performance objectives
determined in the discretion of the Committee as more fully set forth in
Section VI hereof.
PERFORMANCE GOALS
1.18 "Performance Goals" shall have the meaning ascribed to it at Section 6.02.
PLAN
1.19 "Plan" means the Rubbermaid Incorporated Amended and Restated 1989 Stock
Incentive and Option Plan set forth in these pages, as amended from time to
time.
RESTRICTED STOCK AWARD
1.20 "Restricted Stock Award" means an award of Common Shares to a Participant
with restrictions as to disposition and subject to a risk of forfeiture
until certain conditions have been met.
SEC RULE 16b-3
1.21 "SEC Rule 16b-3" means Rule 16b-3 of the Securities and Exchange Commission
promulgated under the Exchange Act, as such rule or any successor rule may
be in effect with respect to Section 16 Persons from time to time.
SECTION 16 PERSON
1.22 "Section 16 Person" means a person subject to potential liability under
Section 16(b) of the Exchange Act with respect to transactions involving
equity securities of the Company.
STOCK APPRECIATION RIGHT
1.23 "Stock Appreciation Right" means a right granted under Section VIII below.
STOCK INCENTIVE
1.24 "Stock Incentive" means a Performance Award, Restricted Stock Award, Option
or Stock Appreciation Right.
SUBSIDIARY
1.25 "Subsidiary" means a corporation or other form of business association of
which shares (or other ownership interests) having more than 50% of the
voting power are owned or controlled, directly or
A-3
<PAGE> 30
indirectly, by the Company; provided, however, that in the case of an
Incentive Stock Option, the term "Subsidiary" shall mean a Subsidiary (as
defined by the preceding clause) which is also a "subsidiary corporation"
as defined in Section 424(f) of the Code.
SECTION II
PLAN ADMINISTRATION
ADMINISTRATOR
2.01 The Plan shall be administered by the Committee, which shall consist of
three or more directors appointed from time to time by the Board. Unless
the Board determines otherwise, the Committee shall be comprised solely of
"outside directors" within the meaning of Section 162(m) of the Code. In
addition, the Committee will be constituted in a manner that satisfies the
"non-employee" director standard in SEC Rule 16b-3. Notwithstanding the
requirements contained in the two immediately preceding sentences, the
Board may, in its discretion, delegate to a committee or subcommittee of
the Board that does not meet the foregoing requirements any or all of the
authority and responsibility of the Committee with respect to awards of
Stock Incentives to employees who are not Section 16 Persons or "covered
employees" for purposes of Section 162(m) of the Code at the time any such
delegated authority or responsibility is exercised. Such other committee or
subcommittee may consist of three or more directors who may, but need not,
be officers or employees of the Company or of any of its Subsidiaries. To
the extent that the Board has delegated to such other committee or
subcommittee the authority and responsibility of the Committee pursuant to
the foregoing, all references to the Committee in the Plan shall be to such
other committee or subcommittee.
ADMINISTRATIVE POWERS
2.02 The Committee shall have full power to interpret and administer the Plan
and full authority to act in selecting the Participants to whom Stock
Incentives will be granted, in determining the type and amount of Stock
Incentives to be granted to each such Participant, the terms and conditions
of Stock Incentives granted under the Plan, including any applicable
Performance Goals, and the terms of agreements which will be entered into
with Participants. The Committee shall have the power to make regulations
for carrying out the Plan and to make changes in such regulations as it
from time to time deems proper. Any interpretation by the Committee of the
terms and provisions of the Plan and any instrument issued thereunder and
its administration thereof, and all action taken by the Committee, shall be
final, binding and conclusive on the Company, its shareholders,
Subsidiaries, affiliates, all Holders, their respective legal
representatives, successors and assigns and upon all other persons claiming
under or through any of them.
LIMITATION ON LIABILITY
2.03 Members of the Board of Directors and members of the Committee acting under
the Plan shall be fully protected in relying in good faith upon information
supplied by the management of the Company and the advice of counsel and
shall incur no liability except for acts or omissions undertaken with
deliberate intent to cause injury or undertaken with reckless disregard.
SECTION III
PLAN SHARES
SHARES SUBJECT TO THE PLAN; MAXIMUM NUMBER -- AGGREGATE
3.01 Subject to adjustments as provided in Section X and the provisions of
Sections 3.03 and 8.07 hereof, the total number of Common Shares as to
which Stock Incentives may be granted under the Plan in each calendar year
during any part of which the Plan is effective shall be one percent (1%) of
the total outstanding Common Shares as of the first day of such year;
provided that the maximum number of Common Shares that may be issued or
transferred in respect of Incentive Stock Options granted under this Plan
shall be 5,000,000 Common Shares. In addition, any shares issued by the
Company through the assumption or substitution of outstanding grants from
an acquired company shall not reduce the shares
A-4
<PAGE> 31
available for grants under the Plan. Any shares issued hereunder may
consist, in whole or in part, of authorized and unissued shares, treasury
shares, or shares to be purchased, as the Committee may from time to time
determine.
SHARES SUBJECT TO THE PLAN; MAXIMUM NUMBER -- PER PARTICIPANT
3.02 Subject to Sections 3.03, 8.07 and 10.01 hereof, the maximum number of
Stock Incentives that may be granted to each Participant in each calendar
year during any part of which the Plan is in effect shall be as follows:
(a) With respect to Common Shares subject to Options, 500,000 Common
Shares;
(b) With respect to Common Shares subject to Stock Appreciation
Rights, 500,000 Common Shares;
(c) With respect to Restricted Stock (not issued in payment of
Performance Awards), that number of Common Shares whose value equals the
lesser of (i) 500% of such Participant's base salary for such year or (ii)
$2,000,000 (based on the Fair Market Value of Common Shares on the date the
award is granted, not the date the award vests or is paid);
(d) With respect to Performance Awards, that number of Common Shares
whose value equals the lesser of (i) 500% of such Participant's base salary
for such year or (ii) $2,000,000 (based on the Fair Market Value of Common
Shares on the date the award is granted, not the date the award is earned
or paid).
CHARGING OF SHARES
3.03 Subject to the provisions of Section 8.07, Common Shares subject to a Stock
Incentive that are forfeited, terminated, or canceled without having been
exercised (other than Common Shares subject to an Option that is canceled
upon the exercise of a related Stock Appreciation Right) will again be
available for grant under this Plan, without reducing the number of Common
Shares available in any calendar year for grant of Stock Incentives. If a
Holder pays all or part of the exercise price associated with a Stock
Incentive by the transfer of Common Shares or the surrender (including by
attestation) of all or part of a Stock Incentive (including the Stock
Incentive being exercised) such Common Shares will also be available for
grant under this Plan, without reducing the number of Common Shares
available in any calendar year for grant of Stock Incentives.
SECTION IV
GRANTS OF STOCK INCENTIVES
TYPE OF AWARDS
4.01 Subject to the provisions of the Plan, the Committee may at any time, or
from time to time, grant Performance Awards, Restricted Stock Awards,
Options, or Stock Appreciation Rights, or any combination thereof, to any
Participant.
TANDEM AWARDS
4.02 The Committee may (but need not) grant any Stock Incentive in tandem with
another Stock Incentive. Tandem Stock Incentives may be granted as either
alternatives or supplements to one another. The terms and conditions of any
such Tandem Stock Incentives shall be determined by the Committee subject
to the provisions of the Plan.
SECTION V
RESTRICTED STOCK AWARDS
RESTRICTED STOCK AGREEMENTS
5.01 Restricted Stock Awards shall be evidenced by Restricted Stock agreements.
Such agreements shall conform to the requirements of the Plan and may
contain such other provisions (including provisions for
A-5
<PAGE> 32
the protection of Restricted Stock Awards in the event of a Change in
Control) as the Committee shall deem advisable.
RIGHTS OF PARTICIPANTS
5.02 Subject to the restrictions on transfer and the risk of forfeiture, and
except to the extent the Committee provides otherwise at the time of grant
of a Restricted Stock Award, a Participant who has been granted a
Restricted Stock Award will thereafter have all the rights of a
shareholder, including the right to receive dividends paid on such shares
and to vote such shares unless and until any such shares are forfeited.
Certificates or other evidence of Restricted Stock Awards will be held by
the Company or other designee of the Committee.
DELIVERY OF SHARES
5.03 The Restricted Stock Award agreement shall specify the duration of the
restricted period and the employment conditions under which the Restricted
Stock may be forfeited to the Company. If, at the end of the restricted
period, the restrictions imposed hereunder lapse as provided in the
Restricted Stock Award agreement, a certificate representing the number of
Common Shares on which restrictions have lapsed as well as any other form
of compensation provided for in the agreement will be delivered to the
Participant or his Beneficiary upon compliance by the Participant with any
requirements provided for in the agreement. The Committee may, in its sole
discretion, modify or accelerate the vesting of shares of Restricted Stock.
FORFEITURE
5.04 In addition to any specific provisions on forfeiture provided for in any
Restricted Stock Award agreement, Restricted Stock Awards will be forfeited
if the Participant terminates employment with the Company, a Subsidiary or
an affiliate for any reason other than death, disability or retirement,
except that the Committee shall have the authority to provide for their
continuation in whole or in part whenever in its judgment it shall
determine that such continuation is in the best interests of the Company.
NONASSIGNABILITY
5.05 Restricted Stock Awards may not be pledged, assigned or transferred for any
reason during the Participant's lifetime, and any attempt to do so shall be
void and the relevant Award shall be forfeited.
CHANGES IN CONTROL
5.06 In the event of a Change in Control each outstanding Restricted Stock Award
will become fully vested in each Participant as of the day before such
event occurs. This will result in the lapse of all restrictions on such
Restricted Stock Awards.
SECTION VI
PERFORMANCE AWARDS
PERFORMANCE AWARD AGREEMENTS
6.01 Performance Awards shall be evidenced by Performance Award agreements. Such
agreements shall conform to the requirements of the Plan and may contain
such other provisions (including Performance Goals (as defined below) and
provisions for the protection of Performance Awards in the event of a
Change in Control) as the Committee shall deem advisable.
AWARD PERIOD AND PERFORMANCE GOALS
6.02 The Committee shall determine and include in a Performance Award the period
of time during which a Performance Award may be earned ("Award Period").
The Committee shall also establish performance objectives ("Performance
Goals") to be met by the Company, Subsidiary or affiliate during the Award
Period as a condition to payment of, and/or the lapse of any applicable
restrictions relating to, the Performance Award. The Performance Goals may
include minimum and optimum objectives or a single set of objectives.
A-6
<PAGE> 33
With respect to Performance Awards that are intended to qualify as
"performance based" within the meaning of Code Section 162(m)(4)(C), the
Committee shall (i) select the Participants for such Performance Awards,
(ii) establish in writing the applicable Performance Goals and all related
terms no later that 90 days after the commencement of the period of service
to which the Performance Goals relate (or such earlier or later date as may
be the applicable deadline for compensation payable hereunder to qualify as
"performance based" within the meaning of Code Section 162(m)(4)(C)), and
(iii) designate the Performance Awards that are to qualify as "performance
based" within the meaning of Code Section 162(m)(4)(C).
The Committee shall establish in writing the Performance Goals for each
Award Period which shall be based on any of the following performance
criteria, either alone or in any combination, on either a consolidated or
business unit or divisional level, and which shall include or exclude
discontinued operations and acquisition expenses (e.g., pooling of
interests), as the Committee may determine: return on net assets, return on
capital employed, economic value added, level of sales, earnings per share,
income before income taxes and cumulative effect of accounting changes, net
income, return on equity, total shareholder return, market valuation, cash
flow and completion of acquisitions. The foregoing criteria shall have any
reasonable definitions that the Committee may specify at the time the
Performance Goal is established, which may include or exclude any or all of
the following items, as the Committee may specify: extraordinary, unusual,
or non-recurring items; effects of accounting changes; effects of currency
fluctuations; effects of financing activities (e.g., effect on earnings per
share of issuing convertible debt securities); expenses for restructuring
or productivity initiatives; non-operating items; acquisition expenses
(e.g., pooling of interests); and effects of divestitures. Any such
performance criterion or combination of such criteria may apply to the
Participant's award opportunity in its entirety or to any designated
portion or portions of the opportunity, as the Committee may specify.
NO DISCRETION
6.03 With respect to Performance Awards that are intended to qualify as
"performance based" within the meaning of Code Section 162(m)(4)(C), the
Committee has no discretion to increase the amount of the award due upon
attainment of the applicable Performance Goals. No provision of this Plan
shall preclude the Committee from exercising negative discretion with
respect to any Performance Award (i.e., to reduce or eliminate the award
payable) within the meaning of Treasury Regulation Section 1.162-
27(e)(2)(iii)(A).
PERFORMANCE AWARD EARNED
6.04 The Performance Awards shall be expressed in terms of Common Shares and
referred to as "Performance Shares." With respect to each Performance
Award, the Committee shall fix the number of allocable Performance Shares.
The level of Performance Goals attained will determine the percentage of
Performance Shares earned for an Award Period. After completion of the
Award Period, the Committee shall certify in writing the extent to which
the Performance Goals and other material terms applicable to such award are
attained. Unless and until the Committee so certifies, the Performance
Award shall not be paid.
FORFEITURE
6.05 In addition to any specific provisions on forfeiture provided for in any
Performance Award agreement, Performance Awards will be forfeited if the
Participant terminates employment (other than upon death, disability or
retirement) with the Company, a Subsidiary or an affiliate prior to the
completion of the Award Period; provided that the Committee shall have the
authority to provide for a partial or full payment of the Performance Award
that would have been payable if the Participant had continued employment
for the entire Award Period, which shall be paid at the same time as it
would have been paid if no such termination of employment occurred, but
only if and to the extent the exercise of such discretion by the Committee
does not prevent any Performance Award from qualifying as "performance
based" within the meaning of Code Section 162(m)(4)(C).
A-7
<PAGE> 34
PERFORMANCE AWARD PAYMENT
6.06 The Committee, in its discretion, may elect to make the payment of
Performance Awards in Restricted Shares, Common Shares, cash or any
combination of the foregoing. If the Performance Award is paid in
Restricted Shares or Common Shares, the Company shall issue one Restricted
Share or Common Share for each Performance Share earned. If the Performance
Award is paid in cash, the cash payable shall be equal to the Fair Market
Value of the Performance Shares earned as of the last day of the Award
Period.
DELAYED PAYMENT
6.07 To the extent that the Committee, in its sole discretion, determines that
the payment of any Performance Award is not deductible by the Company based
on Code Section 162(m), the Company shall delay the payment of such
Performance Award. The unpaid portion of a Performance Award that is
subject to this Section 6.07 shall be paid (in whole or in part), at the
discretion of the Committee, when such payment is deductible in accordance
with Code Section 162(m). The delayed payment of a Performance Award
payable in Common Shares or Restricted Shares shall be equal to the number
of Performance Shares earned but unpaid. The delayed payment of a
Performance Award payable in cash shall be equal to the Fair Market Value
of the earned but unpaid Performance Shares as of the appropriate date
selected by the Committee.
RIGHTS OF PARTICIPANTS
6.08 Subject to the restrictions on transfer and the risk of forfeiture, and
except to the extent the Committee provides otherwise at the time of grant
of a Performance Award, a Participant who has been granted a Performance
Award payable in Common Shares or Restricted Shares will thereafter have
all the rights of a shareholder, including the right to receive dividends
paid on such shares and to vote such shares unless and until any such
shares are forfeited. Certificates or other evidence of Performance Awards
will be held by the Company or other designee of the Committee.
NONASSIGNABILITY
6.09 Performance Awards may not be pledged, assigned or transferred for any
reason during the Participant's lifetime, and any attempt to do so shall be
void and the relevant Award shall be forfeited.
CHANGE IN CONTROL
6.10 In the event of a Change in Control each outstanding Performance Award will
become fully vested in each Participant as of the day before such event
occurs. This will result in the lapse of all restrictions on such
Performance Awards, regardless of any unachieved Performance Goal.
SECTION VII
OPTIONS
TERMS AND CONDITIONS OF OPTIONS
7.01 Except as otherwise provided in Section 12.07, Options shall be subject to
the provisions set forth in this Section.
PURCHASE PRICE
7.02 Subject to the provisions of Section X, the price at which each Common
Share may be purchased under an Option shall be not less than 100% of the
Fair Market Value of a Common Share on the date the Option is granted (or
in the case of any optionee who, at the time an Incentive Stock Option is
granted, owns, directly or indirectly within the meaning of Section 424(d)
of the Code, stock possessing more than 10% of the total combined voting
power of all classes of stock of his employer corporation or of its parent
or subsidiary corporation, not less than 110% of the Fair Market Value of a
Common Share on the date the Incentive Stock Option is granted).
A-8
<PAGE> 35
PAYMENT OF PURCHASE PRICE
7.03 The purchase price of shares subject to an Option may be paid in whole or
in part (a) in cash, (b) by bank, certified, cashier's or personal check
subject to collection, (c) if so provided in the Option and subject to such
terms and conditions as the Committee may impose, by delivering to the
Company a properly executed exercise notice and instructions to deliver the
resulting stock to a stockbroker that are intended to satisfy the
provisions of Section 220.3(e)(4) of Regulation T issued by the Board of
Governors of the Federal Reserve System as in effect from time to time, and
(d) if so provided in the Option and subject to such terms and conditions
as are specified in the Option, (i) in Common Shares (including through an
attestation procedure) or other property surrendered to the Company or (ii)
by the surrender of all or part of the Option being exercised, or by a
combination of the foregoing methods, as and to the extent permitted by the
Committee. Property for purposes of this paragraph shall include an
obligation of the Company unless prohibited by applicable law. Common
Shares thus surrendered shall be valued at their Fair Market Value on the
date of exercise. Any such other property thus surrendered shall be valued
at its fair market value on any reasonable basis established or approved by
the Committee. Any Common Shares surrendered to the Company in payment of
an Option's purchase price pursuant to Section 7.03(d) (including by
attestation) will again be available for grant under this Plan, without
reducing the number of Common Shares available in any calendar year for
grant of Stock Incentives.
CONSIDERATION FOR GRANT OF OPTIONS
7.04 Options may be granted for such lawful consideration, including money or
other property, tangible or intangible, or labor or services received or to
be received by the Company, as the Committee may determine when the Option
is granted. Property for purposes of the preceding sentence shall include
an obligation of the Company unless prohibited by applicable law.
Subject to the foregoing and the other provisions of this Section VII, each
Option may be exercisable in full at the time of grant or may become
exercisable in one or more installments, and at such time or times, as the
Committee may determine. The Committee may at any time accelerate the date
on which an Option becomes exercisable, and no additional consideration
need be received by the Company in exchange for such acceleration. Unless
otherwise provided in the Option, an Option, to the extent it becomes
exercisable, may be exercised at any time in whole or in part until the
expiration or termination of the Option.
CERTAIN LIMITATIONS ON EXERCISE
7.05 Unless otherwise determined by the Committee, each Option may be exercised,
during the Holder's lifetime, only by the Holder or the Holder's guardian
or legal representative, and after death only by the Holder's Beneficiary
or, absent a Beneficiary, by his estate or by a person who acquired the
right to exercise the Option by will or the laws of descent and
distribution. Notwithstanding any other provision of this Plan, (a) no
Option shall be exercisable after the tenth anniversary of the date the
Option was granted, and (b) no Incentive Stock Option which is granted to
any optionee who, at the time such Option is granted, owns stock, directly
or indirectly within the meaning of Section 424(d) of the Code, possessing
more than 10% of the total combined voting power of all classes of stock of
his employer corporation or of its parent or subsidiary corporation, shall
be exercisable after the expiration of five (5) years from the date such
Option is granted. The Company may but need not provide for an Option to be
exercisable after termination of employment or cessation of service as a
Director, as the case may be, until its fixed expiration date (or until an
earlier date or specified event occurs).
INCENTIVE STOCK OPTIONS
7.06 An Option may, but not need, be an Incentive Stock Option. The aggregate
Fair Market Value (determined as of the time the Option is granted) of the
stock with respect to which Incentive Stock Options may be exercisable for
the first time by any Employee during any calendar year (under all plans,
including this Plan, of his employer corporation and its parent and
subsidiary corporations) shall not exceed $100,000 or such other maximum
amount permitted by the Code.
A-9
<PAGE> 36
OPTION INSTRUMENTS
7.07 Each Option shall be evidenced by a written instrument, signed by an
officer of the Company duly authorized to do so, which shall contain such
terms and conditions, and shall be in such form, as the Committee shall
determine, provided the instrument is consistent with this Plan and
incorporates it by reference. An Option, if so approved by the Committee,
may include terms, conditions, restrictions and limitations in addition to
those provided for in this Plan including, without limitation, terms and
conditions providing for the transfer or issuance of shares, on exercise of
an Option, which may be non-transferable and forfeitable to the Company in
designated circumstances.
PROVISION APPLICABLE TO CERTAIN HARDSHIP DISTRIBUTIONS
7.08 No Participant shall make any elective contribution or employee
contribution (within the meaning of Treasury Regulation Section
1.401(k)-l(d)(2)(iv)(B)(4)) (i.e., exercise an Option with cash or check)
to the Plan during the twelve-month period after the Participant's receipt
of a deemed hardship distribution (within the meaning of Treasury
Regulation Section 1.401(k)-1(d)(2)(iv)) from a plan of the Company (or a
related party within the provisions of Code Section 414(b), (c), (m) or
(o)) containing a cash or deferred arrangement under Section 401(k) of the
Code. The preceding sentence shall not apply if and to the extent that the
Committee determines it is not necessary to qualify any such plan as a cash
or deferred arrangement under Section 401(k) of the Code.
CERTAIN CONDITIONS TO EXERCISE
7.09 No Option shall be exercisable unless and until the Company (a) obtains the
approval of all regulatory bodies whose approval the Committee may deem
necessary or desirable, and (b) complies with all legal requirements deemed
applicable by the Committee.
DATE OF EXERCISE
7.10 An Option shall be considered exercised if and when written notice, signed
by the person exercising the Option and stating the number of shares with
respect to which the Option is being exercised, is received by the Company
on a properly completed form approved for this purpose by the Committee,
accompanied by full payment of the Option purchase price in one or more of
the forms authorized by the Committee and described in Section 7.03 above
for the number of shares to be purchased. No Option may at any time be
exercised with respect to a fractional share.
SECTION VIII
STOCK APPRECIATION RIGHTS
TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
8.01 Stock Appreciation Rights shall be subject to such terms and conditions,
not inconsistent with the Plan, as shall from time to time be determined by
the Committee and to the terms and conditions set forth in this Section
VIII.
TANDEM AND FREE-STANDING RIGHTS
8.02 Stock Appreciation Rights may be granted in connection with all or any part
of an Option, either at the time of the grant of such Option or at any time
thereafter during the term of the Option (in either case, "Tandem Stock
Appreciation Rights"), or may be granted without reference to an Option
("Free-Standing Stock Appreciation Rights").
TANDEM RIGHTS
8.03 Tandem Stock Appreciation Rights may be granted either as an alternative or
a supplement to a specified Option (the "related" Option). Each Tandem
Stock Appreciation Right that is granted as an alternative to an Option
shall entitle the holder to receive the amount determined pursuant to
Section 8.06 below if and when a related Option to purchase one Common
Share that is then exercisable is surrendered. Each Tandem Stock
Appreciation Right that is granted as a supplement to an Option shall
entitle the Holder to
A-10
<PAGE> 37
receive the amount determined pursuant to Section 8.06 below if and when
the Holder purchases a share under the related Option.
CONSIDERATION FOR GRANT OF RIGHTS
8.04 Stock Appreciation Rights may be granted for such lawful consideration,
including money or other property, tangible or intangible, or labor or
services received or to be received by the Company, as the Committee may
determine when the Rights are granted. Property for purposes of the
preceding sentence shall include an obligation of the Company unless
prohibited by applicable law. Subject to the foregoing and the other
provisions of this Section VIII, Stock Appreciation Rights may be
exercisable in full at the time of grant or may become exercisable in one
or more installments, and at such time or times, as the Committee may
determine. The Committee may at any time accelerate the date on which Stock
Appreciation Rights become exercisable, and no additional consideration
need be received by the Company in exchange for such acceleration. Unless
otherwise provided in the Rights, Stock Appreciation Rights, to the extent
they become exercisable, may be exercised at any time in whole or in part
until they expire or terminate.
TERM OF RIGHTS
8.05 No Free-Standing Stock Appreciation Right shall be exercisable after the
tenth anniversary of the date it was granted, and no Tandem Stock
Appreciation Right shall be exercisable after the related Option ceases to
be exercisable. The Committee may but need not provide for Stock
Appreciation Rights to be exercisable after termination of employment or
cessation of service as a Director, as the case may be, until they expire
pursuant to the first sentence of this Section 8.05 (or until an earlier
date or specified event occurs).
PAYMENT UPON EXERCISE
8.06 Upon exercise of Stock Appreciation Rights, the Holder thereof shall be
entitled to receive cash or Common Shares or a combination of each, as the
Committee in its sole discretion may determine, equal to the amount by
which the Fair Market Value of a Common Share on the date of such exercise
exceeds the Base Price of the Stock Appreciation Rights, multiplied by the
number of Stock Appreciation Rights exercised provided that in no event
shall a fractional share be issued. In the case of Tandem Stock
Appreciation Rights, the Base Price shall be the price at which shares may
be purchased under the related Option. In the case of Free-Standing Stock
Appreciation Rights, the Base Price shall be the Fair Market Value of a
Common Share on the date the Rights were granted. The Committee may provide
that, notwithstanding the foregoing, upon exercise of Stock Appreciation
Rights at any time during the thirty-day period following a Change in
Control (a "Change in Control Period"), including, without limitation, upon
exercise of Stock Appreciation Rights which expire before the end of the
Change in Control Period in which they are exercised, the amount of cash or
shares which a Holder shall be entitled to receive shall equal the amount
by which the highest Fair Market Value of a Common Share during such Change
in Control Period exceeds the Base Price of the Stock Appreciation Rights
multiplied by the number of Stock Appreciation Rights exercised but, in the
case of Stock Appreciation Rights that relate to an Incentive Stock Option,
not in excess of the maximum amount that may be paid under Code Section 422
without disqualifying such Option as an Incentive Stock Option.
CHARGING OF SHARES FOR RIGHTS
8.07 The maximum number of shares available for use under the Plan shall be
charged only for the number of shares which are actually issued or
transferred in settlement of Stock Appreciation Rights and for that number
of Common Shares having a Fair Market Value on the date of exercise equal
to the cash payable in settlement of such Rights. In the case of an
exercise of a Tandem Stock Appreciation Right that is alternative to an
Option, if the number of Common Shares previously charged against the
maximum number of shares available for use under the Plan on account of the
surrendered portion of the Option exceeds the number of shares (if any)
actually issued or transferred pursuant to such surrender and that number
of Common Shares having a Fair Market Value on the date of exercise equal
to any cash payable pursuant to such surrender, the excess may be added
back to the number of shares available for use under the Plan.
A-11
<PAGE> 38
CERTAIN LIMITATIONS ON EXERCISE OF RIGHTS
8.08 Unless otherwise determined by the Committee, each Stock Appreciation Right
may be exercised, during the Holder's lifetime, only by the Holder or the
Holder's guardian or legal representative, and after death only by the
Holder's Beneficiary or, absent a Beneficiary, by his estate or by a person
who acquired the right to exercise the Right by will or the laws of descent
and distribution.
STOCK APPRECIATION RIGHT INSTRUMENTS
8.09 Each Stock Appreciation Right shall be evidenced by a written instrument,
which shall contain such terms and conditions, and shall be in such form,
as the Committee shall determine, provided the instrument is consistent
with the Plan and incorporates it by reference.
SECTION IX
CERTAIN CHANGE IN CONTROL, TERMINATION OF EMPLOYMENT
AND DISABILITY PROVISIONS
9.01 Notwithstanding any provision of the Plan to the contrary, any Option or
Stock Appreciation Right which is outstanding but not yet exercisable at
the time of a Change in Control shall become exercisable at that time. Any
Option affected by the preceding sentence shall remain exercisable until it
expires or terminates pursuant to its terms and conditions. The Committee
may at any time, and subject to such terms and conditions as it may impose:
(a) authorize the Holder of an Option or Stock Appreciation Right to
exercise the Option or Stock Appreciation Right following the termination
of the Participant's employment with, or service as a Director of, the
Company and its Subsidiaries, or following the Participant's disability,
whether or not the Option or Stock Appreciation Right would otherwise be
exercisable following such event, provided that in no event may an Option
or Right be exercised after the expiration of its term;
(b) grant Options and Stock Appreciation Rights which become
exercisable only in the event of a Change in Control;
(c) provide for Stock Appreciation Rights to be exercised
automatically and only for cash in the event of a Change in Control; and
(d) provide in advance or at the time of a Change in Control for cash
to be paid in settlement of any Option, Stock Appreciation Right,
Performance Award or Restricted Stock Award in the event of a Change in
Control, either at the election of the Participant or at the election of
the Committee.
SECTION X
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
ADJUSTMENTS TO BE MADE
10.01 In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation or any other change
in the corporate structure of the Company affecting Common Shares, or a
sale by the Company of all or part of its assets other than in the normal
course of business, or any distribution to shareholders other than a
normal cash dividend, the Committee shall make appropriate adjustments in
the number and kind of shares authorized by the Plan and any adjustments
to outstanding Restricted Stock Awards, Performance Awards, Options and
Stock Appreciation Rights (including adjustments in the purchase price or
Base Price thereof and in the number and kind of shares issuable
thereunder) as it determines appropriate; provided that any such
adjustments affecting Incentive Stock Options shall comply with Sections
422 and 424 of the Code.
A-12
<PAGE> 39
SECTION XI
PLAN EXISTENCE; PLAN AMENDMENTS
EFFECTIVE DATE AND TERMINATION
11.01 The Plan shall become effective on April 22, 1997, subject to shareholder
approval that meets the applicable requirements of Section
162(m)(4)(C)(ii) of the Code and the New York Stock Exchange. If not so
approved, the Plan and any Stock Incentive granted thereunder and
contingent upon such approval, shall be null and void. If so approved, the
Plan shall remain in full force and effect until all shares authorized to
be issued or transferred hereunder have been exhausted or until the Plan
is sooner terminated by the Board of Directors, and shall continue in
effect thereafter with respect to any Stock Incentives outstanding at the
time of such termination. In no event shall an Incentive Stock Option be
granted under the Plan more than ten (10) years from the date the Plan is
adopted by the Board, or the date the Plan is approved by the shareholders
of the Company, whichever is earlier.
AMENDMENT AND TERMINATION
11.02 Subject to any applicable shareholder approval requirements of applicable
law or the rules of the New York Stock Exchange, the Plan may be amended
by the Board of Directors at any time and in any respect, including
without limitation to qualify Stock Incentives hereunder as
performance-based compensation under Code Section 162(m)(4)(C) and to
permit or facilitate qualification of Options therefore or thereafter
granted as Incentive Stock Options under the Code, provided that, without
shareholder approval, no amendment shall (a) increase the aggregate number
of shares which may be issued under Incentive Stock Options under the Plan
within the meaning of Proposed Treasury Regulation Section
1.422A-2(b)(3)(iv) or its successor, or (b) change the material terms of a
Performance Goal that were previously approved by shareholders within the
meaning of Treasury Regulation Section 1.162-27(e)(4)(vi) or a successor
provision, unless the Board shall determine that such approval is not
necessary to avoid loss of a deduction under Section 162(m) of the Code,
will not avoid such a loss of deduction or is not advisable. The Plan may
also be terminated at any time by the Board of Directors. No amendment or
termination of this Plan shall adversely affect any Stock Incentive
granted prior to the date of such amendment or termination without the
written consent of the Participant.
SECTION XII
GENERAL
GENERAL PROVISIONS
12.01 Unless otherwise determined by the Committee, no Stock Incentive granted
under this Plan may be transferred or assigned by the Holder other than to
a Beneficiary, as provided hereunder, or, if none, by will, pursuant to
the laws of descent and distribution, or pursuant to a qualified domestic
relations order; except that no Incentive Stock Option may be transferred
or assigned pursuant to a qualified domestic relations order.
12.02 Nothing contained in the Plan, nor in any instrument issued pursuant to
the Plan, shall confer upon any Participant any right with respect to
continuance of employment by, or service as a Director of, as the case may
be, the Company, a Subsidiary or affiliate, nor interfere in any way with
the right of the Company, a Subsidiary or affiliate, to terminate the
employment of, or service as a Director of, any Participant at any time or
without assigning any reason therefor.
12.03 For purposes of this Plan, transfer of employment between the Company and
its Subsidiaries and affiliates shall not be deemed termination of
employment subject, in the case of Incentive Stock Options and any Rights
tandem thereto, to any applicable provisions of Sections 422 and 424 of
the Code.
12.04 The Company and its Subsidiaries may make such provisions as they may deem
appropriate for the withholding of any taxes which they determine are
required to be withheld in connection with any Stock Incentive. Without
limiting the foregoing, the Committee may, subject to such terms and
conditions as it may impose, permit or require any withholding tax
obligation arising in connection with the grant, exercise, vesting,
distribution or payment of any Stock Incentive to be satisfied in whole or
in part, with
A-13
<PAGE> 40
or without the consent of the Holder, by having the Company withhold all
or any part of the Common Shares that vest or would otherwise be
distributed at such time. Any shares so withheld shall be valued at their
Fair Market Value on the date of such withholding.
12.05 No person (individually or as a member of a group), and no Beneficiary or
other person claiming under or through him, shall have any right, title or
interest in or to any Common Shares allocated or reserved for the purposes
of this Plan, or subject to any Stock Incentive, except as to such Common
Shares, if any, as shall have been issued or transferred to him.
12.06 Unless this Section 12.06 prevents an Option from qualifying as an
Incentive Stock Option under Section 422 of the Code or prevents a Stock
Incentive from qualifying as performance based compensation under Section
162(m) of the Code, if any day on which action under the Plan must be
taken falls on a Saturday, Sunday or legal holiday, such action may be
taken on the next succeeding day not a Saturday, Sunday or legal holiday.
12.07 Without amending the Plan, Stock Incentives may be granted to Participants
who are foreign nationals or employed outside the United States or both,
on such terms and conditions different from those specified in the Plan as
may, in the judgment of the Committee, be necessary or desirable to
further the purpose of the Plan.
12.08 Except as provided in Section 6.03, the Committee may amend any
outstanding Stock Incentive to the extent it deems appropriate. Such
amendment may be unilateral by the Company, except in the case of
amendments adverse to the Holder, in which case the Holder's consent is
required to any such amendment.
12.09 Any provision of the Plan to the contrary notwithstanding, and except to
the extent that the Committee determines otherwise: (a) transactions with
respect to persons whose remuneration is subject to the provisions of
Section 162(m) of the Code shall conform to the requirements of Section
162(m)(4)(C) of the Code, and (b) every provision of the Plan shall be
administered, interpreted and construed to carry out (a) hereof.
12.10 Notwithstanding any provision of the Plan to the contrary, the Plan is
intended to give the Committee the authority to grant Stock Incentives
hereunder that qualify as performance-based compensation under Code
Section 162(m)(4)(C) and that do not so qualify. Every provision of the
Plan shall be administered, interpreted and construed to carry out such
intention and any provision that cannot be so administered, interpreted
and construed shall to that extent be disregarded; and any provision of
the Plan that would prevent a Stock Incentive that the Committee intends
to qualify as performance-based pay under Code Section 162(m)(4)(C) from
so qualifying shall be administered, interpreted and construed to carry
out such intention and any provision that cannot be so administered,
interpreted and construed shall to that extent be disregarded.
12.11 The validity, construction, interpretation and administration of the Plan
and of any determinations or decisions made thereunder, and the rights of
all persons having or claiming to have any interest therein or thereunder,
shall be governed by, and determined exclusively in accordance with, the
laws of the State of Ohio, but without giving effect to the principles of
conflicts of laws thereof. Without limiting the generality of the
foregoing, the period within which any action arising under or in
connection with the Plan must be commenced, shall be governed by the laws
of the State of Ohio, without giving effect to the principles of conflicts
of laws thereof, irrespective of the place where the act or omission
complained of took place and of the residence of any party to such action
and irrespective of the place where the action may be brought.
12.12 The use of the masculine gender shall also include within its meaning the
feminine. The use of the singular shall include within its meaning the
plural and vice versa.
A-14
<PAGE> 41
3550-PS-97
<PAGE> 42
(RUBBERMAID LOGO)
ADMISSION TICKET
ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1997
TO AVOID DELAY AT THE ENTRANCE TO THE MEETING,
PLEASE PRESENT THIS TICKET.
You are cordially invited to attend the Annual Meeting of Shareholders on
Tuesday, April 22, 1997 at the Ohio Agricultural Research and Development
Center, Fisher Auditorium, 1680 Madison Avenue, Wooster, Ohio. The meeting will
begin at 9:00 a.m. EDT. Admission is limited to shareholders, their proxies,
and guests of the Company. This ticket will admit you and a guest.
PROXY CARD INSTRUCTIONS
Attached below is a proxy card for the 1997 Annual Meeting of Shareholders of
Rubbermaid Incorporated.
Please mark the boxes on the proxy card to indicate how your shares should be
voted. Sign, date and return your proxy as soon as possible in the enclosed
postage paid envelope.
Votes are tallied by Bank of Boston, Rubbermaid's transfer agent. Any comments
noted on the proxy card or an attachment will be forwarded by Bank of Boston to
Rubbermaid.
Advance indications of attendance are helpful to us in making arrangements for
the meeting. If you plan to attend the meeting, please mark the box provided on
the proxy card. This admission ticket should be presented at the meeting to
expedite registration.
DETACH CARD BEFORE MAILING
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
A vote FOR is recommended by the Board of Directors: A vote FOR is recommended by the Board of Directors:
<S> <C> <C> <C> <C>
WITHHELD
1. Election of Directors For ALL FOR ALL 2. Approval of the FOR AGAINST ABSTAIN
Nominees: Nominees Nominees 1997 Management [ ] [ ] [ ]
Scott S. Cowen, [ ] [ ] Incentive Plan
Karen N. Horn,
William D. Marohn,
Jan Nicholson,
Wolfgang R. Schmitt
-----------------------------------------
For all nominees, except as noted above.
A vote FOR is recommended by the Board of Directors:
3. Approval of the FOR AGAINST ABSTAIN
Amended and [ ] [ ] [ ]
Restated
1989 Stock Incentive
and Option Plan
I plan to attend the annual meeting. [ ]
I have made comments on this card or [ ]
attachment.
Discontinue duplicate annual report. [ ]
Mark here for address change and note at [ ]
left.
Signature ___________________ Date _______ 1997 Signature ___________________ Date _______ 1997
</TABLE>
<PAGE> 43
LOCATOR MAP
FISHER AUDITORIUM
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTER
WOOSTER, OHIO
[GRAPHIC MAP]
DETACH CARD BEFORE MAILING
- --------------------------------------------------------------------------------
RUBBERMAID INCORPORATED
BOARD OF DIRECTORS PROXY FOR ANNUAL MEETING, APRIL 22, 1997
The undersigned, having received the Notice of Meeting and Proxy
Statement, hereby makes, constitutes, and appoints Tom H. Barrett, Robert
M. Gerrity and Paul G. Schloemer, and each of them (with full power of
substitution respectively), true and lawful attorneys and proxies for the
undersigned to attend the Annual Meeting to be held on April 22, 1997, at
Wooster, Ohio, and any adjournments thereof.
THE PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED:
P IF NO DIRECTION IS MADE THIS PROXY WILL BE VOTED FOR DIRECTOR NOMINEES,
R FOR APPROVAL OF THE 1997 MANAGEMENT INCENTIVE PLAN, AND FOR APPROVAL OF THE
O AMENDED AND RESTATED 1989 STOCK INCENTIVE AND OPTION PLAN. IN THEIR
X DISCRETION THE PARTIES ARE ALSO AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS
Y AS MAY PROPERLY COME BEFORE THE MEETING.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE
BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO
VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS RECOMMENDATION. YOUR SHARES
CANNOT BE VOTED UNLESS YOU SIGN AND RETURN THIS CARD.
---------------
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
---------------
