<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 sec.240.14a-11(c) or sec.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 10:30 a.m., on April 28, 1998.
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 28, 1998
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 10:30 a.m., April 28, 1998, for
the following purposes:
1. To elect Directors.
2. 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 27, 1998,
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 13, 1998
Approximate date of mailing to shareholders
<PAGE> 4
Rubbermaid Logo
RUBBERMAID INCORPORATED
PROXY STATEMENT
March 13, 1998
- --------- Solicitation and Revocation of Proxies
This Proxy Statement and the accompanying Proxy is being furnished
commencing on March 13, 1998 in connection with the solicitation by the
Board of Directors of proxies for use at the Annual Meeting of
Shareholders to be held on April 28, 1998 and all postponements and
adjournments thereof. 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
$7,000, plus expenses.
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. If no indication is made the Proxy
will be voted for Director Nominees.
- --------- Annual Report
The Annual Report of the Company for the year ended December 31, 1997,
is being mailed to shareholders with this Proxy Statement.
- --------- Voting Securities
As of February 27, 1998, there were outstanding 149,799,579 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. A broker's authority to vote
is not limited as to the election of directors.
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
1
<PAGE> 5
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 five incumbent Directors, Messrs. Barrett, Carroll,
Ebert, Falk and Minter expire at the forthcoming Annual Meeting of
Shareholders. Mr. Ebert will be retiring from the Board at the Annual
Meeting of Shareholders in accordance with the Board's retirement
policy. The Board wishes to thank him for his guidance and support over
his 22 years of service.
There are no current plans to fill the vacancy created by Mr. Ebert's
retirement. Pursuant to the Code of Regulations, the Board has the
authority to determine the number of Directors within a range of 10 to
14 (currently 13). Accordingly, the Board at its meeting on January 16,
1998 determined, pursuant to the Code of Regulations, to decrease the
size of the Board from 13 to 12 effective with the Annual Meeting of
Shareholders.
Messrs. Barrett, Carroll, Falk and Minter are nominees for election to
the class of Directors whose terms expire in 2001.
It is intended that proxies for the Board of Directors containing no
designation to the contrary will be voted for the election of Messrs.
Barrett, Carroll, Falk and Minter to the class of Directors whose terms
will expire in 2001. 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.
- --------- Information as to Board of Directors and Nominees
<TABLE>
<S> <C>
TOM H. BARRETT
Age: 67
[Tom H. Barrett Photo] Director Since 1984
Expiration of Proposed Term: 2001
Partner, American Industrial Partners, an investment
partnership. 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., Mutual Life Insurance Company of New York
and A. O. Smith Corporation.
----------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
CHARLES A. CARROLL
Age: 48
Director Since 1993
Expiration of Proposed Term: 2001
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.
[Charles A. Carroll Photo]
-----------------------------------------------------------------------------------------------------------------
SCOTT S. COWEN
Age: 51
[Scott S. Cowen Photo] Director Since 1997
Expiration of Present 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 and
Fabri-Centers of America.
-----------------------------------------------------------------------------------------------------------------
THOMAS J. FALK
Age: 39
[Thomas J. Falk Photo] Director Since 1997
Expiration of Proposed Term: 2001
Group President, North American Tissue, Pulp and Paper of Kimberly-Clark
Corporation since January of 1996. Prior thereto and from 1993 he was respec-
tively Group President Infant and Child Care Products, Group President NA
Consumer Products and Group President NA Tissue Products. He has been with
Kimberly-Clark since 1983 and has served in numerous management, financial and
administrative roles.
-----------------------------------------------------------------------------------------------------------------
ROBERT M. GERRITY
Age: 60
[Robert M. Gerrity Photo] Director Since 1993
Expiration of Present Term: 1999
Corporate Director and Chairman and Chief Executive Officer of Antrium Group
Inc., a technology company. Previously from 1994-1996, Senior Advisor, Invest-
ment 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 1987. 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.
-----------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 7
<TABLE>
<S> <C>
KAREN N. HORN
Age: 54
Director Since 1987
Expiration of Present 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.
[Karen N. Horn Photo]
-------------------------------------------------------------------------------------------------------------------
WILLIAM D. MAROHN
Age: 57
[William D. Marohn Photo] Director Since 1993
Expiration of Present Term: 2000
Vice Chairman of the Board, Whirlpool Corporation since 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
Age: 59
[Steven A. Minter Photo] Director Since 1990
Expiration of Proposed Term: 2001
Executive Director and President, The Cleveland Foundation since 1984. Also a
director of Consolidated Natural Gas Company, The Goodyear Tire & Rubber Company
and KeyCorp.
-------------------------------------------------------------------------------------------------------------------
JAN NICHOLSON
Age: 52
[Jan Nicholson Photo] Director Since 1992
Expiration of Present Term: 2000
Managing Director, MBIA Insurance Corporation since February 1998, a bond
insurance company, who acquired Capital Markets Assurance Corporation where she
had been Managing Director since 1994. Previously Vice President, Citibank from
1981 and from 1991 to 1994, Senior Credit Officer and head of the Northeast
Department of Citicorp Real Estate. Also a director of Ball Corporation.
-------------------------------------------------------------------------------------------------------------------
PAUL G. SCHLOEMER
Age: 69
[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.
-------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 8
<TABLE>
<S> <C>
WOLFGANG R. SCHMITT
Age: 53
Director Since 1987
Expiration of Present 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 Divi-
sion (1984-1990). Employed by the Company in various marketing and research
and development assignments since 1966. Also director of Kimberly Clark Corpo-
ration and Parker Hannifin Corporation.
[Wolfgang R. Schmitt Photo]
----------------------------------------------------------------------------------------------------------------
GORDON R. SULLIVAN
Age: 60
[Gordon R. Sullivan Photo] Director Since 1995
Expiration of Present Term: 1999
President, Association of the United States Army (since February 1998).
Previously from 1995-1997 Corporate Vice President, Coleman Research
Corporation, 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. 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. Cowen, Ebert, Falk, Minter and Sullivan
held two meetings during 1997. 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 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
Messrs. Marohn (Chair), Cowen, Gerrity, Sullivan and Ms. Horn held seven
meetings during 1997. 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 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, Schloemer and Ms. Horn
held three meetings during 1997. 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 1997.
5
<PAGE> 9
Because the date of a Board Meeting was changed, resulting in a
scheduling conflict for Mr. Minter, he missed one Board meeting and two
committee meetings scheduled around that meeting, and one additional
committee meeting during 1997. All of the other Directors attended 75%
or more of the Board and Committee meetings they were eligible to attend
during 1997.
- --------- Remuneration of Directors
The Board of Directors, based on Committee recommendations,
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, $27,000 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 Messrs. Cowen,
Falk and 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.
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- --------- 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, 1997.
<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 11,991,703* 8.0
82 Devonshire St. (Indirect)
Boston, Massachusetts 02109
State Farm Mutual Automobile 10,652,200 7.1
Insurance Company and (Direct)
Related Entities
3 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
11,991,703 Common Shares of Rubbermaid Incorporated (sole power to
dispose or direct the disposition of 11,991,703 shares and sole power
to vote or direct the vote of 1,330,903 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, 1998,
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)............................ 26,140 *
Scott S. Cowen (b)............................... 1,016 *
Robert O. Ebert (a)(b)........................... 1,241,607 *
Thomas J. Falk (b)............................... 1,772 *
Robert M. Gerrity (b)............................ 6,142 *
Karen N. Horn (b)................................ 2,509 *
William D. Marohn (b)............................ 4,329 *
Steven A. Minter (b)............................. 8,066 *
Jan Nicholson (b)................................ 1,000,646 *
Paul G. Schloemer (b)............................ 9,490 *
Gordon R. Sullivan (b)........................... 1,907 *
Executive Officers
Wolfgang R. Schmitt (a)(c)....................... 250,877 *
Charles A. Carroll (a)(c)........................ 97,966 *
Joseph M. Ramos (b)(c)........................... 36,585 *
Derial H. Sanders (c)............................ 2,525 *
David T. Gibbons (c)............................. 11,275 *
All of the above and other Executive Officers as
a Group....................................... 2,937,822 1.96
</TABLE>
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<PAGE> 11
-----------------------
<TABLE>
<C> <S>
* Less than 1%
(a) Does not include shares held by members of the immediate
families of Messrs. Barrett (78), Ebert (3,650), Schmitt
(23,023), and Carroll (230) as to which beneficial ownership
is disclaimed.
(b) Includes shares held under trust agreements -- Ebert (sole
investment power 861,902, shared investment power 213,199,
voting power only 165,757), Horn (977) and Schmitt (4,000)
as to which beneficial ownership is disclaimed. Includes
shares held by the Rubbermaid Incorporated 1993 Deferred
Compensation Plan the trustee of which has sole voting
power-Barrett (19,122), Cowen (516), Ebert (1,754), Falk
(273), Gerrity (1,842), Horn (1,836), Marohn (3,129), Minter
(6,806), Nicholson (1,872), Ramos (12,806), Schloemer
(8,290) and Sullivan (1,907).
(c) Includes performance based shares issued pursuant to the
Company's Stock Incentive Plan as follows-Schmitt (111,631),
Carroll (62,310), Ramos (16,900), Sanders (2,500) and
Gibbons (11,275).
</TABLE>
- --------- Executive Compensation-Report of Compensation Committee
In 1997 the Company made significant changes to its executive officer
compensation program. The revised program has simplified and
strengthened the company's long-standing and strongly held belief in the
principle of performance-oriented compensation. This report discusses
the implementation of that incentive compensation program for 1997.
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
Following a detailed analysis of the Company's compensation structure,
a new compensation program more aligned to the competitive marketplace
was developed and implemented in 1997. The revised structure represents
a shift in the mix of compensation elements, including an increase in
base salaries and a commensurate reduction in short term incentive
compensation such that the total cash compensation (base salary and
target bonus) remains unchanged. Base salaries are targeted for
executive officer positions at 10% below the 50th percentile of the
competitive marketplace for comparable positions in similar sized high
performing consumer products companies.
ANNUAL INCENTIVE COMPENSATION
Following shareholder approval of the 1997 Management Incentive Plan
("1997 Plan"), the plan was implemented in conjunction with the changes
in base salary for executive officers. Under the new plan,
8
<PAGE> 12
annual incentive payments for executive officer positions are targeted
as a percentage of base pay (50%-105%) established by reference to
incentive payments for similar positions in the competitive marketplace.
The actual bonus earned by 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, the performance measures were change in Economic Value Added
(EVA) and Corporate/Division Global sales growth. EVA is a method used
to measure the value Rubbermaid produces for its shareholders and 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.
Performance for 1997 varied substantially among the business units of
the Company since individual objectives are set for each business unit
and they are subject to different competitive dynamics.
In 1997 executive officers were given the opportunity to exchange
short term incentive compensation earned under the plan for an
additional stock option grant. The exchange of cash incentive
compensation for stock options was based upon a Black Scholes valuation
methodology. This 10-year non-qualified option vests upon grant and is
exercisable regardless of employment status with the Company. The value
of these options is dependent upon the future price appreciation of the
company's stock which aligns with shareholder interests.
LONG-TERM INCENTIVE COMPENSATION
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. In 1997 the granting of performance based restricted stock
was discontinued and a mix of performance shares and stock options was
granted instead.
Under the revised long-term incentive plan, all participants except
corporate and division senior executives 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 new plan targets long-term compensation at the 50th
percentile, except for executive officers who are targeted at the 75th
percentile of the comparator companies.
Stock option grants will have a duration of ten years and will vest
over a three (3) year period at a rate of 33% per year. The size of
stock option grants is established by salary band and reference to the
comparator companies.
For corporate and division senior executives, the weighting of
long-term compensation is 70% stock options and 30% performance shares,
which again reflects the competitive marketplace. A performance share
award, established by salary band and reference to comparator companies,
is 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. In this
respect they are similar to the previous performance based restricted
stock.
In late 1997, executive officers voluntarily exchanged all or a
portion of the performance shares previously granted to them for stock
options which the Committee believes more aligns with shareholder
interests since the value creation depends upon an increasing share
price. This 10-year non-qualified option vests upon grant and is
exercisable regardless of employment status with the company.
From 1979 until their use was discontinued in 1997, the Company's
long-term incentive compensation programs utilized performance based
restricted stock which was tied to the financial performance of the
Company as measured only by RONA.
9
<PAGE> 13
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.
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.
The average RONA for the 5-year cycle ending in 1997 exceeded the
target and during 1998 will result in lapse of restrictions for all of
the shares in that cycle and payment of a cash award of $8.32 per share.
The RONA performance for the 3-year cycle ending in 1997 was below the
target and will result in the lapse of restrictions on 86.6% of the
shares originally awarded. The remaining 13.4% of the shares originally
granted will be forfeited and no cash award is payable on the three year
cycle. Award cycles ending after 1997 will be similarly impacted unless
RONA improves.
CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation program for Mr. Schmitt, including salary, annual
bonus, performance shares and stock options, was determined for 1997
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.
Under the Company's previous compensation plan design the chief
executive's base salary was substantially below the competitive
marketplace and the target for short term incentive compensation was
above the market. The mix of Mr. Schmitt's compensation, like other
executive officers, was changed in 1997 such that his base salary was
increased and his target bonus was decreased but his total cash
compensation potential (base salary and target bonus) remained
unchanged. His base salary for 1997 was established at 10% below the
50th percentile and his long term compensation is targeted at the 75th
percentile for comparable positions in the marketplace.
A major portion of Mr. Schmitt's compensation opportunity is 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.
The annual and long-term target incentive 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 the company's
achievement of EVA and sales growth targets and achievement of
individual objectives established by the Committee. A cash bonus of 28%
of target was earned by Mr. Schmitt for 1997 based upon the
corporation's EVA and global sales growth performance against target.
Mr. Schmitt has forgone the payment of any cash bonus for 1997 and
like other executive officers has received stock options in an amount
equal to the cash bonus that otherwise would have been paid to him. This
10-year non qualified option vests upon grant and is exercisable
regardless of employment status with the company. Unlike a cash bonus
which is payable immediately, the value of which is known and certain,
the option grant has no value to Mr. Schmitt until and unless the price
of Rubbermaid stock increases in the future.
As discussed above, no cash bonus was paid to Mr. Schmitt in 1997 and
he further agreed to forgo the annual accrual to his supplemental
retirement plan account in exchange for stock options on the same basis
as was discussed previously.
In addition, Mr. Schmitt voluntarily exchanged the performance shares
which were granted to him in January of 1997 in exchange for stock
options. In summary, Mr. Schmitt has relinquished his annual cash bonus,
the annual accrual to his supplemental retirement plan and his
previously granted performance share award in exchange for stock
options. By so doing Mr. Schmitt has forgone current cash compensation
for stock options, the ultimate value of which depends upon growth in
the Company's stock price.
10
<PAGE> 14
A portion of the cash compensation received by Mr. Schmitt in 1997
reflects the conclusion of performance based restricted stock cycles
which began in 1992 and 1994. These plan cycles concluded on December
31, 1996 and the payments provided for under their terms was made in
1997. The payment reflected the Company's performance from 1992-1996 and
1994-1996 rather than the performance of the Company in 1997.
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 $1 million. To qualify as
"performance-based" compensation, payments must be made from a plan that
meets several criteria. The Committee intends for all performance based
compensation to meet the criteria for deductibility.
THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
<TABLE>
<S> <C>
William D. Marohn (Chair) Karen N. Horn
Scott S. Cowen Gordon R. Sullivan
Robert M. Gerrity
</TABLE>
11
<PAGE> 15
- --------- Summary Compensation Table
The following table sets forth the compensation received for the three
years ended December 31, 1997 by the persons who were at December 31,
1997 the Company's Chief Executive Officer and the four other most
highly paid Executive Officers.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-------------------------------------- ------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING
NAME AND SALARY(1) BONUS(2) COMPENSATION(3) AWARDS(2,4) OPTIONS(2)
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#)
------------------ ---- --------- -------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
WOLFGANG R. SCHMITT......... 1997 621,343 -- 97,517 781,869 319,997
Chairman of the Board....... 1996 448,265 434,368 471,333 867,402 40,000
and Chief Executive......... 1995 427,440 365,461 431,580 863,156 33,000
Officer
CHARLES A. CARROLL.......... 1997 417,086 -- 51,300 462,216 154,231
President and Chief......... 1996 302,107 256,791 182,368 541,624 20,000
Operating Officer........... 1995 286,203 233,542 100,741 486,984 16,500
JOSEPH M. RAMOS............. 1997 252,405 -- 17,391 116,214 84,005
President and COO,.......... 1996 183,943 179,344 23,289 132,924 4,500
Rubbermaid Commercial....... 1995 178,073 164,718 8,455 79,650 4,000
DERIAL H. SANDERS........... 1997 246,410 -- -- -- 49,944
President & COO, Graco...... 1996 78,258 -- -- -- --
Children's Products
DAVID T. GIBBONS............ 1997 271,578 -- -- 87,197 58,954
President & GM,............. 1996 277,081 181,665 -- 51,937 5,000
Rubbermaid, Europe.......... 1995 25,962 -- -- -- --
<CAPTION>
ALL OTHER
NAME AND COMPENSATION(2,5)
PRINCIPAL POSITION ($)
------------------ -----------------
<S> <C>
WOLFGANG R. SCHMITT......... 54,676
Chairman of the Board....... 289,172
and Chief Executive......... 269,725
Officer
CHARLES A. CARROLL.......... 23,636
President and Chief......... 157,839
Operating Officer........... 150,781
JOSEPH M. RAMOS............. 15,020
President and COO,.......... 68,451
Rubbermaid Commercial....... 61,370
DERIAL H. SANDERS........... --
President & COO, Graco...... 1,178
Children's Products
DAVID T. GIBBONS............ 12,544
President & GM,............. 66,295
Rubbermaid, Europe.......... 39
</TABLE>
-----------------------
(1) As a part of a new compensation plan aligned to the competitive
marketplace, base salaries were increased in 1997 to more
competitive levels. Commensurate reduction in short term bonus
targets were likewise made so that total cash compensation (salary
and target bonus) remains unchanged.
(2) At the end of 1997, pursuant to a new program approved by the
Compensation Committee, each of the named executive officers elected
to receive grants of additional stock options in exchange for and in
lieu of (a) his 1997 annual cash bonus, (b) the performance shares
granted to him in January of 1997 that otherwise were subject to
vesting over time, and (c) the 1997 accrual that would otherwise
have been made on his account in the Company's non-qualified
Supplemental Retirement Plan (the "SRP"). The additional options are
10-year non-qualified stock options that are fully vested upon grant
and are exercisable throughout their term without regard to the
optionee's employment status with the Company. The additional
options were granted at an exchange rate determined by using a Black
Scholes valuation methodology. Options in exchange for performance
shares and the accrual to the SRP were granted on December 31, 1997
with an exercise price equal to the fair market value of the shares
on that date. Options in exchange for 1997 bonuses were granted on
February 27, 1998 (the date the bonuses would have been paid in
cash) with an exercise price equal to the fair market value of the
shares on that date. The dollar amounts of cash bonus, value of
performance shares, and 1997 accrual to the SRP so exchanged by each
of the named executive officers are, respectively:
Schmitt -- $189,210, $551,375, and $228,396; Carroll -- $108,860,
$250,625, and $132,020; Ramos -- $293,801, $50,125, and $59,657;
Sanders -- $139,419, $50,125, and $19,891; and Gibbons -- $20,335,
$80,200, and $105,000. The aggregate number of additional options
received pursuant to these exchanges for 1997 by each of the named
executive officers, all of which are reflected in the "Securities
Underlying Options" column of the above table, was, respectively,
Schmitt -- 170,146, Carroll -- 86,370, Ramos -- 70,945, Sanders --
36,744, and Gibbons -- 36,061. The dollar amounts of cash bonus,
value of performance shares, and
12
<PAGE> 16
1997 accruals to the SRP that were exchanged for these options are
not reflected in the body of the above table.
(3) This column reflects a cash award paid in 1997 at the conclusion of
five and three-year performance based restricted stock cycles which
began in 1992 and 1994 respectively, concluded at the end of 1996,
and the payment for which was made in 1997. The payment reflects the
Company's performance from 1992-1996 and 1994-1996, and not 1997
performance.
The value of perquisites and other personal benefits is not included
since the value of such compensation is below minimum required
disclosure thresholds.
(4) The amounts shown in this column reflect the value of shares awarded
for three- and five-year performance based restricted stock cycles
under a plan which was discontinued in 1997 as part of the Company's
revised compensation program, which is detailed in the Report of the
Compensation Committee. 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 1997 restricted stock holdings and the value thereof based
on the year-end closing price of Rubbermaid stock is as follows:
Schmitt -- 89,631 shares ($2,240,775); Carroll -- 52,310 shares
($1,307,750); Ramos -- 14,400 shares ($360,000), and Gibbons --
8,395 shares ($209,875). Shares which will vest in under three
years, assuming achievement of financial objectives, are as follows:
Schmitt (24,229-1998; 32,791-1999); Carroll (15,483-1998;
19,385-1999); Ramos (2,912-1998; 4,874-1999); and Gibbons
(3,657-1999). Unless the Company's RONA performance improves the
number of shares received at the conclusion of the respective cycles
will be less than the number initially awarded and there will be no
cash award.
(5) The amounts disclosed in this column include:
<TABLE>
<C> <S> <C>
(a) Company paid premiums for excess group term life insurance
on behalf of Schmitt (1997-$1,089, 1996-$823, 1995-$1,981);
Carroll (1997-$771, 1996-$583, 1995-$774); Ramos (1997-
$514, 1996- $407, 1995-$1,133); Sanders(1997-$504); and
Gibbons (1997-$544, 1996-$472, 1995-$39).
(b) Contributions or accruals pursuant to the defined
contribution retirement plans on behalf of Schmitt,
(1997-$12,000, 1996-$241,126, 1995-$220,586);
Carroll,(1997-$12,000, 1996-$144,750, 1995-$137,405);
Ramos,(1997-$12,000, 1996-$65,551, 1995-$58,022); Sanders
(1997-$4,750, 1996-$4,725), and Gibbons, (1997-$12,000,
1996-$65,823). 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 1997 was
8.129%; 1996-8.128%; 1995-8.690% on behalf of Schmitt
(1997-$41,587, 1996-$47,226, 1995-$47,158); Carroll
(1997-$10,865, 1996-$12,506; 1995-$12,602); and Ramos
(1997-$2,506, 1996-$2,493, 1995-$2,215).
</TABLE>
13
<PAGE> 17
- --------- Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------- POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES
NUMBER OF OPTIONS OF STOCK PRICE APPRECIATION
SECURITIES GRANTED TO FOR OPTION TERM
UNDERLYING EMPLOYEES EXERCISE OR ---------------------------
OPTIONS IN FISCAL BASE PRICE EXPIRATION
NAME GRANTED(#) YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- ------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Schmitt.......... 150,000 9.2% 22.9375 01/16/2007 5,608,219 8,911,219
136,803 8.4% 25.0625 12/31/2007 5,588,659 8,880,139
33,343 2.0% 28.9063 02/27/2008 1,542,116 2,496,301
Mr. Carroll.......... 68,000 4.2% 22.9375 01/16/2007 2,542,392 4,039,753
67,132 4.2% 25.0625 12/31/2007 2,742,468 4,357,664
19,248 1.2% 28.9063 02/27/2008 890,222 1,441,046
Mr. Ramos............ 13,200 0.8% 22.8125 01/01/2007 481,800 779,914
19,261 1.2% 25.0625 12/31/2007 772,366 125,067
51,715 3.2% 28.9063 02/27/2008 2,381,823 3,871,763
Mr. Sanders.......... 13,200 0.8% 22.8125 01/01/2007 481,800 779,914
12,284 0.8% 25.0625 12/31/2007 492,588 797,378
24,460 1.5% 28.9063 02/27/2008 1,131,279 1,831,255
Mr. Gibbons.......... 22,000 1.4% 22.8125 01/01/2007 803,000 129,986
10,000 0.6% 24.8750 04/22/2007 401,980 650,705
23,386 1.4% 25.0625 12/31/2007 937,779 151,803
14,132 0.9% 28.9063 02/27/2008 653,606 1,058,025
</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 with the exception of options granted pursuant to a special
option exchange program in December 1997 which is described in the
Report of the Compensation Committee and footnote 2 to the Summary
Compensation Table. Such options are fully exercisable at the date of
grant.
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.
14
<PAGE> 18
- --------- Option Exercises and Values
This table presents information regarding options exercised for the
Company's Common Shares during fiscal 1997 and the value of unexercised
options held at December 31, 1997. There were no options exercised by
the named executives and no SARs outstanding during fiscal 1997.
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND 1997 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 0 401,479/187,667 0/309,375
Mr. Carroll.............. 0 0 164,546/86,834 0/140,250
Mr. Ramos................ 0 0 79,342/17,534 0/28,875
Mr. Sanders.............. 0 0 36,744/13,200 0/28,875
Mr. Gibbons.............. 0 0 34,007/35,334 0/49,375
</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, 1997 is
calculated as follows: [(Per Share Closing Sale Price on
12/31/97)--(Per Share Exercise Price)] x Number of Shares subject to
Unexercised Options. The per share closing sale price on December
31, 1997 was $25.00.
- --------- 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>
400,000 40,000 60,000 80,000 100,000
450,000 45,000 67,500 90,000 112,500
500,000 50,000 75,000 100,000 125,000
550,000 55,000 82,500 110,000 137,500
600,000 60,000 90,000 120,000 150,000
650,000 65,000 97,500 130,000 162,500
700,000 70,000 105,000 140,000 175,000
750,000 75,000 112,500 150,000 187,500
</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 and Carroll are participants in the Plan with 32 and 27 years of
credited years respectively, however, benefit accruals (salary increases
and years of service) for them have
15
<PAGE> 19
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 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> <C>
$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
1,800,000 891,000 940,500 990,000
2,000,000 990,000 1,045,000 1,100,000
</TABLE>
-----------------------
* Salary, bonus and performance share 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 32 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 (highest three years
average), 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. If
retirement or termination of employment occurs on or after age 60 the
benefit increases to 60% and increases 1% per year thereafter.
- --------- 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
16
<PAGE> 20
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 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 Board of Directors has provided for the following severance
arrangement for Mr. Carroll in the event of his involuntary termination
of employment for reasons other than cause -- two years of base pay and
target bonus with continued health insurance coverage and vesting of any
unvested stock options with a two year exercise period as well as
vesting of any outstanding performance stock grants subject to
achievement of previously established performance targets.
The Company has an employment agreement with Mr. Gibbons which in the
event of his involuntary termination of employment other than for cause
provides for up to three years of base salary severance payments
determined by the number of months worked subsequent to September 1,
1997 and his EVA center performance. After July 1, 2001 the maximum
severance arrangement is 18 months reduced by one month for each month
worked thereafter until the severance arrangement reaches a level
consistent with that for other Company executives at his level. Mr.
Gibbon's base salary will be no less than $285,200 per year, his target
annual incentive bonus will be no less than 65% of his base salary,
annual grants of performance shares and stock options will not be less
than 3,200 and 23,000 shares respectively and $105,000 will be allocated
to his Supplemental Retirement Plan Account for 1997, 1998 and 1999
after which allocations will revert to the normal formula. The
performance requirements attached to a 10,000 stock option award made to
Mr. Gibbons in 1997 have been waived, and upon retirement or earlier
termination of employment any unvested stock options will become vested
with a two year exercise period and any outstanding performance stock
grants will likewise vest subject to achievement of previously
established performance targets.
- --------- Rubbermaid Stock Performance
Following is a graph which compares the five year cumulative return
from investing $100 at the end of 1992 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 Rubbermaid S&P
(Fiscal Year Covered) Inc. S&P 500 Industrials
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 110.81 110.08 109.03
1994 93.18 111.53 113.19
1995 84.08 153.45 152.34
1996 76.22 188.68 187.39
1997 86.27 251.63 245.51
</TABLE>
Assumes $100 invested on December 31, 1991 and reinvestment of
dividends.
17
<PAGE> 21
- --------- 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, 1998.
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.
- --------- 1999 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 1999 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 13, 1998, it will be included in the proxy statement and form
of proxy relating to such meeting.
- --------- 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
18
<PAGE> 22
3350-PS-98
<PAGE> 23
(RUBBERMAID LOGO)
RUBBERMAID INCORPORATED
1147 Akron Road
Wooster, OH 44691 USA
ADMISSION TICKET
ANNUAL MEETING OF SHAREHOLDERS
Tuesday, April 28, 1998
10:30 a.m. EDT
OARDC, Fisher Auditorium
1680 Madison Avenue
Wooster, Ohio 44691
You are cordially invited to attend the Annual Meeting of Shareholders on
Tuesday, April 28, 1998 at the Ohio Agricultural Research and Development
Center, Fisher Auditorium, 1680 Madison Avenue, Wooster, Ohio. The meeting will
begin at 10:30 a.m. EDT. Admission is limited to shareholders and one guest,
their proxies, and guests of the Company. To avoid delay at the entrance to the
meeting, please present this ticket. Admittance will be based upon availability
of seating.
See reverse for map of area.
- --------------------------------------------------------------------------------
PROXY CARD INSTRUCTIONS
Please mark the box 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 Boston EquiServe, our transfer
agent. Any comments noted on the proxy card or an attachment will be forwarded
by Boston EquiServe to Rubbermaid. If you plan to attend the meeting, please
mark the box provided on the proxy card. Advance indications of attendance are
helpful to us in making arrangements for the meeting.
DETACH CARD BEFORE MAILING
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
[ ]
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
[ ]
A vote FOR is recommended by the Board of Directors:
<S> <C> <C>
WITHHELD
1. Election of Directors For ALL FOR ALL
Nominees: Nominees Nominees
Tom H. Barrett [ ] [ ]
Charles A. Carroll
Thomas J. Falk
Steven A. Minter
------------------------------------------
For all nominees except as noted above
[ ]
[ ]
Signature_________________________ Date___________1998
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.
Note: Please sign exactly as name appears hereon.
Joint owners should each sign. When signing as
attorney, executor, administrator, trustee, or
guardian, please give full name and title as such.
Signature_________________________ Date___________ 1998
PLEASE SIGN THIS PROXY AS NAME(S) APPEAR ABOVE.
</TABLE>
<PAGE> 24
LOCATOR MAP
FISHER AUDITORIUM
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTER
WOOSTER, OHIO
[GRAPHIC MAP]
DETACH CARD BEFORE MAILING
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RUBBERMAID INCORPORATED
BOARD OF DIRECTORS PROXY FOR ANNUAL MEETING, APRIL 28, 1998
The undersigned, having received the Notice of Meeting and Proxy
Statement, hereby makes, constitutes, and appoints Robert M. Gerrity,
Jan Nicholson 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 April 28,
1998, at Wooster, Ohio, and all postponements and adjournments thereof.
P THE PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
R DIRECTED; IF NO DIRECTION IS MADE THIS PROXY WILL BE VOTED FOR DIRECTOR
O NOMINEES. IN THEIR DISCRETION THE PARTIES ARE ALSO AUTHORIZED TO VOTE
X UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
Y
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
RECOMMENDATIONS. YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN AND
RETURN THIS CARD.
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SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
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