<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<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>
AVERY DENNISON CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
AVERY DENNISON CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
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Avery Dennison Corporation
(LOGO) 150 North Orange Grove Boulevard
Pasadena, California 91103
- ----------------- ---------------------------------------------------------
NOTICE OF To the Stockholders:
ANNUAL MEETING
OF STOCKHOLDERS The Annual Meeting of Stockholders of Avery Dennison
Corporation will be held at 150 North Orange Grove
To be held Boulevard, Pasadena, California on Thursday, April 27,
April 27, 1995 1995 at 1:30 P.M. for the following purposes:
1. To elect four directors to hold office for a term of
three years and until their successors are elected
and have qualified; and
2. To consider and vote upon a proposal to approve
certain amendments to the Company's 1988 Stock Option
Plan for Non-Employee Directors; and
3. To transact such other business as may properly come
before the meeting and any adjournments thereof.
In accordance with the Bylaws, the Board of Directors has
fixed the close of business on Friday, March 3, 1995, as
the record date for the determination of stockholders
entitled to vote at the Annual Meeting and to receive
notice thereof.
All stockholders are cordially invited to attend the
meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Robert G. van Schoonenberg
Secretary
Pasadena, California
Dated: March 10, 1995
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Whether or not you presently plan to attend the Annual
Meeting, in order to ensure your representation please
complete, sign and date the enclosed proxy as promptly as
possible and return it in the enclosed envelope (to which
no postage need be affixed if mailed in the United
States). If you attend the meeting and wish to vote in
person, your proxy will not be used.
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<PAGE> 3
AVERY DENNISON CORPORATION
150 NORTH ORANGE GROVE BOULEVARD
PASADENA, CALIFORNIA 91103
PROXY STATEMENT
This proxy statement is furnished to the stockholders on behalf of the
Board of Directors of Avery Dennison Corporation, a Delaware corporation
(hereinafter called the "Company"), for solicitation of proxies for use at the
Annual Meeting of Stockholders to be held on Thursday, April 27, 1995 at 1:30
P.M. and at any and all adjournments thereof. A stockholder giving a proxy
pursuant to the present solicitation may revoke it at any time before it is
exercised by giving a subsequent proxy or by delivering to the Secretary of the
Company a written notice of revocation prior to the voting of the proxy at the
Annual Meeting. If you attend the meeting and wish to vote your shares in
person, your proxy will not be used. Votes cast by proxy or in person at the
Annual Meeting will be tabulated by the election inspectors appointed for the
meeting and will determine whether or not a quorum is present. Under the
Company's bylaws and Delaware law: (1) shares represented by proxies that
reflect abstentions or "broker non-votes" (i.e., shares held by a broker or
nominee which are represented at the meeting, but with respect to which such
broker or nominee is not empowered to vote on a particular proposal) will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum; (2) there is no cumulative voting and the
director nominees receiving the highest number of votes, up to the number of
directors to be elected, are elected and, accordingly, abstentions, broker
non-votes and withholding of authority to vote will not affect the election of
directors; and (3) proxies that reflect abstentions as to a particular proposal
will be treated as voted for purposes of determining the approval of that
proposal and will have the same effect as a vote against that proposal, while
proxies that reflect broker non-votes will be treated as unvoted for purposes of
determining approval of that proposal and will not be counted as votes for or
against that proposal. The Company has retained D.F. King & Co., Inc. to assist
in soliciting proxies for this meeting at a fee estimated at $10,000 plus out of
pocket expenses. Expenses incident to the preparation and mailing of the notice
of meeting, proxy statement and form of proxy are to be paid by the Company.
This proxy statement is to be mailed to stockholders on or about March 10, 1995.
The purpose of the meeting and the matters to be acted upon are set forth
in the foregoing attached Notice of Annual Meeting. In addition to the election
of directors, certain amendments to the Company's 1988 Stock Option Plan for
Non-Employee Directors (the "Director Plan") will be submitted for approval by
the Company's stockholders. The Director Plan previously has been approved by
the stockholders, but is proposed to be amended to change the date of grant of
options under the Director Plan to the date of each regular December meeting of
the Board of Directors, remove the age 72 limitation on the granting of options
under the Director Plan, provide for the vesting on a director's date of
retirement at or after age 72 of all options owned by that director which are
unexercisable on the date of such retirement, extend the Director Plan's
termination date from January 31, 1997 to January 31, 2007 and permit directors
to designate beneficiaries to receive vested options in the event of their
deaths. As of the date of this statement, management knows of no other business
which will be presented for consideration at the meeting. However, if any such
other business shall properly come before the meeting, votes will be cast
pursuant to said proxies in respect of any such other business in accordance
with the best judgment of the persons acting under said proxies. See
"GENERAL -- Stockholder Proposals" below.
ELECTION OF DIRECTORS (PROXY ITEM 1)
The Bylaws of the Company presently provide for 14 directors, divided into
three classes. However, two directors, Messrs. R. Stanton Avery and H. Russell
Smith, will not seek reelection upon expiration of their current terms
immediately prior to the 1995 Annual Meeting. Therefore, the Board of Directors
has amended the Bylaws, effective immediately prior to the 1995 Annual Meeting,
to reduce the number of directors to 12. In order to balance the number of
directors in each of the three classes of directors, as contemplated by the
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<PAGE> 4
Bylaws, Mr. Philip M. Neal has resigned as a director in the class of directors
which was elected to serve until the 1996 Annual Meeting, contingent upon his
election as one of the class of directors elected to serve until 1998 at the
1995 Annual Meeting.
Four directors are to be elected at the 1995 Annual Meeting and will hold
office until the 1998 Annual Meeting and until their successors are elected and
have qualified. It is intended that the persons so appointed in the enclosed
proxy will, unless authority is withheld, vote for the election of the four
nominees proposed by the Board of Directors, all of whom are presently directors
of the Company. In voting for the election of directors each share has one vote
for each position to be filled. All of the nominees have consented to being
named herein and to serve if elected. In the event that any of them should
become unavailable prior to the Annual Meeting, the proxy will be voted for a
substitute nominee or nominees designated by the Board of Directors, or the
number of directors may be reduced accordingly.
The following information, which has been provided by the directors, shows
for each of the nominees for election to the Board of Directors and for each
director whose term continues, his or her name, age, and principal occupation or
employment during the past five years, the name of the corporation or other
organization, if any, in which such occupation or employment is or was carried
on, the period during which such person has served as a director of the Company
and the year in which each continuing director's present term as director
expires.
1995 NOMINEES
FRANK V. CAHOUET, age 62. During the past five years, Mr. Cahouet
has been Chairman, President and Chief Executive Officer of Mellon
(photo) Bank Corporation. He is a director of Mellon Bank Corporation and
Teledyne, Inc. Mr. Cahouet has been a director of Avery Dennison
Corporation since 1983.
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PETER W. MULLIN, age 54. During the past five years, Mr. Mullin
has been Chairman and Chief Executive Officer of Mullin
(photo) Consulting, Inc., formerly known as Management Compensation Group,
Los Angeles, Inc., an executive compensation, benefit planning and
corporate insurance consulting firm, and related entities. He has
been a director of Avery Dennison Corporation since January 1988.
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JOAN T. BOK, age 65. During the past five years, Mrs. Bok has been
Chairman of the Board of New England Electric System, a public
utility holding company and supplier of electricity. She is a
director of Monsanto Company, John Hancock Mutual Life Insurance
(photo) Company and New England Electric System, and its subsidiaries, New
England Power Company, Massachusetts Electric Company, and The
Narragansett Electric Company. Mrs. Bok has been a director of
Avery Dennison Corporation since October 1990. Mrs. Bok also
served as a director of Dennison Manufacturing Company from
1984 to October 1990.
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PHILIP M. NEAL, age 54. Since December 1990, Mr. Neal has been
President and Chief Operating Officer of Avery Dennison
(photo) Corporation. From March 1990 to December 1990, he served as
Executive Vice President. He has been a director of Avery Dennison
Corporation since December 1990.
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CONTINUING DIRECTORS
LAWRENCE R. TOLLENAERE, age 72. In December 1994, Mr. Tollenaere
retired as Chairman of the Board of Ameron, Inc., a manufacturer
of engineered products for construction, utilities and industry.
He was Chairman, Chief Executive Officer and President of Ameron,
(photo) Inc. from April 1991 to June 1993 and Chairman and Chief Executive
Officer of Ameron, Inc. from May 1989 to April 1991. Mr.
Tollenaere is a director of Ameron, Inc., Newhall Land and Farming
Company and Pacific Mutual Life Insurance Company. He has been a
director of Avery Dennison Corporation since 1964. His present
term expires in 1996.
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F. DANIEL FROST, age 73. During the past five years, Mr. Frost has
been the owner and Chief Executive Officer of Sun Ridge Foods,
(photo) Inc. and Cascade Columbia Foods, Ltd., both located in the State
of Washington. He has been a director of Avery Dennison
Corporation since 1966. His present term expires in 1996.
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RICHARD M. FERRY, age 57. Since May 1991, Mr. Ferry has been
Chairman and Chief Executive Officer of Korn/Ferry International,
an international executive search firm. Prior to 1991, he served
(photo) as President of Korn/Ferry International. He is a director of Dole
Food Company and Pacific Mutual Life Insurance Company. He has
been a director of Avery Dennison Corporation since 1985. His
present term expires in 1996.
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DWIGHT L. ALLISON, JR., age 65. During the past five years,
Mr. Allison has been a private investor. Mr. Allison has been a
(photo) director of Avery Dennison Corporation since October 1990.
Mr. Allison also served as a director of Dennison Manufacturing
Company from 1974 to October 1990. His present term expires in
1996.
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CHARLES D. MILLER, age 67. During the past five years, Mr. Miller
has served as Chairman and Chief Executive Officer of Avery
Dennison Corporation. He is a director of Great Western Financial
(photo) Corporation, Nationwide Health Properties, Inc., Pacific Mutual
Life Insurance Company and Southern California Edison Company. He
has been a director of Avery Dennison Corporation since 1975. His
present term expires in 1997.
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SIDNEY R. PETERSEN, age 64. During the past five years,
Mr. Petersen has been a private investor. In 1984, he retired as
Chairman and Chief Executive Officer of Getty Oil Company. He is a
(photo) director of Broadway Stores, Inc., Global Natural Resources, Inc.,
Group Technologies Corporation, Union Bank and NICOR, Inc. He has
been a director of Avery Dennison Corporation since 1981. His
present term expires in 1997.
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JOHN C. ARGUE, age 63. During the past five years, Mr. Argue has
been Of Counsel and formerly Senior Partner of the law firm of
Argue Pearson Harbison & Myers. Since October 1992, Mr. Argue has
been Chairman of Rose Hills Memorial Park Association. Mr. Argue
(photo) is a director of CalMat Co. and TCW Funds, Inc., a registered
investment company. He is also a trustee of the TCW/DW family of
funds and the TCW/DW Term Trust 2000, TCW/DW Term Trust 2002 and
TCW/DW Term Trust 2003. Mr. Argue is an advisory director of
LAACO Ltd. He has been a director of Avery Dennison Corporation
since January 1988. His present term expires in 1997.
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JOHN B. SLAUGHTER, age 61. During the past five years,
Dr. Slaughter has served as President of Occidental College.
Dr. Slaughter is a director of Atlantic Richfield Company,
(photo) International Business Machines Corporation, Northrop Grumman
Corporation and Monsanto Company. He has been a director of Avery
Dennison Corporation since December 1988. His present term expires
in 1997.
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<PAGE> 7
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the number of shares of the Company's common
stock beneficially owned by each director of the Company and each of the
executive officers named in the table on page 9, and the aggregate number of
such shares beneficially owned by all directors and executive officers as of
December 31, 1994.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OWNERSHIP(1) OF CLASS
---- ------------ --------
<S> <C> <C>
R. Stanton Avery.......................................... 2,716,324(2) 5.07%
H. Russell Smith.......................................... 1,086,954(3) 2.03%
Lawrence R. Tollenaere.................................... 81,808(4)(5) (6)
F. Daniel Frost........................................... 17,097 (6)
Charles D. Miller......................................... 598,816(7) 1.11%
Sidney R. Petersen........................................ 18,322(4)(8) (6)
Frank V. Cahouet.......................................... 24,265(4)(9) (6)
Richard M. Ferry.......................................... 18,000(4) (6)
John C. Argue............................................. 18,440(4)(10) (6)
Peter W. Mullin........................................... 19,200(4) (6)
John B. Slaughter......................................... 16,000(4)(11) (6)
Philip M. Neal............................................ 199,993(12) (6)
Dwight L. Allison, Jr. ................................... 36,492(13) (6)
Joan T. Bok............................................... 16,007(14) (6)
Kim A. Caldwell........................................... 65,445(15) (6)
R. Gregory Jenkins........................................ 120,566(16) (6)
Donald L. Thompson........................................ 60,998(17) (6)
All Directors and Executive Officers as a Group
(31 persons, including those named)..................... 5,500,572(18) 10.04%
</TABLE>
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(1) Except as otherwise indicated and subject to applicable community property
and similar statutes, the persons listed as beneficial owners of the shares
have sole voting and/or investment power with respect to such shares.
(2) Does not include 10,259 shares held by Mrs. R. Stanton Avery, as to which
Mr. Avery disclaims any beneficial ownership. Includes 162,736 shares held
by The Durfee Foundation, as to which Mr. Avery as a director of that
foundation shares the authority to vote and to dispose of the shares, but
in which Mr. Avery has no economic interest. Also includes 1,690,224 shares
held by the testamentary trust created by the will of Dorothy Durfee Avery.
As the sole trustee, Mr. Avery has the right to vote and to dispose of the
shares; he is also entitled to receive the trust income during his
lifetime.
(3) Includes 12,950 shares held under the Elden Smith Trust. As co-trustee,
Mr. Smith shares the right to vote and to dispose of such shares but has no
economic interest in such shares. Also includes 24,000 shares held under
the Stewart R. Smith Children Trust. As trustee, Mr. Smith has the sole
right to vote and to dispose of such shares, but has no economic interest
in such shares. Also includes 1,049,170 shares held by the Kinsmith
Financial Corporation, of which Mr. Smith is Chairman of the Board and
Mr. Smith's family as a group owns all of the outstanding stock. Mr. Smith
shares the right to vote and to dispose of such shares.
(4) Includes 16,000 shares with respect to which each of Messrs. Tollenaere,
Petersen, Cahouet, Ferry, Argue, Mullin and Slaughter holds options
exercisable within 60 days from December 31, 1994.
(5) Includes 2,534 shares held jointly with Mrs. Lawrence R. Tollenaere, as to
which Mr. Tollenaere has shared voting and investment power. Also includes
15,000 shares held in trust, as to which Mr. Tollenaere shares the
authority to vote and to dispose of the shares.
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<PAGE> 8
(6) Less than 1%.
(7) Includes 418,578 shares with respect to which Mr. Miller holds options
exercisable within 60 days from December 31, 1994. Also includes 171,614
shares held in the Miller Family Trust, as to which Mr. Miller has sole
authority to vote and to dispose of the shares. Also includes 1,200 shares
held in The Candyman Trust, as to which Mr. Miller, as co-trustee, shares
the authority to vote and to dispose of the shares. Does not include 511
shares held by Mrs. Charles D. Miller, as to which Mr. Miller disclaims any
beneficial ownership.
(8) Includes 2,322 shares held in the Petersen Family Trust, as to which
Mr. Petersen, as co-trustee, shares the authority to vote and to dispose
of the shares.
(9) Does not include 5,250 shares held in trust by Mrs. Frank V. Cahouet, as to
which Mr. Cahouet disclaims any beneficial ownership. Includes 5,250 shares
held in trust with respect to which Mr. Cahouet has sole voting and
disposition power.
(10) Includes 2,200 shares held in trust with respect to which Mr. Argue has
sole voting power but no disposition power. Also includes 200 shares held
in trust with respect to which Mr. Argue has the authority to vote and
dispose of the shares.
(11) Does not include 100 shares held by Mrs. John B. Slaughter, as to which
Dr. Slaughter disclaims any beneficial ownership.
(12) Includes 164,658 shares with respect to which Mr. Neal holds options
exercisable within 60 days from December 31, 1994. Does not include 757
shares held by Mr. Neal's son, as to which Mr. Neal disclaims any
beneficial ownership.
(13) Does not include 840 shares held by Mrs. Dwight L. Allison, as to which
Mr. Allison disclaims any beneficial ownership. Includes 6,000 shares with
respect to which Mr. Allison holds options exercisable within 60 days from
December 31, 1994.
(14) Includes 12,000 shares with respect to which Mrs. Bok holds options
exercisable within 60 days from December 31, 1994.
(15) Includes 59,000 shares with respect to which Mr. Caldwell holds options
exercisable within 60 days from December 31, 1994.
(16) Includes 94,785 shares with respect to which Mr. Jenkins holds options
exercisable within 60 days from December 31, 1994.
(17) Includes 56,950 shares with respect to which Mr. Thompson holds options
exercisable within 60 days from December 31, 1994. Does not include 99
shares held by Mrs. Donald L. Thompson, as to which Mr. Thompson disclaims
any beneficial ownership interest.
(18) Includes 1,239,384 shares with respect to which all executive officers and
directors as a group hold options exercisable within 60 days from December
31, 1994.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
During 1994, there were eight meetings of the full Board of Directors and
nine meetings of committees of the Board. All directors of the Company attended
at least 75% of the aggregate number of meetings of the Board and meetings of
Board committees of which they were members held during the time they served on
the Board or Committee.
Standing committees of the Board of Directors include the following:
The Audit Committee, which is composed of the following directors: Lawrence
R. Tollenaere (Chairman), Frank V. Cahouet, Sidney R. Petersen, John C. Argue,
Dwight L. Allison, Jr. and Joan T. Bok, met twice during 1994. The functions of
the Audit Committee are to aid the directors in undertaking and fulfilling their
responsibilities for financial reporting to the stockholders; to support and
encourage efforts to improve the financial controls exercised by management and
to ensure their adequacy for purposes of public reporting; and to provide better
avenues of communication between the Board of Directors, management and the
external and internal auditors.
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The Compensation and Executive Personnel Committee, which is composed of
the following directors: F. Daniel Frost (Chairman), Richard M. Ferry, Sidney R.
Petersen, Lawrence R. Tollenaere, Frank V. Cahouet, John C. Argue and Peter W.
Mullin, met four times during 1994. The functions of the Compensation Committee
are to review new or modified programs in the areas of executive salary and
incentive compensation, deferred compensation, and stock plans; to review and
make recommendations to the Board concerning management's proposed option
grants, cash incentive awards and other direct and indirect compensation
matters; and to monitor equal opportunity and affirmative action programs and
practices.
The Ethics and Conflict of Interest Committee, which is composed of the
following directors: Frank V. Cahouet (Chairman), John B. Slaughter, Joan T. Bok
and Philip M. Neal, met once during 1994. The functions of the Ethics and
Conflict of Interest Committee are to survey, monitor and provide counsel on a
continuing basis as to the business relationships, affiliations and financial
transactions of directors, officers and key employees, as they may relate to
possible conflicts of interest or violations of the Company's Legal and Ethical
Conduct Policy; to monitor compliance with the Foreign Corrupt Practices Act in
connection with the Company's relationship to domestic and foreign governments,
political parties and the agencies, instrumentalities and officials of each; and
to report and make recommendations to the full Board in all instances where it
is believed that possible violations of Company policy or that Act could exist.
The Finance Committee, which is composed of the following directors: Sidney
R. Petersen (Chairman), Frank V. Cahouet, F. Daniel Frost, Charles D. Miller,
Richard M. Ferry, Peter W. Mullin, Dwight L. Allison, Jr. and Philip M. Neal,
met once during 1994. The functions of the Finance Committee are to assist the
Board in consideration of matters relating to the financial affairs and capital
requirements of the Company; to provide an overview of the financial planning
and policies of the Company; and to review proposed budgets, proposed
acquisitions, bank loans and changes in the financial structure of the Company.
The Nominating Committee, which is composed of the following directors:
John C. Argue (Chairman), R. Stanton Avery, F. Daniel Frost, Charles D. Miller
and Richard M. Ferry, met once during 1994. The functions of the Nominating
Committee are to review the qualifications of candidates for board membership,
to review the status of a director when his or her principal position and/or
primary affiliation changes, to recommend to the Board of Directors candidates
for election by stockholders at annual meetings, to recommend candidates to fill
vacancies in directorships, to recommend to the Board of Directors the removal
of a director, if in the Company's best interest, and to make recommendations to
the Board of Directors concerning selection, tenure, retirement, and composition
of the Board of Directors. Stockholders desiring to make recommendations
concerning new directors must submit the candidate's name, together with
biographical information and the candidate's written consent to nomination, to:
Secretary, Nominating Committee of the Board of Directors, Avery Dennison
Corporation, 150 North Orange Grove Boulevard, Pasadena, California 91103.
Stockholders wishing to nominate new directors for election at an annual meeting
must comply with the requirements described under the heading
"GENERAL -- Stockholder Proposals" on p. 23.
The Strategic Planning Committee, which is composed of the following
directors: Charles D. Miller (Chairman), Frank V. Cahouet, F. Daniel Frost, John
C. Argue, Peter W. Mullin, Richard M. Ferry, Philip M. Neal, and John B.
Slaughter, did not meet in 1994. The functions of the Strategic Planning
Committee are to review the Company's long-term strategic plan, objectives,
programs, and proposed acquisition candidates and divestitures; to review steps
being taken to improve shareholder value; and to make recommendations to the
Board of Directors on any of these matters.
The Executive Committee, which is composed of the following directors:
H. Russell Smith (Chairman), R. Stanton Avery, F. Daniel Frost, Charles D.
Miller, Lawrence R. Tollenaere and Philip M. Neal, did not meet during 1994. The
function of the Executive Committee is to act on an interim basis for the full
Board and to report all such actions to the Board for ratification at its next
meeting.
Each director who is not an officer of the Company is paid an annual
retainer fee of $28,000 and attendance fees of $1,200 per Board meeting
attended, and $1,000 per committee meeting attended as Chairman of the committee
or $900 per committee meeting attended as a member of the committee. The
Chairmen of the Audit and Compensation and Executive Personnel Committees are
each also paid an annual retainer fee of $3,000, and the Chairmen of the
Finance, the Nominating and the Ethics and Conflict of
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<PAGE> 10
Interest Committees are each paid an annual retainer fee of $2,000. Under the
Company's Deferred Compensation Plan for Directors, each director may elect to
defer payment of all or specified portions of such fees, in which case the
director is entitled to interest accruals on the amounts so deferred at the
prime rate in effect at the end of the Company's preceding fiscal year (adjusted
annually), plus one-quarter of one percent. Directors are also eligible to
participate in two additional deferred compensation plans. Under the Directors
Deferred Compensation Plan, fees which are deferred accrue interest at a
"Declared Rate" (adjusted annually) equal to Moody's Long-Term Corporate Bond
Index Rate plus, if the director ceases to be a director by reason of death,
disability or normal retirement or elects to receive a preretirement benefit, 6%
per annum. Under the Directors Variable Deferred Compensation Plan, fees which
are deferred either accrue interest at a fixed rate based on the 120-month
rolling average of ten-year U.S. Treasury Notes (plus, if the director ceases to
be a director by reason of death, disability or normal retirement, 25% of such
rate per annum), or accrue at the actual rate of return (less an administrative
fee) of one of four investment funds managed by an insurance company. Benefits
payable by the Company under these plans are secured with assets placed in an
irrevocable trust.
Directors are also eligible to participate in the Retirement Plan for
Directors, whereby individuals who serve on the Company's Board of Directors
after 1982 and subsequently terminate their service as a director with at least
five years' tenure, are entitled to receive an annual benefit from the Company
equal to the annual director retainer fee plus 12 times the regular meeting fee,
as such fees are in effect on the date of termination, payable to the director
(or to his surviving spouse of at least one year or other designated
beneficiary) for the number of full or partial years the director served on the
Company's Board. Following the death of the director's surviving spouse, or if
there is no surviving spouse living at the time of the death of the director,
any benefits will be paid to one or more secondary beneficiaries designated by
the director prior to his or her death until the first to occur of (i) receipt
of the maximum benefit to which the director would have been entitled had he or
she survived, (ii) the death of the secondary beneficiaries, if natural persons
or (iii) benefits have been paid under the plan to the director, surviving
spouse, and/or the secondary beneficiaries for a combined period of ten years.
Non-employee directors also participate in the Director Plan, pursuant to
which options to purchase a total of 38,000 shares of Company common stock were
granted in 1994 to the non-employee directors eligible to receive grants under
the Director Plan, including options to purchase a total of 20,000 shares which
were granted on December 1, 1994, subject to stockholder approval of the
amendments to the Director Plan described under the heading "The 1988 Stock
Option Plan for Non-Employee Directors (Proxy Item 2)" (the "Amendments"). The
option price for each such option granted is 100% of the fair market value of
Company common stock on the date of grant. All options granted have a term of
ten years, and become exercisable in two cumulative installments of 50% of the
number of shares with respect to which the option was initially granted, on each
of the first and second anniversaries of the grant date, except that, if the
Amendments are approved by stockholders, all options owned by a director which
are unexercisable on the date the director retires at or after age 72 will
become fully exercisable on the date of such retirement. The Director Plan calls
for each non-employee director to receive an option grant with respect to 5,000
shares upon joining the Board of Directors, and automatic annual grants
thereafter to each continuing non-employee director with respect to 2,000
shares. In addition, the Company made a cash payment in February 1995 to Mr. F.
Daniel Frost in the amount of $11,560. This payment was made in lieu of the
regular grant of an option to purchase 2,000 shares of the Company's common
stock under the Director Plan which Mr. Frost did not receive in February 1994
because he had attained the age of 72 at that time and therefore had ceased to
be eligible to receive options under the Director Plan. Such amount represents
the grant date present value of an option for 2,000 shares at an exercise price
of $30.5625 (the price at which options were granted to the other directors
under the Director Plan on February 24, 1994) under a Black-Scholes option
pricing model adapted for use in valuing director stock options.
8
<PAGE> 11
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The following table and accompanying notes show for the Chief Executive
Officer and the other four most highly compensated executive officers of the
Company for 1994, the compensation paid by the Company to such persons for
services in all capacities during 1994 and, to the extent required by applicable
rules, the preceding two fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ----------------------- --------
---------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(1) ($) ($) (#)(2) (3) ($)(4)(5)
------------------ ---- -------- -------- ------------ ---------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles D. Miller 1994 $695,000 $850,000 -- -- 167,000 $217,000 $167,904
Chairman and Chief 1993 683,333 555,000 -- -- 73,400 -- 120,038
Executive Officer 1992 650,000 530,000 -- -- 85,000 -- 164,410
Philip M. Neal 1994 $440,000 $500,000 -- -- 83,000 $137,400 $ 54,014
President and Chief 1993 428,333 325,000 -- -- 37,200 -- 42,642
Operating Officer 1992 393,333 300,000 -- -- 41,000 -- 55,802
Kim A. Caldwell 1994 $289,084 $251,000 -- -- 44,000 $127,200 $ 28,708
Senior Group Vice 1993 271,000 165,000 -- -- 16,700 -- 19,405
President, 1992 245,333 155,000 -- -- 19,000 -- 25,712
Worldwide Materials
R. Gregory Jenkins 1994 $267,000 $200,000 -- -- 33,000 $83,400 $ 35,960
Senior Vice President, 1993 262,000 150,000 -- -- 14,600 -- 27,975
Finance and Chief 1992 247,100 140,000 -- -- 17,600 -- 42,876
Financial Officer
Donald L. Thompson 1994 $252,084 $161,000 -- -- 36,000 $28,700 $ 17,295
Group Vice President, 1993 219,250 85,000 -- -- 8,500 -- 14,595
Office Products 1992 175,667 75,000 -- -- 10,000 -- 37,527
</TABLE>
- ---------------
(1) Amounts shown include amounts earned but deferred at the election of
executive officers under the Company's deferred compensation plans and the
Company's Employee Savings Plan, a qualified defined contribution plan under
Section 401(k) of the Internal Revenue Code of 1986, as amended (the
"Code").
(2) Amounts for 1994 consist of options granted in February and December 1994.
The December grant was a result of a decision by the Board of Directors to
change the date of grants from February to December of each year, and
consequently the two grants in 1994 represent grants in respect of two years
of service. Amounts for 1993 and 1992 consist of options granted in February
1993 and February 1992, respectively.
(3) Amounts consist of cash payments under the Company's Key Executive Long-Term
Incentive Plan for the cycle which was completed on December 31, 1993.
(4) Amounts consist of (i) Company contributions to deferred compensation plans
in lieu of Company contributions to the Company's Employee Savings Plan, a
401(k) plan, and, in the case of Mr. Thompson, Company contributions to the
Savings Plan; (ii) Company contributions to the Company's Stock Holding and
Retirement Enhancement Plan, a leveraged employee stock ownership plan which
offsets benefits under the Retirement Plan for Employees of Avery Dennison
Corporation; and (iii) interest earned on deferred compensation accounts
above 120% of the applicable federal rate ("above market interest"). These
amounts for 1994 are $39,112, $6,488 and $122,304, respectively for
Mr. Miller; $24,475, $6,488 and $23,051, respectively for Mr. Neal; $15,398,
$4,521 and $8,789, respectively for Mr. Caldwell; $14,198, $3,301 and
$18,461, respectively for Mr. Jenkins; and $9,837, $6,488 and $970,
respectively for Mr. Thompson.
(5) A substantial portion of above market interest earned on deferred
compensation accounts for Messrs. Neal, Caldwell and Thompson (each of whom
is under age 55) will not be payable in the event that the executive
officer's employment terminates other than by reason of death, disability or
retirement.
9
<PAGE> 12
OPTION GRANTS
The following table shows information regarding options granted in 1994 to
each of the named executive officers under the Company's 1990 Stock Option and
Incentive Plan for Key Employees (the "1990 Plan") pursuant to the Company's
Amended and Restated Key Executive Long-Term Incentive Plan (the "LTIP").
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------
NUMBER OF
SECURITIES % OF
UNDERLYING TOTAL OPTIONS EXERCISE
OPTIONS GRANTED TO OR BASE
GRANTED EMPLOYEES IN PRICE EXPIRATION GRANT DATE
NAME (#)(1)(2) FISCAL YEAR ($/SH) DATE PRESENT VALUE($)(3)
---- ----------- ------------- ----------- ---------- -------------------
<S> <C> <C> <C> <C> <C>
Charles D. Miller 85,000 12.80% $30.5625 2/24/2004 $597,550
82,000 11.94% 32.5000 12/01/2004 701,100
Philip M. Neal 42,000 6.33% 30.5625 2/24/2004 295,260
41,000 5.97% 32.5000 12/01/2004 350,550
Kim A. Caldwell 24,000 3.61% 30.5625 2/24/2004 168,720
20,000 2.91% 32.5000 12/01/2004 171,000
R. Gregory Jenkins 18,000 2.71% 30.5625 2/24/2004 126,540
15,000 2.18% 32.5000 12/01/2004 128,250
Donald L. Thompson 19,000 2.86% 30.5625 2/24/2004 133,570
17,000 2.48% 32.5000 12/01/2004 145,350
</TABLE>
- ---------------
(1) Amounts consist of non-qualified stock options granted in February and
December 1994. The December grant was a result of a decision by the Board of
Directors to change the date of grants from February to December of each
year, and consequently the two grants in 1994 represent grants in respect of
two years of service. All options were granted at fair market value for a
term of ten years under the 1990 Plan pursuant to the LTIP. The options vest
nine years and nine months from the date of grant, but are eligible for
accelerated vesting, beginning three years from the date of grant, if the
Company meets the "return on total capital" (as defined in the LTIP) test
set forth in the LTIP. This test generally measures the Company's return on
total capital against that of a specified group of other companies approved
by the Compensation and Executive Personnel Committee.
(2) The Compensation and Executive Personnel Committee may accelerate the time
at which an option becomes exercisable, and in the event of a "change of
control" of the Company (as defined in the option agreement) options become
immediately exercisable. However, no option will be accelerated to the
extent that such acceleration would subject the optionee to the excise tax
under Section 4999 of the Code.
(3) Option grant date values were determined using a Black-Scholes option
pricing model adapted for use in valuing executive stock options. In
determining the Black-Scholes value, the following underlying assumptions
were used: (i) stock price volatility is measured as the standard deviation
of the Company's stock over the three years prior to grant (ranges from
.2254 to .2838); (ii) dividend yield is measured as the twelve month average
ratio of dividends to month-end closing price (for the month in which the
dividend was declared) prior to grant of the option (ranges from 2.33% to
3.19%); (iii) the risk-free rate of return represents the weekly average of
the ten-year Treasury bond rates for the 52 weeks immediately preceding the
grant date of the options (ranges from 5.75% to 6.90%); (iv) option term
represents the period from the date of grant of each option to the
expiration of the term of each option (10 years); (v) vesting restrictions
are reflected by reducing the value of the option determined by the
Black-Scholes model by 5% for each full year of vesting restrictions,
assuming that exercisability of the options was accelerated to the fifth
anniversary of the option grant date as a result of meeting the performance
condition described in footnote (1) as of that date (i.e., 25%). In the
event that the performance condition described in footnote (1) is met later
than the fifth anniversary of the grant date, or is not met
10
<PAGE> 13
during the term of the options, the grant date present value of the options
would be lower. In the event that such performance condition is not met at
all and the options become exercisable nine years and nine months after the
options are granted, the grant date present value of the February 1994 and
December 1994 option grants would be $408,000 and $477,240, respectively for
Mr. Miller; $201,600 and $238,620, respectively for Mr. Neal; $115,200 and
$116,400, respectively for Mr. Caldwell; $86,400 and $87,300, respectively
for Mr. Jenkins; and $91,200 and $98,940, respectively for Mr. Thompson. The
Black-Scholes option pricing model establishes a cash equivalent value for
an option on the date of grant. The Company's use of such model is not
intended to forecast any future appreciation in the price of the Company's
stock. In addition, no gain to the optionees is possible without
appreciation in the price of the Company's common stock, which will benefit
all stockholders. If the market price of the stock does not exceed the
exercise price of the options at some time after the options become
exercisable or if they terminate unvested or unexercised, the value of the
options will ultimately be zero.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table shows for each of the named executive officers the
shares acquired on exercise of options during 1994, the difference between the
option exercise price and the market value of the underlying shares on the date
of such exercise, and (as to outstanding options at December 31, 1994) the
number of unexercised options and the aggregate unrealized appreciation on
"in-the-money", unexercised options held at such date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR-END (#) FISCAL YEAR-END($)(2)
SHARES ------------------- ---------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE
---- ------------ -------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
Charles D. Miller 80,000 $1,256,755 401,078/342,900 $5,250,525/$2,300,869
Philip M. Neal 15,500 246,359 155,658/170,200 $2,127,355/$1,143,075
Kim A. Caldwell -- -- 55,750/ 82,950 $ 762,234/$ 539,216
R. Gregory Jenkins 28,000 417,374 91,535/ 68,450 $1,233,293/$ 462,303
Donald L. Thompson -- -- 50,525/ 49,175 $ 665,281/$ 269,969
</TABLE>
- ---------------
(1) Market value of the common stock at the exercise date minus the exercise
price of the options exercised. Amounts in this column represent the value
realized by the named executive upon the exercise of stock options granted
in prior years. All options had exercise prices equal to the market price of
the Company's stock on the date the options were granted, and vested on the
basis of the executive's continued employment with the Company. Thus, the
amount realized upon exercise of the options resulted directly from
appreciation in the Company's stock price during the executives' tenure with
the Company.
(2) Market value of the common stock at December 31, 1994 minus the exercise
price of "in-the-money" options.
LONG-TERM INCENTIVE PLAN AWARDS
Under the LTIP, key executives recommended by the Company's Chief Executive
Officer and designated by the Compensation and Executive Personnel Committee of
the Board of Directors (the "Committee") are eligible to receive annual grants
of stock options and to earn a deferred cash incentive award based on the
financial performance of the Company and, in some cases, its business units.
Participants in the LTIP are eligible to earn a deferred cash incentive award
after the end of each three-year performance cycle, which cycles begin every
other year (e.g., 1991, 1993 and 1995). Option grants pursuant to the LTIP are
made under the 1990 Plan. Cash payouts made in 1994 under the LTIP for the
performance cycle which began in
11
<PAGE> 14
1991 and ended in 1993 are set forth in the table on page 9. No deferred cash
incentive awards were made under the LTIP in 1994.
RETIREMENT PLAN
The table set forth below illustrates representative retirement benefits
for various compensation levels and service periods for employees under the
Retirement Plan for Employees of Avery Dennison Corporation (the "Retirement
Plan").
PENSION PLAN TABLE(1)
<TABLE>
<CAPTION>
YEARS OF SERVICE(2)
----------------------------------------------------------
REMUNERATION (2)(3) 15 20 25 30 35
------------------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$200,000 $50,796 $67,728 $ 84,661 $101,593 $118,525
$250,000 and above $60,204 $80,272 $100,341 $120,409* $140,477*
</TABLE>
- ---------------
* For the plan year beginning December 1, 1993, amount is subject to annual
pension limitation of $118,800 imposed under Section 415 of the Code.
(1) Amounts shown assume payment in the form of a straight life annuity, level
compensation, and are not subject to deductions for Social Security payments
or other offsets. Amounts shown do not include estimated benefits under the
Company's Supplemental Executive Retirement Plan described below.
(2) Compensation covered by the Retirement Plan for each of the individuals
listed in the table on page 9 is the sum of the 1994 salary as shown in the
third column in that table and the 1993 bonus (which was paid in 1994) as
shown in the fourth column in that table, less amounts deferred at the
election of executive officers under the Company's deferred compensation
plans and the Company's Employee Savings Plan. Such covered compensation for
Messrs. Miller, Neal, Caldwell, Jenkins and Thompson is $1,111,760,
$628,000, $311,884, $266,400 and $321,844, respectively. Full years of
credited service under the Retirement Plan for these individuals are as
follows: Charles D. Miller, 29 years; Philip M. Neal, 19 years; Kim A.
Caldwell, 20 years; R. Gregory Jenkins, 20 years; and Donald L. Thompson,
20 years.
(3) For the plan year beginning December 1, 1993, compensation used to determine
annual benefit accruals under the Retirement Plan was limited under the Code
to the first $235,840 of covered compensation.
Benefits under the Company's Retirement Plan are coordinated with benefits
from the Stock Holding and Retirement Enhancement Plan (the "SHARE Plan"), a
leveraged employee stock ownership plan. Under this arrangement, the pension
benefit to which an employee would otherwise be entitled under the Retirement
Plan ("basic pension benefit") is provided first under the SHARE Plan and then,
to the extent necessary, under the Retirement Plan. If the sum of the Retirement
Plan benefit accrued before adoption of the SHARE Plan and the SHARE Plan
benefit exceeds the basic pension benefit, the employee receives the higher
benefit.
The Supplemental Executive Retirement Plan (the "SERP"), adopted in 1983,
is designed to provide its participants with additional incentives to further
the Company's growth and development and as an inducement to remain in its
service. Participants designated by the Committee of the Board of Directors are
offered benefits under this plan to supplement those to which they may be
entitled at the time of their retirement. The Committee has designated Charles
D. Miller as a participant in this plan. Mr. Miller's participation has been set
to commence upon his retirement at or after age 65 at a benefit level which,
when added to the benefits to which he will be entitled from the Retirement Plan
and the SHARE Plan at the time of his retirement, Company contributions to the
Employee Savings Plan and Social Security, will equal 62.5% of his final
three-year average compensation, plus an additional 0.5% of such compensation
for each year of employment after age 65 (or during which termination
compensation payments under his October 24, 1990 agreement with the Company are
being made). Assuming retirement at age 70, and certain modest increases in
compensation over the next five years, Mr. Miller's estimated annual retirement
benefit under the SERP would be $530,000. Survivor and disability benefits are
also payable under the SERP under certain circumstances. Benefits payable under
the SERP are secured with assets placed in an irrevocable trust. The
12
<PAGE> 15
cost of benefits payable under the SERP will be recovered from the proceeds of
life insurance purchased by the Company if assumptions made as to life
expectancy, policy dividends, and other factors are realized.
OTHER INFORMATION
On October 24, 1990, the Company entered into an agreement with Mr. Miller,
replacing Mr. Miller's substantially similar 1982 agreement with the Company.
The new agreement provides that if Mr. Miller's employment with the Company is
terminated for any reason other than cause, retirement at or after age 70 or
voluntary resignation or following a "change of control" of the Company (as
defined in the agreement), the Company must for three years thereafter or until
he reaches age 70, whichever first occurs, pay Mr. Miller (or his beneficiary,
should he die before all such payments have been made) annual termination
compensation equal to the highest compensation (salary plus bonus) paid to him
in any of the three previous years (half of his average annual compensation over
this period for disability termination) and continue coverage during such period
for Mr. Miller, and to the extent possible for his spouse, under existing life,
accident, medical and dental plans. Amounts to which Mr. Miller would be
entitled under this agreement are reduced to the extent of any compensation he
earns from any new employment. If he dies while receiving disability termination
payments, or if his employment is terminated by death, his spouse will be
entitled to receive such disability termination payments, as well as medical and
dental benefits, until her death or September 1, 1997, whichever first occurs.
Following a change of control, payments to which Mr. Miller would otherwise be
entitled under other plans on account of a change of control are to be limited
to an aggregate amount equal to 2.99 times the "base amount" as defined in
Section 280G of the Code. If Mr. Miller's employment is terminated for any
reason other than cause, he will be entitled to purchase the Company automobile,
if any, then being provided for his use at the depreciated book value thereof,
and to have assigned to him at no cost (although Mr. Miller must reimburse the
Company for the cash value of the policy, if any), and with no apportionment of
prepaid premiums, any assignable insurance policy then owned by the Company
relating specifically to him (paid up to age 70).
On October 23, 1990, Mr. Neal entered into an agreement with the Company
substantially the same as that of Mr. Miller described above, except (i) Mr.
Neal receives no benefits from the Company except those provided under other
Company plans under the agreement if his employment is terminated by death or
disability, (ii) the period of compensation following termination other than for
cause, voluntary resignation or retirement (at or after age 65) or following a
change of control is 18 months or until age 65, whichever first occurs, (iii)
Mr. Neal must use his best efforts to secure new employment following
termination and compensation earned from such employment offsets payments due
under this agreement, and (iv) following a change of control Mr. Neal's rights
will be governed by the Company's Executive Employment Security Policy described
below, instead of this agreement.
Messrs. Neal and Jenkins have been designated by the Committee as
participants under the Company's Executive Employment Security Policy (the
"Policy"). The Policy provides that if within three years of a "change of
control" of the Company, as defined in the Policy, the employment of an officer
is terminated for reasons other than cause, death, disability, normal retirement
at or after age 65 or voluntary resignation (except for resignation following a
reduction in status or compensation), the officer will be entitled to receive,
for a period of one, two or three years, depending on length of service (but in
no event after the officer's 65th birthday), monthly termination indemnity
payments equal to one-twelfth of the highest annual compensation (salary plus
bonus) paid to such officer within the previous three years. During this period
the officer and his spouse are entitled to the benefits provided under the
Company's then existing life, accident, medical and dental insurance plans,
reduced to the extent they are provided by another employer or under another
group plan, and to the benefit of continued accrual of benefits provided under
the Company's Retirement Plan. During this period the officer must use his best
efforts to secure new employment, and termination indemnity payments will be
reduced by half the amount of any compensation he receives from new employment.
Messrs. Caldwell and Thompson have been designated by the Committee as
participants under the Company's 1985 Executive Employment Security Policy. This
policy is in all respects identical to the Policy except that it prohibits
participants from receiving termination compensation in excess of an amount
which would subject such compensation to the excise tax provided in Section 4999
of the Code.
13
<PAGE> 16
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "1934
Act") requires the Company's officers and directors, and persons who own more
than ten percent of a registered class of the Company's equity securities
(collectively, "Insiders"), to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission (the "SEC") and
the New York Stock Exchange. Insiders are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file. To the Company's
knowledge, based solely on its review of the copies of such reports furnished to
the Company and written representations from certain Insiders that no other
reports were required for such Insiders, the Company believes that, during the
1994 fiscal year, all Section 16(a) filing requirements applicable to Insiders
were complied with, except that one report, covering two transactions, was filed
late by Mr. Wayne H. Smith, one report, covering one transaction, was filed late
by Mr. R. Stanton Avery, and one report, covering one transaction, was filed
late by Mr. H. Russell Smith.
REPORT OF COMPENSATION AND EXECUTIVE PERSONNEL COMMITTEE
ON EXECUTIVE COMPENSATION
The Committee has furnished the following report on executive compensation.
OVERALL POLICY
The Company's executive compensation program is designed to be closely
linked to Company performance and returns to stockholders. To this end, the
Company developed several years ago an overall compensation strategy and
specific compensation plans that tie a significant portion of executive
compensation to the Company's success in meeting specified performance goals and
to appreciation in the Company's stock price. The overall objectives of this
strategy are to attract and retain the best possible executive talent, to
motivate these executives to achieve the goals inherent in the Company's
business strategy, to link executive and stockholders interests through equity
based plans and finally to provide a compensation package that recognizes
individual contributions as well as overall business results.
Each year the Committee, which is comprised exclusively of non-employee
directors, conducts a review of the Company's executive compensation program.
This review includes an assessment of the effectiveness of the Company's
compensation program and a comparison of the Company's executive compensation
and performance to comparable public corporations, including companies within
the Peer Group described under "Stockholder Return Performance". The Company
retains from time to time the services of executive compensation consultants to
provide to the Company and the Committee comparative data, benefit design advice
and analysis of the cost of incentives provided.
The Committee determines the compensation of the Company's 19 executive
officers, including the individuals whose compensation is detailed in this proxy
statement, and sets policies for and reviews the compensation awarded to another
approximately 45 highly compensated executives. This is designed to ensure
consistency throughout the executive compensation program. In reviewing the
individual performance of the 19 executive officers (other than Mr. Miller), the
Committee takes into account the detailed performance reviews and
recommendations of Mr. Miller.
The key elements of the Company's executive compensation program consist of
base salary, annual bonus, stock options, and, for certain executives,
participation in the Company's LTIP. The Committee's policies with respect to
each of these elements, including the basis for the compensation paid and
awarded to Mr. Miller, the Company's Chairman and Chief Executive Officer, are
discussed below. In addition, while the elements of compensation described below
are considered separately, the Committee takes into account the full
compensation package afforded by the Company to the individual.
Under the 1993 Omnibus Budget Reconciliation Act ("OBRA"), income tax
deductions of publicly-traded companies may be limited to the extent total
compensation for certain executive officers exceeds $1 million (less the amount
of any "excess parachute payments" as defined in Section 280G of the Code) in
any one year, except for compensation payments which qualify as
"performance-based." The Committee has designed the Company's compensation
programs to conform with the OBRA legislation and related
14
<PAGE> 17
regulations so that total compensation paid to any employee will not exceed $1
million in any one year, except for compensation payments which qualify as
"performance-based." However, the Internal Revenue Service has not yet
promulgated final regulations interpreting OBRA. Moreover, the Company may pay
compensation which is not deductible in limited circumstances when sound
management of the Company so requires. In furtherance of the Company's intention
to design compensation programs to conform with the OBRA legislation, at the
Company's 1994 Annual Meeting the Company requested and received stockholder
approval of the LTIP, the Company's Senior Executive Compensation Plan and
certain amendments to the 1990 Plan.
BASE SALARIES
Base salaries for new executive officers are initially determined by
evaluating the responsibilities of the position to be held and the experience of
the individual, and by reference to the competitive marketplace for executive
talent, including a comparison to base salaries for comparable positions at
other companies. The Company participates each year in two nationwide salary
surveys of between approximately 350 and 400 large public companies performed by
nationally recognized compensation consulting firms. The Committee uses the data
compiled from these surveys to assist it in establishing base salaries. In
general, base salaries and total compensation for executives are targeted to a
range that is within the third quartile (the fourth quartile being the highest)
of the compensation paid by such other companies. Mr. Miller's base salary is
also targeted in this range, and his total compensation is targeted to a range
within the fourth quartile. In addition, in establishing salary levels within
that range, the Committee considers the competitiveness of the executives'
entire compensation package. For 1994, salary levels were within or below this
range, based on competitive salary data compiled in 1993 and updated for use in
1994.
Annual salary adjustments are determined by evaluating the performance of
the Company and of each executive officer, reviewing base salaries for
comparable positions at other companies contained in the salary surveys
described above, and, for selected senior executives, including Mr. Miller,
comparing the total compensation packages of the executives, including base
salary, with those of the companies in the Peer Group described under
"Stockholder Return Performance". In addition, the Committee takes into account
any new responsibilities. In the case of executive officers with responsibility
for a particular business unit, such unit's financial results are also
considered. The Committee, where appropriate, also considers non-financial
performance measures. These include increases in market share, manufacturing
efficiency gains, and improvements in product quality, customer service, working
capital management, employee safety, relations with employees and leadership
development.
Based on the then existing economic conditions in late 1993 and early 1994,
Mr. Miller recommended that his base salary, and that of certain other executive
officers (including certain of the officers whose compensation is detailed in
this proxy statement), remain constant in 1994. Accordingly, the Committee did
not increase such officers' base salaries during 1994. The base salary figures
in the table on page 9 for these officers reflect an increase in salaries from
1993 to 1994 due to the fact that base salaries were raised in mid-1993 and
continued at the increased levels throughout 1994.
ANNUAL BONUS
The Company's executive officers, other than Messrs. Miller and Neal, are
eligible for an annual cash bonus under the Company's Executive Incentive
Compensation Plan (the "Executive Bonus Plan"). Under the Executive Bonus Plan,
individual and corporate performance objectives are established at the beginning
of each year. Eligible executives are assigned threshold, target and maximum
bonus levels. The Company performance measure for bonus payments is based on
several financial goals, including, in 1994, return on sales ("ROS"), return on
total capital ("ROTC") and earnings per share ("EPS"). For executive officers
with responsibility for a particular group, each of which consists of several
business units, the performance measure is based on the group's net income and
ROTC. The Committee weighs these financial goals very heavily. Each of the
specified financial performance measures is given approximately equal weight. In
1994, the Company exceeded each of its targeted financial goals, and each of the
groups exceeded each of its targeted financial goals. The Committee also
considers the individual non-financial performance measures
15
<PAGE> 18
described above under "Base Salaries" in determining bonuses under the Executive
Bonus Plan, but to a much lesser extent than the financial goals described
above.
Messrs. Miller and Neal are eligible for an annual cash bonus under the
Company's Senior Executive Incentive Compensation Plan (the "Senior Executive
Bonus Plan") which was approved by stockholders in 1994 as part of the Company's
policy to design the Company's compensation programs to conform with the OBRA
legislation and related regulations. Payments under the Senior Executive Bonus
Plan are based solely on the achievement of one or more of the following
pre-established objective performance goals: ROS, ROTC, EPS, return on equity,
net income, cash flow, sales and total shareholder return (defined as cumulative
shareholder return, including the reinvestment of dividends, on the Company's
common stock), subject to the Committee's discretion to decrease awards which
would otherwise be payable under the Senior Executive Bonus Plan. In addition,
no bonuses are payable to the chief executive officer, chief operating officer
or chief financial officer (who is currently a participant in the Executive
Bonus Plan) unless the Company's pre-tax return on stockholders' equity exceeds
a minimum threshold and, in such event, the total of such executives' bonuses
may not exceed a specified percentage of the Company's pre-tax return on
stockholders' equity in excess of that minimum threshold. In 1994, the Company
exceeded each of its three targeted performance goals (ROS, ROTC and EPS) under
the Senior Executive Bonus Plan. Based on this performance, Mr. Miller was
awarded a bonus of $850,000, a 53% increase over the bonus paid in 1993.
STOCK OPTIONS
Under the 1990 Plan, stock options are granted to the Company's executive
officers. In 1994, the Board of Directors decided to move the date of the
regular annual option grants to executives under the 1990 Plan from the date of
the regular meeting of the Board in each February to the date of the regular
meeting of the Board in each December. As a result, most executives received two
option grants in 1994 (one in February and one in December), but will not
receive another option grant until December 1995. The size of stock option
awards is determined by the Committee using as a guideline a formula which takes
into account competitive compensation data and the executive's total cash
compensation opportunity (base salary and bonus opportunity). The formula does
not take into account the amount of stock options previously awarded to the
executive officers although the Committee may do so. In the event of poor
Company or individual performance, the Committee can elect not to award options
or grant options on fewer shares.
Stock options are designed to align the interests of executives with those
of the stockholders. The Committee believes that significant equity interests in
the Company held by the Company's management align the interests of stockholders
and management. The Company has adopted a stock ownership philosophy for
officers and directors which encourages each officer and director to achieve and
maintain certain specified levels of stock ownership during his or her tenure
with the Company. In furtherance of this philosophy, the Company maintains a
policy which limits the percentage of shares of the Company's common stock which
should be sold during each year.
Stock options are granted with an exercise price equal to the market price
of the common stock on the date of grant and with a ten-year term. Options for
LTIP participants (including the individuals whose compensation is detailed in
this proxy statement) vest nine years and nine months from the date of grant,
subject to accelerated vesting beginning three years from the date of grant if
the Company meets the ROTC test set forth in the LTIP. Options for the rest of
the Company's executives vest 25% per year over four years. This approach is
designed to promote the creation of stockholder value over the long term since
the full benefit of the compensation package cannot be realized unless stock
price appreciation occurs over a number of years.
In February 1994, Mr. Miller received options to purchase 85,000 shares
with an exercise price of $30.5625 per share. In December 1994, Mr. Miller
received options to purchase an additional 82,000 shares with an exercise price
of $32.50 per share, as a result of the Board's decision to move the date of
annual option grants to executives as described above. Mr. Miller now owns
directly 171,614 shares of the Company's common stock and, with the 1994 grants,
holds options to purchase an additional 743,978 shares, of which options to
purchase 401,078 shares were exercisable at December 31, 1994.
16
<PAGE> 19
LTIP
Under the LTIP, key executives recommended by the Company's Chief Executive
Officer and designated by the Committee are eligible to receive annual grants of
stock options and to earn a deferred cash incentive award based on the financial
performance of the Company and, in some cases, its business units. Participants
in the LTIP are eligible to earn a deferred cash incentive award after the end
of each three-year performance cycle, which cycles begin every other year (e.g.,
1991, 1993 and 1995). Option grants pursuant to the LTIP are made under the 1990
Plan and are described above under "Stock Options". Cash payouts made in 1994
under the LTIP for the performance cycle which began in 1991 and ended in 1993
are set forth in the table on page 9. No deferred cash incentive awards were
made under the LTIP in 1994.
CONCLUSION
Through the programs described above, a very significant portion of the
Company's executive compensation is linked directly to individual and Company
performance and stock price appreciation. In 1994, as in previous years,
approximately 50% of the Company's executive compensation (over 50% for the
individuals listed in the table on page 9) consisted of these performance-based
variable elements. In the case of Mr. Miller, approximately 65% of his 1994
compensation consisted of performance-based variable elements. The Committee
intends to continue the policy of linking executive compensation to Company
performance and returns to stockholders, recognizing that the ups and downs of
the business cycle from time to time may result in an imbalance for a particular
period.
February 23, 1995 F. Daniel Frost, Chairman
John C. Argue
Frank V. Cahouet
Richard M. Ferry
Peter W. Mullin
Sidney R. Petersen
Lawrence R. Tollenaere
17
<PAGE> 20
STOCKHOLDER RETURN PERFORMANCE
As required by the rules of the SEC, the following graph compares the
Company's cumulative stockholder return on its common stock, including the
reinvestment of dividends, with the return on the Standard & Poor's 500 Stock
Index (the "S&P 500 Index") and the average return, weighted by market
capitalization, of a peer group of companies (the "Peer Group"). In addition,
the Company has included the median return of the Peer Group in the graph
because, under the Company's LTIP, Company performance is measured against the
performance of other companies using a percentile approach in which each company
is given equal weight regardless of its size. The Peer Group is comprised of The
Actava Group Inc. (formerly Fuqua Industries, Inc.), AMETEK, Inc., Avery
Dennison Corporation, Ball Corporation, Bemis Company, Inc., Boise Cascade
Corporation, W.H. Brady Co., Cabot Medical Corporation, Champion International
Corporation, A.T. Cross Company, Deere & Company, The Dexter Corporation, Dover
Corporation, Dresser Industries, Inc., Echlin Inc., Engelhard Corporation, Ennis
Business Forms, Inc., Ethyl Corporation, Federal-Mogul Corporation, Ferro
Corporation, H.B. Fuller Company, The B.F. Goodrich Company, W.R. Grace & Co.,
Harris Corporation, Harsco Corporation, Hercules Incorporated, Hunt
Manufacturing Co., Illinois Tool Works Inc., Imo Industries Inc., James River
Corporation of Virginia, Johnson Controls, Inc., Masco Corporation, Maytag
Corporation, The Mead Corporation, Moore Corporation Limited, Nashua
Corporation, National Service Industries, Inc., Olin Corporation, Pentair, Inc.,
Pittway Corporation, Premark International, Inc., Scott Paper Company, The
Sherwin-Williams Company, The Standard Register Company, Teledyne, Inc., Thomas
& Betts Corporation, The Timken Company, Union Carbide Corporation, Valhi, Inc.,
Wallace Computer Services, Inc., Westvaco Corporation, and Witco Corporation.
18
<PAGE> 21
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN(1)
OF AVERY DENNISON, S&P 500 INDEX AND PEER GROUP,
WEIGHTED AVERAGE(2) AND MEDIAN
<TABLE>
<CAPTION>
PEER GROUP
MEASUREMENT PERIOD AVERY S&P 500 (WEIGHTED PEER GROUP
(FISCAL YEAR COVERED) DENNISON INDEX AVERAGE) (MEDIAN)
<S> <C> <C> <C> <C>
1989 100 100 100 100
1990(3) 68 97 78 80
1991 83 126 105 97
1992 97 136 122 114
1993 103 150 153 135
1994 128 152 161 135
</TABLE>
- ---------------
(1) Assumes $100 invested on December 31, 1989 in the stock of Avery Dennison,
the S&P 500 Index and the Peer Group and that all dividends were reinvested.
(2) Weighted by market capitalization.
(3) On May 25, 1990, Avery International Corporation announced its agreement to
merge with Dennison Manufacturing Company. The merger was completed on
October 16, 1990.
Stock price performance of the Company reflected in the above graph is not
necessarily indicative of future price performance.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Peter W. Mullin, a member of the Committee, is the chairman and chief
executive officer and a director of Mullin Insurance Services, Inc. ("MINC") and
PWM Insurance Services, Inc. ("PWM"), executive compensation and benefit
consultants and insurance agents. Mr. Mullin is also the majority stockholder of
MINC and the sole stockholder of PWM. During 1994, the Company paid insurance
companies premiums for life insurance placed by MINC and PWM in 1994 and prior
years in connection with various Company employee benefit plans. In 1994, the
insurance companies paid commissions to MINC and PWM in an aggregate amount of
approximately $522,000 for the placement and renewal of this insurance, in which
Mr. Mullin had direct and indirect interests approximating $438,200.
Richard M. Ferry, a member of the Committee, is the chairman and chief
executive officer, a director and a principal stockholder of Korn/Ferry
International ("Korn/Ferry"), an executive search firm. During 1994, Korn/Ferry
received an aggregate of approximately $385,000 in payments from the Company for
executive search services, in which Mr. Ferry had an indirect interest
approximating $28,875.
19
<PAGE> 22
VOTING SHARES
Stockholders of record at the close of business on March 3, 1995, are
entitled to notice of, and to vote at, the Annual Meeting. There were 53,304,271
shares of common stock of the Company outstanding on March 3, 1995.
PRINCIPAL STOCKHOLDERS
Whenever in this proxy statement information is presented as to "beneficial
ownership", please note that such ownership indicates only that the person
shown, directly or indirectly, has or shares with others the power to vote (or
to direct the voting of) or the power to dispose of (or to direct the
disposition of) such shares; he or she may or may not have any economic interest
in the shares. The reporting of information herein does not constitute an
admission that any such person is, for the purpose of Section 13 or 16 of the
1934 Act, the "beneficial owner" of the shares shown herein.
To the knowledge of the Company, the following was the only person or group
who, as of December 31, 1994, owned beneficially 5% or more of the outstanding
common stock of the Company.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------- ------------------ --------
<S> <C> <C>
R. Stanton Avery.............................. 2,716,324(1) 5.07%
150 No. Orange Grove Blvd.
Pasadena, CA 91103
</TABLE>
- ---------------
(1) Refer to the table on page 5 for details of Mr. Avery's beneficial
ownership.
The Company's Employee Savings Plan and SHARE Plan, and the Dennison
Manufacturing Company Bargaining Unit Employee Stock Ownership Plan
(collectively, the "Plans") together owned a total of 6,070,367 shares of
Company common stock on December 31, 1994, or 11.34% of Common Stock then
outstanding. Although the Company is the Administrator of the Plans, each plan
was established and is administered to achieve the different purposes for which
it was created for the exclusive benefit of its participants, and employees
participating in the Plans are entitled to vote all shares allocated to their
accounts. Accordingly, such plans do not constitute a "group" within the meaning
of Section 13(d) of the 1934 Act.
THE 1988 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS (PROXY ITEM 2)
PROPOSED AMENDMENTS
Upon the recommendation of the Committee, the Board of Directors has
adopted, subject to stockholder approval, the following amendments to the
Director Plan (the "Amendments"):
1. a change in the date of grant of options under the Director Plan from
the date of each regular February meeting of the Board of Directors to
the date of each regular December meeting of the Board of Directors;
2. the removal of the prohibition on the granting of options under the
Director Plan to persons 72 years of age or older;
3. a change in the date of accelerated vesting of a director's
unexercisable options from his 72nd birthday to the date of such
director's retirement at or after age 72;
4. an extension of the Director Plan's termination date from January 31,
1997 to January 31, 2007; and
5. the addition of a provision permitting directors to designate
beneficiaries to receive vested options in the event of their deaths.
20
<PAGE> 23
DESCRIPTION OF THE DIRECTOR PLAN
In January 1988 the Company's Board of Directors adopted the Director Plan
and in March 1988 the stockholders approved it. The Director Plan is intended to
permit the Company to attract and retain the services of experienced and
knowledgeable independent directors for the benefit of the Company and its
stockholders, and to provide additional incentive for such directors to continue
to work for the best interests of the Company and its stockholders.
The principal features of the Director Plan, as amended by the Amendments,
are summarized below, but the summary is qualified in its entirety by reference
to the Director Plan itself. Copies of the Director Plan will be available at
the Annual Meeting and can also be obtained by making written request of the
Company's Secretary.
STOCK SUBJECT TO THE DIRECTOR PLAN
There are reserved for issuance upon the exercise of options granted under
the Director Plan 320,000 shares of Common Stock. Such shares may be authorized
and unissued shares or shares then held in the Company's treasury. Of such
shares, 128,000 shares remained available for future option grants as of
December 31, 1994. If any option granted under the Director Plan expires or
terminates without having been exercised in full, the shares subject to such
option will again be available for the purposes of issuance upon the exercise of
options granted under the Director Plan. On February 28, 1995, the closing stock
price of a share of the Company's Common Stock on the New York Stock Exchange
Composite Tape was $37.50.
OPTION GRANTS UNDER THE DIRECTOR PLAN
Under the Director Plan, each non-employee director receives an option
grant with respect to 5,000 shares upon joining the Board of Directors, and each
continuing non-employee director automatically receives on the date of the
regular meeting of the Board of Directors in each December thereafter an option
for 2,000 shares. Employee directors who retire as employees of the Company but
who remain on the Board are not entitled to receive a 5,000 share option grant,
but will receive annual option grants as described above commencing on the
December next following their retirement. Appropriate adjustments in the number
of shares subject to the Director Plan and to outstanding options will be made
in the event of stock splits, stock dividends or certain other types of
recapitalization, but the options granted thereafter will not be adjusted for
such events. Only non-qualified stock options may be granted under the Director
Plan. At present, eight non-employee directors are eligible to participate in
the Director Plan (four of the non-employee directors are over age 72). Upon
approval of the Amendments by the stockholders, all ten continuing non-employee
directors will be eligible to participate in the Director Plan. Each of these
directors received the 2,000 share option grant described above on December 1,
1994, subject to stockholder approval of the Amendments at the Annual Meeting.
The grant date present value of these options using a Black-Scholes option
pricing model adapted for use in valuing director stock options was $21,060 for
each non-employee director and $210,600 in the aggregate. Values of options
granted in the future under the Director Plan are not presently determinable.
The option price for each option granted under the Director Plan is 100% of
the fair market value of the Common Stock on the date of grant.
Options granted under the Director Plan have a term of ten years and vest
and become exercisable in two cumulative installments of 50% of the number of
shares initially granted, on each of the first and second anniversaries of the
grant date, except that all options owned by a director which are unexercisable
on the date the director retires at or after the age of 72 will become fully
exercisable on the date of such retirement.
If an optionee ceases to be a director, other than by reason of death or
retirement, the optionee may exercise an option (unless previously terminated)
for a period of three months after such termination, but not after expiration of
the option, to the extent the option was exercisable at the date of termination.
An option is exercisable for twelve or twenty-four months after death or
retirement from the Board of Directors, respectively, to the extent the option
was exercisable on the date of death or retirement, as the case may be.
21
<PAGE> 24
However, options granted under the Director Plan provide that in the event of a
"change of control" of the Company (as defined in the option) all previously
unexercisable options become immediately exercisable.
No option granted under the Director Plan may be assigned or transferred by
its holder except by will or by the laws of intestate succession, or to a
properly designated beneficiary. During the lifetime of the holder, an option
may be exercised only by the holder, or his guardian or legal representative.
ADMINISTRATION OF THE DIRECTOR PLAN
The Board of Directors administers the Director Plan.
AMENDMENT AND TERMINATION OF THE DIRECTOR PLAN
The Director Plan may be terminated, modified or amended by the
stockholders of the Company. The Board of Directors may also terminate the
Director Plan or modify or amend it in certain respects as set forth in the
Director Plan. No options may be granted under the Director Plan after January
31, 2007.
FEDERAL INCOME TAX CONSEQUENCES
The tax consequences of the Director Plan under current federal law are
summarized in the following discussion which deals with the general tax
principles applicable to the Director Plan, and is intended for general
information only. Alternative minimum tax and state and local income taxes are
not discussed, and may vary depending on individual circumstances and from
locality to locality.
For Federal income tax purposes, the recipient of options granted under the
Director Plan will not have taxable income upon the grant of the option, nor
will the Company then be entitled to any deduction. Generally, upon exercise of
an option the optionee will realize ordinary income, and the Company will be
entitled to a deduction, in an amount equal to the difference between the option
exercise price and the fair market value of the stock at the date of exercise.
An optionee's basis for the stock for purposes of determining his gain or loss
on his subsequent disposition of the shares generally will be the fair market
value of the stock on the date of exercise of the option.
REASONS FOR AMENDMENTS
The Director Plan currently provides that continuing non-employee directors
will automatically receive an annual option grant for 2,000 shares on the date
of the regular meeting of the Board of Directors in each February. Prior to
1994, this grant date coincided with the date of option grants to Company
executives under the 1990 Plan. During 1994, the Board of Directors determined
that it was advisable to move the date of the regular annual option grants to
the Company's executives to the date of the regular meeting of the Board of
Directors in each December in order to have more time at the February Board
meeting to make bonus determinations and to set goals under the bonus plans and
the LTIP. The Board also determined that it was advisable to continue to make
annual option grants under the Director Plan at the same time as option grants
for executives. Accordingly, in December 1994 the Board granted options under
the Director Plan, subject to stockholder approval of an amendment to the
Director Plan to change the date of grant of options under the Director Plan to
the annual Board meeting held in December, and the Board recommends such
amendment.
The Director Plan also currently provides that continuing non-employee
directors will cease to receive annual option grants once they reach the age of
72, and that all options which are unexercisable on the date a director reaches
the age of 72 shall become fully exercisable on that date, the age set for
directors' retirement from the Board under the Company's Bylaws. However, from
time to time the Board has determined that it is in the best interests of the
Company for certain directors to continue to serve on the Board beyond the age
of 72, to take advantage of such directors' experience and contributions to the
Board. Therefore, the Board believes that it is appropriate for such directors
to continue to receive the same compensation as other active members of the
Board, and recommends approval of amendments to the Director Plan to remove the
age 72 limitation and, correspondingly, to extend the vesting date for options
which are unexercisable on the date such director reaches the age of 72 to the
date of such director's date of retirement at or after age 72.
22
<PAGE> 25
Accordingly, in December 1994 the Board granted options to the two non-employee
directors who are age 72 or older and who will continue to serve as directors
after the 1995 Annual Meeting, subject to stockholder approval of the
Amendments.
The Director Plan currently terminates on January 31, 1997. The Board has
determined that it is advisable to continue to provide stock-based incentive
compensation to the Company's directors, thereby continuing to align the
interests of such directors with those of the stockholders, and that option
grants under the Director Plan are an effective means of providing such
compensation. Accordingly, the Board has amended the Director Plan to extend the
termination date of the Director Plan from January 31, 1997 to January 31, 2007,
subject to stockholder approval of the Amendments at the Annual Meeting. In
addition, to add flexibility to the Director Plan, the Board has amended the
Director Plan to permit directors to designate beneficiaries to receive vested
options in the event of their death.
REQUIRED VOTE FOR APPROVAL AND RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of a majority of the shares present or represented and
entitled to vote at the Annual Meeting is required to approve the Amendments.
Your Board of Directors recommends a vote FOR approval of the Amendments.
GENERAL
INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Coopers & Lybrand to serve as the
Company's independent accountants for the 1995 fiscal year. One or more
representatives of Coopers & Lybrand will be present at the Annual Meeting to
respond to appropriate questions and will be given an opportunity to make a
statement if they so desire.
STOCKHOLDER PROPOSALS
Stockholder proposals for presentation at the annual meeting scheduled to
be held on April 25, 1996, must be received at the Company's principal executive
offices on or before November 11, 1995. The Company's Bylaws provide that
stockholders desiring to nominate persons for election to the board of directors
or to bring any other business before the stockholders at an annual meeting must
notify the Secretary of the Company thereof in writing 60 to 90 days prior to
the first anniversary of the preceding year's annual meeting (or, if the date of
the annual meeting is more than 30 days before or more than 60 days after such
anniversary date, 60 to 90 days prior to such annual meeting or within 10 days
after the public announcement of the date of such meeting is first made by the
Company; or, if the number of directors to be elected to the board of directors
is increased and the Company does not make a public announcement naming all of
the nominees for director or specifying the size of the increased board at least
70 days prior to the first anniversary of the preceding year's annual meeting,
within 10 days after such public announcement is first made by the Company (with
respect to nominees for any newly created positions only)). Such notice must
include (a) as to each person whom the stockholder proposes to nominate for
election or reelection as a director, all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the 1934 Act and Rule 14a-11 thereunder, (b) as
to any other business that the stockholder proposes to bring before the meeting,
a brief description of such business, the reasons for conducting such business
at the meeting and any material interest in such business of such stockholder
and the beneficial owner, if any, on whose behalf the proposal is made, and (c)
the name and record address, and class and number of shares owned beneficially
and of record, of such stockholder and any such beneficial owner.
23
<PAGE> 26
ANNUAL REPORT
The Company's 1994 Annual Report to Stockholders has recently been mailed
to all stockholders of record.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, AND RETURN THE ACCOMPANYING
PROXY CARD IN THE ENCLOSED ENVELOPE.
Robert G. van Schoonenberg
Secretary
Dated: March 10, 1995
24
<PAGE> 27
PROXY
SOLICITED BY BOARD OF DIRECTORS Avery Dennison Corporation
[LOGO] ANNUAL MEETING -- APRIL 27, 1995 150 No. Orange Grove Boulevard
PASADENA, CALIFORNIA Pasadena, California 91103
The undersigned hereby appoints Charles D. Miller, Sidney R. Petersen and F.
Daniel Frost, or each or any of them with power of substitution, proxies for the
undersigned to act and vote at the 1995 annual meeting of stockholders of Avery
Dennison Corporation and at any adjournments thereof as indicated upon the
matters referred to on the reverse side and described in the proxy statement for
the meeting, and, in their discretion, upon any other matters which may properly
come before the meeting.
1. Election of Directors
NOMINEES: Frank V. Cahouet, Peter W. Mullin, Joan T. Bok, Philip M. Neal
2. Approval of Amendments to the Company's 1988 Stock Option Plan for
Non-Employee Directors
IF NO OTHER INDICATION IS MADE, THE PROXIES SHALL VOTE FOR THE ELECTION OF
THE DIRECTOR NOMINEES AND FOR PROPOSAL NUMBER 2.
(OVER)
/X/ PLEASE MARK VOTES.
- --------------------------------------------------------------------------------
A vote FOR ALL nominees is recommended A vote FOR is recommended by the
by the Board of Directors: Board of Directors:
- --------------------------------------------------------------------------------
1. Election of Directors (page 1) 2. Approval of certain amendments
to the Company's 1988 Stock
FOR ALL WITHHELD FROM Option Plan for Non-Employee
nominees ALL nominees Directors (page 20)
/ / / /
FOR AGAINST ABSTAIN
/ / / / / /
FOR ALL EXCEPT THE FOLLOWING NOMINEE(S):
- --------------------------------------------
- --------------------------------------------------------------------------------
Date__________________, 1995
-----------------------------
-----------------------------
Signature(s) of Stockholder(s)
-----------------------------
If acting as attorney,
executor, trustee, or in
other representative
capacity, please sign
name and title.
-----------------------------
Send admission ticket
for meeting / /
-----------------------------
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
<PAGE> 28
[LOGO] CONFIDENTIAL VOTING INSTRUCTIONS Avery Dennison Corporation
150 No. Orange Grove Boulevard
Pasadena, California 91103
TO: FIRST INTERSTATE BANK OF CALIFORNIA AS AGENT FOR THE TRUSTEES OF THE
AVERY DENNISON SAVINGS PLAN AND SHARE PLAN
VOTING INSTRUCTIONS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS OF
AVERY DENNISON CORPORATION FOR THE ANNUAL MEETING OF STOCKHOLDERS, APRIL 27,
1995.
The undersigned hereby appoints Charles D. Miller, Sidney R. Petersen and F.
Daniel Frost, or each or any of them with power of substitution, proxies for the
undersigned to act and vote at the 1995 annual meeting of stockholders of Avery
Dennison Corporation and at any adjournments thereof as indicated upon the
matters referred to on the reverse side and described in the proxy statement for
the meeting, and, in their discretion, upon any other matters which may properly
come before the meeting.
1. Election of Directors
NOMINEES: Frank V. Cahouet, Peter W. Mullin, Joan T. Bok, Philip M. Neal
2. Approval of Amendments to the Company's 1988 Stock Option Plan for
Non-Employee Directors
IF NO OTHER INDICATION IS MADE, THE PROXIES SHALL VOTE FOR THE ELECTION OF
THE DIRECTOR NOMINEES AND FOR PROPOSAL NUMBER 2.
(OVER)
/X/ PLEASE MARK VOTES.
- --------------------------------------------------------------------------------
A vote FOR ALL nominees is recommended A vote FOR is recommended by the
by the Board of Directors: Board of Directors:
- --------------------------------------------------------------------------------
1. Election of Directors (page 1) 2. Approval of certain amendments
FOR ALL WITHHELD FROM to the Company's 1988 Stock
nominees ALL nominees Option Plan for Non-Employee
/ / / / Directors (page 20)
FOR AGAINST ABSTAIN
/ / / / / /
FOR ALL EXCEPT THE FOLLOWING NOMINEE(S):
- ----------------------------------------
- --------------------------------------------------------------------------------
Date ______________________, 1995
----------------------------------
----------------------------------
Signature(s) of Stockholder(s)
----------------------------------
If acting as attorney,
executor, trustee, or in
other representative
capacity, please sign name
and title.
----------------------------------
Send admission ticket / /
for meeting
----------------------------------
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
<PAGE> 29
CONFIDENTIAL VOTING INSTRUCTIONS Avery Dennison Corporation
[LOGO] 150 No. Orange Grove Boulevard
Pasadena, California 91103
TO: FIRST INTERSTATE BANK OF CALIFORNIA AS AGENT FOR THE TRUSTEES OF THE
DENNISON MANUFACTURING COMPANY BARGAINING UNIT EMPLOYEE STOCK OWNERSHIP PLAN
VOTING INSTRUCTIONS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS OF
AVERY DENNISON CORPORATION FOR THE ANNUAL MEETING OF STOCKHOLDERS, APRIL 27,
1995.
The undersigned hereby appoints Charles D. Miller, Sidney R. Petersen and F.
Daniel Frost, or each or any of them with power of substitution, proxies for the
undersigned to act and vote at the 1995 annual meeting of stockholders of Avery
Dennison Corporation and at any adjournments thereof as indicated upon the
matters referred to on the reverse side and described in the proxy statement for
the meeting, and, in their discretion, upon any other matters which may properly
come before the meeting.
1. Election of Directors
NOMINEES: Frank V. Cahouet, Peter W. Mullin, Joan T. Bok, Philip M. Neal
2. Approval of Amendments to the Company's 1988 Stock Option Plan for
Non-Employee Directors
IF NO OTHER INDICATION IS MADE, THE PROXIES SHALL VOTE FOR THE ELECTION OF
THE DIRECTOR NOMINEES AND FOR PROPOSAL NUMBER 2.
(OVER)
/X/ PLEASE MARK VOTES.
- --------------------------------------------------------------------------------
A vote FOR ALL nominees is recommended A vote FOR is recommended by the
by the Board of Directors: Board of Directors:
- --------------------------------------------------------------------------------
1. Election of Directors (page 1) 2. Approval of certain amendments to
the Company's 1988 Stock Option
FOR ALL WITHHELD FROM Plan for Non-Employee Directors
nominees ALL nominees (page 20)
/ / / /
FOR AGAINST ABSTAIN
/ / / / / /
FOR ALL EXCEPT THE FOLLOWING NOMINEE(S):
- ----------------------------------------
- --------------------------------------------------------------------------------
Date ________________, 1995
------------------------------
------------------------------
Signature(s) of Stockholder(s)
------------------------------
If acting as attorney,
executor, trustee, or in
other representative
capacity, please sign name
and title.
------------------------------
Send admission ticket
for meeting / /
------------------------------
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
<PAGE> 30
AVERY INTERNATIONAL CORPORATION
1988 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. Purpose
This 1988 Stock Option Plan for Non-Employee Directors (the "Plan") is
intended to attract and retain the services of experienced and knowledgeable
independent directors of Avery International Corporation (the "Company") for
the benefit of the Company and its stockholders and to provide additional
incentive for such directors to continue to work for the best interests of the
Company and its stockholders.
2. Stock Subject to the Plan
There are reserved for issuance upon the exercise of options
("Options") granted under the Plan 320,000 shares of $1.00 par value Common
Stock of the Company (the "Common Stock"). Such shares may be authorized and
unissued shares of Common Stock or previously outstanding shares of Common
Stock then held in the Company's treasury. If any Option granted under the
Plan shall expire or terminate for any reason without having been exercised in
full, the shares subject thereto shall again be available for the purposes of
issuance upon the exercise of Options granted under the Plan.
3. Administration
The Plan shall be administered by the Board of Directors of the
Company (the "Board"). Subject to the express provisions of the Plan, the
Board shall have authority to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to it, to determine the terms and
provisions of the Option grants or agreements (which shall comply with and be
subject to the terms and conditions of the Plan) and to make all other
determinations necessary or advisable for the administration of the Plan. The
Board's determinations of the matters referred to in this Paragraph 3 shall be
conclusive.
4. Eligibility
Each director of the Company, who has not reached his seventy-second
birthday and who is not an employee of the Company, shall automatically be
granted an Option to purchase 5,000 shares of Common Stock (subject to
adjustments as provided in Paragraph 8) on January 28, 1988, subject, however,
to (i) shareholder approval of both the Plan, and any Options granted to
Directors under the Plan prior to March 31, 1988, at the Annual Shareholders'
Meeting on March 31, 1988, and (ii) receipt of an interpretive letter from the
Securities and Exchange Commission as set forth in
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Paragraph 12. Following the initial grant, during the term of the Plan each
then current, non-employee director ("Optionee"), who has not then reached his
seventy-second birthday, shall automatically be granted, on the date of each
regular January meeting of the Board, an Option for 2,000 shares (subject to
adjustment as provided in Paragraph 8). When new non-employee directors are
elected to the Board, such directors will receive an initial Option of 5,000
shares of Common Stock as of the date of their election, subject to the same
conditions as set forth in the first sentence of this Paragraph. Directors who
are employees of the Company and who subsequently retire from the Company and
remain on the Board will not receive an initial Option of 5,000 shares, but, to
the extent they are otherwise eligible, after retirement from the Company they
will receive Options as described in the second sentence of this Paragraph.
Each Option shall be evidenced by a written Stock Option Agreement
("Agreement"), copy of which is attached as Exhibit A, which shall be executed
by the Optionee and an authorized officer of the Company and which shall
contain such other terms and conditions as the Board shall determine,
consistent with the Plan.
Only non-qualified stock options (options which do not qualify as
"incentive stock options" under Section 422A of the Internal Revenue Code of
1986, as amended) shall be granted under the Plan.
5. Option Grants
(a) The option price ("Option Price") of the Common Stock under each
Option granted under the Plan shall be 100% of the fair market value (as
defined below in Paragraph 5 (c)) of the stock on the date such Option is
granted.
(b) Options shall become exercisable in installments of 50% of the
number of shares initially granted, commencing on the first anniversary of the
grant date, such installments to be cumulative; provided, however, that all
Options owned by a director which are unexercisable on the date the director
reaches the age of seventy-two shall become fully exercisable on that date. In
no case may an Option be exercised as to fewer than 100 shares at any one time
(or the remaining shares covered by the Option if fewer than 100 during the
term of the Option). The term of each Option shall be ten (10) years from the
date of grant thereof, or such shorter period as is prescribed in Paragraph 5.
Except as provided in Paragraph 5, no Option may be exercised at any time
unless the holder thereof is then a director of the Company. In the event that
the Option shall be exercised pursuant to Paragraph 5(g), by any person or
persons other than the Optionee, appropriate proof of the right of such person
or persons to exercise the Option shall be provided to the Company.
(c) Upon exercise, the Optionee shall provide written notice of
exercise to the Secretary of the Company and the Option Price shall be paid in
full in cash or in Common Stock owned by the Optionee having a fair market
value on the date of exercise equal to the aggregate Option price, or in a
combination of cash and stock. Fair market value shall be determined as the
mean between the
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<PAGE> 32
highest and lowest selling prices of the Common Stock on the New York Stock
Exchange Composite Tape on the date of exercise, or, if there were no sales on
such date, as the weighted average of the means between the highest and lowest
sales upon the nearest date before and the nearest date after the exercise date
or, if such stock is not traded on an exchange, as the mean between the closing
representative bid and asked prices for the stock on such date as reported by
NASDAQ or, if NASDAQ is not then in existence, by its successor quotation
system. Upon exercise of an Option, the Company shall have the right to retain
or sell, without notice, sufficient shares of stock to cover government
withholding taxes or deductions, if any, as described in Paragraph 11. The
Optionee shall also provide such representations and documents as the Board, in
its absolute discretion, deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act of 1933, as amended, and any
other federal or state securities laws or regulations. The Board may, in its
absolute discretion, also take whatever additional actions it deems appropriate
to effect such compliance including, without limitation, having legends placed
on share certificates and having stop-transfer orders issued to transfer agents
and registrars.
(d) In the event that the Optionee shall cease to be a director,
other than by reason of retirement (hereinafter "Retirement"), or death, he may
exercise his Option within three months after such termination, but not after
the expiration of the Option, to the extent of the number of shares exercisable
by him at the date of termination of his service as director; otherwise the
Option shall expire at the end of such three-month period.
(e) In the event that the Optionee shall cease to be a director
because of Retirement, the Optionee may exercise his Option within twenty-four
months after Retirement, but not after the expiration of the Option, to the
extent of the number of shares exercisable by him at the date of Retirement;
otherwise the Option shall expire at the end of such twenty-four month period.
(f) In the event of the death of a director or a former director to
whom an Option has been granted under the Plan, the Option theretofore granted
to him (unless the Option shall have been previously terminated pursuant to the
provisions of Paragraph 5(d) or 5(e)) may be exercised by a legatee or legatees
of the option holder under his last will or by his personal representatives or
distributees at any time within twelve months of the date of the Optionee's
death, but not after the expiration of the Option, to the extent of the number
of shares exercisable by the Optionee at the date of his death; otherwise the
Option shall expire at the end of such twelve-month period.
(g) Nothing in the Plan or in any Option granted pursuant to the Plan
shall confer on any individual any right to continue as a director of the
Company or interfere in any way with the right of the Company to terminate his
service as a director at any time.
6. Conditions to Issuance of Stock Certificates
The shares of stock deliverable upon the exercise of an Option, or any
part thereof, may be either previously authorized but unissued shares or issued
shares which have then been reacquired
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<PAGE> 33
by the Company. The Company shall not be required to issue or deliver any
certificate or certificates for shares of stock purchased upon the exercise of
any Option or portion thereof prior to fulfillment of all of the following
conditions:
(a) The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed;
(b) The completion of any registration or other qualification of such
shares under any state or federal law, or under the rulings or regulations of
the Securities and Exchange Commission or any other governmental regulatory
body which the Board shall, in its absolute discretion, deem necessary or
advisable;
(c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Board shall, in its absolute
discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Board may establish from time to time for reasons
of administrative convenience; and
(e) The receipt by the Company of full payment for such shares and
payment of any applicable withholding tax.
7. Transferability and Stockholder Rights of Holders of Options
No Option granted under the Plan shall be transferable otherwise than
by will or by the laws of descent and distribution, and an Option may be
exercised, during the lifetime of the holder thereof, only by him. The holder
of an Option shall have none of the rights of a stockholder until the shares
subject thereto shall have been registered in the name of the person or persons
exercising such Option on the transfer books of the Company upon such exercise.
8. Adjustment upon Changes in Capitalization
Notwithstanding the provisions in Paragraphs 2 and 4 of the Plan, the
number and class of shares subject to the Plan and subject to the Options which
have been granted under the Plan and the option prices of such Options shall be
proportionately adjusted in the event of changes in the outstanding Common
Stock by reason of stock dividends, stock splits, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, split-ups, split-offs,
spin-offs, liquidations or other similar changes in the capitalization, or any
distribution to common stockholders other than cash dividends and, in the event
of any such change in the outstanding Common Stock, the aggregate number and
class of shares available under the Plan and the number of shares as to which
Options may be granted shall be appropriately adjusted by the Board. However,
no such adjustments shall be made with respect to Options not yet granted under
the Plan.
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9. Merger of the Company
In the event of the merger or consolidation of the Company into
another company, the exchange of all or substantially all of the assets of the
Company for the securities of another company, the acquisition by another
company of 80% or more of the Company's then outstanding voting stock, or the
liquidation or dissolution of the Company, then no Option may be exercised
after such event, provided, however, that for a ten (10) day period prior to
such event, such Options shall be exercisable as to all shares covered thereby,
notwithstanding anything to the contrary in Paragraph 5(b).
10. Amendment and Termination
Unless the Plan shall theretofore have been terminated as hereinafter
provided, the Plan shall terminate on, and no awards of Options shall be made
after January 31, 1997; provided, however, that such termination shall have no
effect on Options granted prior thereto. The Plan may be terminated, modified
or amended by the stockholders of the Company. The Board of Directors of the
Company may also terminate the Plan or modify or amend the Plan in such
respects as it shall deem advisable in order to conform to any change in any
law or regulation applicable thereto, or in other respects which shall not
change (i) the total number of shares as to which Options may be granted, (ii)
the class of persons eligible to receive Options under the Plan, (iii) the
manner of determining the Option prices, (iv) the period during which Options
may be granted or exercised or (v) the provisions relating to the
administration of the Plan by the directors of the Company.
11. Withholding
Upon the transfer of Common Stock as a result of the exercise of an
Option, the Company shall have the right to retain or sell, without notice,
sufficient shares of stock (taken at their fair market value, as defined in
Paragraph 5 (c), on the date of exercise) to cover the amount of any tax
required by any government to be withheld or otherwise deducted and paid with
respect to such payment, remitting any balance to the Optionee; provided,
however, that the Optionee shall have the right to provide the Company with the
funds to enable it to pay such tax.
12. Approval by Stockholders and Receipt of Interpretive Letter
The Plan as approved and adopted by the Board on January 28, 1988 and
will be submitted for the approval of the Company's stockholders at the meeting
of the stockholders to be held on March 31, 1988; Options may be granted prior
to said stockholders' meeting but shall also be submitted for such approval by
the stockholders at said meeting. Each Option granted under the Plan prior to
satisfaction of conditions (i) and (ii) below shall provide that if (i) the
Plan, and Options granted prior to March 31, 1988, are not approved at said
meeting by the vote of the holders of a majority of the outstanding shares of
Common Stock of the Company and (ii) the Company does not, by January 28, 1989,
receive an interpretive letter from the Securities and Exchange Commission to
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<PAGE> 35
the effect that the Plan meets the requirements of Rule 16b-3 of the Securities
Exchange Act of 1934 and that non-employee directors receiving Options under
the Plan are disinterested persons within the meaning of Rule 16b-3 for the
purpose of administering certain compensation plans of the Company, such
Options shall be cancelled and become null and void.
13. Titles
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of the Plan.
14. Construction
This Plan and any Agreement hereunder shall be administered and
interpreted under the laws of the State of California.
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EXHIBIT A
AVERY INTERNATIONAL CORPORATION
NON-EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT
THIS AGREEMENT, dated _________________________, is made by and between Avery
International Corporation, a Delaware corporation, hereinafter referred to as
the "Company," and [name of Director], a non-employee Director of Company.
WHEREAS, Company wishes to afford Optionee the opportunity to purchase shares
of its $1.00 par value common stock under the terms of the 1988 Stock Option
Plan for Non-Employee Directors of Avery International Corporation;
(hereinafter referred to as the "Plan") and
WHEREAS, The Company's Board of Directors (hereinafter referred to as the
"Board"), appointed to administer said Plan, has determined that it would be to
the advantage and best interest of Company and its stockholders to grant the
Option provided for herein to Optionee as an inducement to provide services as
a Director of the Company and as an incentive for increased efforts during such
service. The Board has advised Company of its determination and instructed the
undersigned officers to issue said Option, which is a Non-Qualified Stock
Option, as required under the Plan;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, Company and Optionee do hereby agree as follows:
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ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement they shall have the
meaning specified below unless the context clearly indicates to the contrary.
1.1 Agreement
"Agreement" shall mean this Non-Employee Director Stock Option
Agreement.
1.2 Change of Control
"Change of Control" shall mean a change in control of the Company of a
nature that would be required to be reported in response to Item 5(f)
of Schedule 14A, Regulation 240.14a-101, promulgated under the
Securities Exchange Act of 1934 as in effect on the date of this
Agreement or, if Item 5(f) is no longer in effect, any regulation
issued by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 which serves similar purposes;
provided that, without limitation, a Change of Control shall be deemed
to have occurred if and when:
(a) Any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) is or becomes
a beneficial owner, directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the
combined voting power of the Company's then outstanding
securities, or
(b) Individuals who were members of the Board of Directors of the
Company immediately prior to a meeting of the shareholders of
the Company involving a contest or the election of the
directors shall not constitute a majority of the Board of
Directors following such election.
1.3 Option
"Option" shall mean this option to purchase common stock of the
Company granted under the Agreement.
1.4 Optionee
"Optionee" shall mean a non-employee Director eligible under the terms
of the Plan.
1.5 Plan
The "Plan" shall mean The 1988 Stock Option Plan for Non-Employee
Directors of Avery International Corporation.
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1.6 Pronouns
The masculine pronoun shall include the feminine and neuter, and the
singular, and the plural, where the context so indicates.
1.7 Secretary
"Secretary" shall mean the Secretary of the Company.
1.8 Termination
"Termination" shall mean the time when the Optionee ceases to be a
Director of the Company for any reason, including, but not limited to,
a termination by resignation, removal, death, retirement, or failure
to be elected.
ARTICLE II
GRANT OF OPTION
2.1 Grant of Option
In consideration of Optionee's agreement to provide services as a
Director of the Company and for other good and valuable consideration,
on the date hereof the Company irrevocably grants to Optionee the
option to purchase any part or all of an aggregate of __________
shares of its $1.00 par value common stock upon the terms and
conditions set forth in this Agreement. Such Option is granted
pursuant to the Plan and shall also be subject to the terms and
conditions set forth in the Plan which is incorporated herein by
reference.
2.2 Purchase Price
The purchase price of the shares of stock covered by the Option shall
be ____________________________ dollars ($__________) per share
without commission or other charge.
2.3 Consideration to Company
In consideration of the granting of this Option by the Company, the
Optionee agrees to render services as a Director to the Company, for a
period of at least one (1) year from the date this Option is granted.
Nothing in this Agreement or in the Plan shall confer upon the
Optionee any right to continue as a Director of the Company, nor shall
it interfere with or restrict in any way, other than the loss of
rights as provided in Article III of this Agreement, the right of the
Optionee voluntarily to resign as a Director of the Company.
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<PAGE> 39
2.4 Adjustments in Option
In the event that the outstanding shares of the stock subject to the
Option are changed into or exchanged for a different number or kind of
shares of the Company or other securities of the Company by reason of
merger, consolidation, recapitalization, reclassification, stock
split-up, stock dividend, or combination of shares, the Board shall
make an appropriate and equitable adjustment in the number and kind of
shares as to which the Option, or portions thereof then unexercised,
shall be exercisable. Such adjustment shall be made with the intent
that after the change or exchange of shares, the Optionee's
proportionate interest shall be maintained as before the occurrence of
such event. Such adjustment in the Option may include a necessary
corresponding adjustment in the option price per share, but shall be
made without change in the total price applicable to the unexercised
portion of the Option (except for any change in the aggregate price
resulting from rounding-off of share quantities or prices).
ARTICLE III
PERIOD OF EXERCISABILITY
3.1 Commencement of Exercisability
(a) The Option shall become exercisable in two cumulative
installments as follows:
(i) The first installment shall consist of fifty percent
(50%) of the shares covered by the Option and shall
become exercisable on the first anniversary of the
date the Option was granted.
(ii) The second installment shall consist of an additional
fifty percent (50%) of the shares covered by the
Option and shall become exercisable on the second
anniversary of the date the Option was granted.
The installments provided for in this Subsection (a) are
cumulative. Each installment which becomes exercisable shall
remain exercisable during the term of the Option, subject to
Sections 3.3 and 3.4.
(b) No portion of the Option which is an unexercisable installment
under Subsection (a) above at Termination shall thereafter
become exercisable.
(c) Notwithstanding Subsection 3.1(a) above, upon a Change of
Control, all Option installments not yet exercisable shall
become immediately exercisable.
(d) Notwithstanding Subsection 3.1(a) above, when the
director-Optionee reaches his seventy-second birthday, all
Option installments not yet exercisable shall become
immediately exercisable.
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3.2 Term of Option
The Option will expire and will not, under any condition, be
exercisable after the tenth (10th) anniversary of the date the Option
was granted. Such date shall be the Option's Expiration Date.
3.3 Exercise of Option after Termination
This Option is exercisable by the Optionee only while he is a Director
of the Company, subject to the following exceptions:
(a) If the Optionee dies while the Option is exercisable under the
terms of this Agreement, the person to whom the Optionee's
rights have passed by will or the laws of descent and
distribution may exercise such rights, subject to the
limitation in Subsection 3.1(b). The Option must be exercised
within twelve (12) months after the Optionee's death, but not
later than the Option's Expiration Date.
(b) If the Optionee ceases to be a Director due to his retirement,
the Optionee may exercise the Option, subject to the
limitation in Subsection 3.1(b), within twenty-four (24)
months after Termination, but not later than the Option's
Expiration Date.
(c) If the Optionee ceases to be a Director other than for the
reasons set forth in Subsections (a) or (b) above, the
Optionee may exercise the Option, subject to the limitations
of Subsection 3.1(b), within three (3) months after
Termination, but not later than the Option's Expiration Date.
3.4 Exercise of Option Upon Merger or Consolidation
(a) Notwithstanding Section 3.3, the Option may not be exercised
to any extent by anyone after the effective date of either the
merger or consolidation of the Company into another
corporation, the exchange of all or substantially all of the
assets of the Company for the securities of another
corporation, the acquisition by another corporation of 80% or
more of the Company's then outstanding voting stock, or the
liquidation or dissolution of the Company. At least twenty
(20) days prior to the effective date of such merger,
consolidation, exchange, acquisition, liquidation, or
dissolution, the Company shall give the Optionee notice of
such event if the Option has then neither been fully exercised
nor become unexercisable.
(b) In the event of such merger, consolidation, exchange,
acquisition, liquidation, or dissolution, then for a period of
ten (10) days prior to the effective date of such event, the
Option shall be exercisable as to all shares covered hereby,
notwithstanding that the Option may not yet have become fully
exercisable under Subsection 3.1(a).
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<PAGE> 41
ARTICLE IV
EXERCISE OF OPTIONS
4.1 Partial Exercise
Any exercisable portion of the Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time
prior to the time when the Option or portion thereof becomes
unexercisable under Section 3.2. Each partial exercise shall be for
not less than one hundred (100) shares (or a smaller number, if it is
the maximum number which may be exercised under Section 3.1), and
shall be for whole shares only.
4.2 Manner of Exercise
The Option, or any exercisable portion thereof, may be exercised
solely by delivery to the Secretary or his office all of the
following:
(a) A written notice, complying with the applicable rules
established by the Board, stating that the Option or portion
is thereby exercised. The notice shall be signed by the
Optionee or the other person then entitled to exercise the
Option;
(b) Full payment (in cash or by check) for the shares with respect
to which the Option or portion is exercised. Payment may be
made by surrendering Company common stock owned by the
Optionee, with a fair market value (as defined in Paragraph
5(c) of the Plan) on the date the Option is exercised equal to
the aggregate purchase price of the shares with respect to
which the Option, or portion thereof, is exercised; and
(c) In the event the Option or portion thereof shall be exercised
by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the
Option.
4.3 Conditions to Issuance of Stock Certificates
The shares of stock deliverable upon the exercise of the Option, or
any part thereof, may be either previously authorized but unissued
shares or issued shares which have then been reacquired by the
Company. Such shares shall be fully paid and non-assessable. The
Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of the
Option or part thereof prior to fulfillment of all of the following
conditions:
(a) The admission of such shares to listing on all stock exchanges
on which such class of stock is then listed;
(b) The completion of any registration or other qualification of
such shares under any state or federal law, or under rulings
or regulations of the Securities and Exchange Commission or
any other governmental regulatory body which the Board shall,
in its absolute discretion, deem necessary or advisable;
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<PAGE> 42
(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Board shall, in
its absolute discretion, determine to be necessary or
advisable;
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Board may from time to time
establish for reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such shares.
4.4 Rights as Stockholders
The holder of the Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares
purchasable upon the exercise of any part of the Option unless and
until certificates representing such shares shall have been issued by
the Company to such holder.
ARTICLE V
MISCELLANEOUS
5.1 Administration
The Board shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith
and to interpret or revoke any such rules. All actions taken and all
interpretations and determinations made by the Board in good faith
shall be final and binding upon the Optionee, the Company and all
other interested persons. No member of the Board shall be personally
liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Option.
5.2 Option Not Transferable
Neither the Option nor any interest or right therein or part thereof
may be sold, pledged, assigned or transferred in any manner other than
by will or by the applicable laws of descent and distribution. The
Option shall be exercised during the Optionee's lifetime only by the
Optionee, or his guardian or legal representative.
5.3 Notices
Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary and
any notice to be given to the Optionee shall be addressed to him at
the address given beneath his signature hereto. By a notice given
pursuant to this Section, either party may hereafter designate a
different address for notices to be given to him. Any notice which is
required to be given to Optionee shall, if Optionee is then deceased,
be given to Optionee's personal representative if such representative
has previously informed the Company of his status and address by
written notice under this
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<PAGE> 43
Section. Any notice shall have been deemed duly given when enclosed
in a properly sealed envelope or wrapper addressed as aforesaid,
deposited (with postage prepaid) in a post office or branch post
office regularly maintained by the United States Postal Service.
5.4 Approval by Stockholders and Receipt of Interpretive Letter
The Plan was approved and adopted by the Board on January 28, 1988 and
will be submitted for approval of the Company's stockholders at the
meeting of the stockholders to be held on March 31, 1988; Options may
be granted prior to said stockholders' meeting but shall also be
submitted for such approval by the stockholders at said meeting. This
option shall be cancelled and become null and void unless, and until,
(i) the Plan, and Options granted prior to March 31, 1988, are
approved at said meeting by the vote of the holders of a majority of
the outstanding shares of Common Stock of the Company and (ii) the
Company receives, by January 31, 1989, an interpretive letter from the
Securities and Exchange Commission to the effect that the Plan meets
the requirements of Rule 16b-3 of the Securities Exchange Act of 1934
and that non-employee directors receiving Options under the Plan are
disinterested persons within the meaning of Rule 16b-3 for the purpose
of administering certain compensation plans of the Company.
5.5 Titles
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.
5.6 Construction
This Agreement shall be administered and interpreted under the laws of
the State of California.
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<PAGE> 44
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.
AVERY INTERNATIONAL CORPORATION
By _____________________________________
Chairman and Chief Executive Officer
By _____________________________________
Secretary
_______________________________
Optionee
Address: _______________________
_______________________
_______________________
_______________________
Optionee's Social Security Number
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<PAGE> 45
AMENDMENT NO. 1
TO THE AVERY INTERNATIONAL CORPORATION
1988 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
WHEREAS, Paragraph 10 of the Avery International Corporation 1988 Stock Option
Plan for Non-Employee Directors (the "Plan") provides that the Plan may be
amended by the stockholders of Avery Dennison Corporation (the "Company"); and
WHEREAS, the Board of Directors of the Company has determined that it is
advisable to amend the Plan in certain respects and to submit this amendment to
the Company's stockholders for approval.
NOW, THEREFORE, subject to such stockholder approval, the Plan is hereby
amended effective as of December 1, 1994 in the following respects:
1. The name of the Plan shall be changed to the "Avery Dennison
Corporation 1988 Stock Option Plan for Non-Employee Directors."
2. The second sentence of the first paragraph of Paragraph 4 is hereby
deleted in its entirety and the following is inserted in lieu thereof:
"Commencing with the regular meeting of the Board in December 1994,
during the term of the Plan each then current, non-employee director
("Optionee") shall automatically be granted, on the date of each
regular December meeting of the Board, an Option for 2,000 shares
(subject to adjustment as provided in Paragraph 8), except that any
director retiring from the Board as of the Annual Meeting of
Stockholders on April 27, 1995 shall not be entitled to receive any
such grant of Options."
3. The first sentence of Paragraph 5(b) is hereby deleted in its entirety
and the following is inserted in lieu thereof:
"(b) Options shall become exercisable in installments of 50%
of the number of shares initially granted, commencing on the first
anniversary of the grant date, such installments to be cumulative;
provided, however, that all Options owned by a director which are
unexercisable on the date of such director's Retirement at or after
age seventy-two shall become fully exercisable on that date."
4. Paragraph 5(f) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"(f) In the event of the death of a director or former
director to whom an Option has been granted under the Plan, the Option
theretofore granted to him (unless the Option shall have been
previously terminated pursuant to the provisions of Paragraph 5(d) or
5(e)) may be exercised by a person properly designated by the
Optionee, including his spouse or heirs at law, to exercise such
Optionee's rights under this Plan (a "Beneficiary") at any time within
twelve months of the date of the Optionee's death, but not after the
expiration of the Option, to the extent of the number of shares
exercisable by the Optionee at the date of his death; otherwise the
Option shall expire at the end of such twelve-month period.
Designation, revocation and redesignation of Beneficiaries must be
made in writing in accordance with
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rules established by the Board and shall be effective upon delivery to
the Board."
5. The first sentence of Paragraph 7 is hereby deleted in its entirety
and the following is inserted in lieu thereof:
"No Option granted under the Plan shall be transferable
otherwise than by will or by the laws of descent and distribution, or
to a Beneficiary, and an Option may be exercised, during the lifetime
of the holder thereof, only by him."
6. The first sentence of Paragraph 10 is hereby deleted in its entirety
and the following is inserted in lieu thereof:
"Unless the Plan shall theretofore have been terminated as hereinafter
provided, the Plan shall terminate on, and no awards of Options shall
be made after, January 31, 2007; provided, however, that such
termination shall have no effect on Options granted prior thereto."
7. Exhibit A is hereby deleted in its entirety and the attached Exhibit A
is inserted in lieu thereof.
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EXHIBIT A
AVERY DENNISON CORPORATION
NON-EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT
THIS AGREEMENT, dated ____________________________, is made by and between
Avery Dennison Corporation, a Delaware corporation, hereinafter referred to as
the "Company," and *, a non-employee director of Company, hereinafter referred
to as "Optionee".
WHEREAS, Company wishes to afford Optionee the opportunity to purchase shares
of its $1.00 par value common stock under the terms of the 1988 Stock Option
Plan for Non-Employee Directors of Avery Dennison Corporation; (hereinafter
referred to as the "Plan") and
WHEREAS, The Company's Board of Directors (hereinafter referred to as the
"Board"), appointed to administer said Plan, has determined that it would be to
the advantage and best interest of Company and its stockholders to grant the
Option provided for herein to Optionee as an inducement to provide services as
a Director of the Company and as an incentive for increased efforts during such
service. The Board has advised Company of its determination and instructed the
undersigned officers to issue said Option, which is a Non-Qualified Stock
Option, as required under the Plan;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, Company and Optionee do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement they shall have the
meaning specified below unless the context clearly indicates to the contrary.
1.1 Agreement
"Agreement" shall mean this Non-Employee Director Stock Option
Agreement.
1.2 Change of Control
"Change of Control" shall mean a change in control of the Company of a
nature that would be required to be reported in response to Item 5(f)
of Schedule 14A, Regulation 240.14a-101, promulgated under the
Securities Exchange Act of 1934 as in effect on the date of this
Agreement or, if Item 5(f) is no longer in effect, any regulation
issued by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 which serves similar purposes;
provided that, without limitation, a Change of Control shall be deemed
to have occurred if and when:
* Refer to attached Notice.
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(a) Any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) is or becomes
a beneficial owner, directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the
combined voting power of the Company's then outstanding
securities, or
(b) Individuals who were members of the Board of Directors of the
Company immediately prior to a meeting of the shareholders of
the Company involving a contest or the election of the
directors shall not constitute a majority of the Board of
Directors following such election.
1.3 Option
"Option" shall mean this option to purchase common stock of the
Company granted under the Agreement.
1.4 Optionee
"Optionee" shall mean a non-employee Director eligible under the terms
of the Plan.
1.5 Plan
The "Plan" shall mean The 1988 Stock Option Plan for Non-Employee
Directors of Avery Dennison Corporation.
1.6 Pronouns
The masculine pronoun shall include the feminine and neuter, and the
singular, and the plural, where the context so indicates.
1.7 Secretary
"Secretary" shall mean the Secretary of the Company.
1.8 Termination
"Termination" shall mean the time when the Optionee ceases to be a
Director of the Company for any reason, including, but not limited to,
a termination by resignation, removal, death, retirement, or failure
to be elected.
1.9 Beneficiary
"Beneficiary" shall mean a person properly designated by the Optionee,
including his/her spouse or heirs at law, to exercise such Optionee's
rights under the Plan. Designation, revocation and redesignation of
Beneficiaries must be made in writing in accordance with rules
established by the Committee and shall be effective upon delivery to
the Committee.
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ARTICLE II
GRANT OF OPTION
2.1 Grant of Option
In consideration of Optionee's agreement to provide services as a
director of the Company and for other good and valuable consideration,
on the date hereof the Company irrevocably grants to Optionee the
option to purchase any part or all of an aggregate of __________
shares of its $1.00 par value common stock upon the terms and
conditions set forth in this Agreement. Such Option is granted
pursuant to the Plan and shall also be subject to the terms and
conditions set forth in the Plan which is incorporated herein by
reference.
2.2 Purchase Price
The purchase price of the shares of stock covered by the Option shall
be __________________ dollars ($__________) per share without
commission or other charge.
2.3 Consideration to Company
In consideration of the granting of this Option by the Company, the
Optionee agrees to render services as a Director to the Company, for a
period of at least one (1) year from the date this Option is granted.
Nothing in this Agreement or in the Plan shall confer upon the
Optionee any right to continue as a Director of the Company, nor shall
it interfere with or restrict in any way, other than the loss of
rights as provided in Article III of this Agreement, the right of the
Optionee voluntarily to resign as a Director of the Company.
2.4 Adjustments in Option
In the event that the outstanding shares of the stock subject to the
Option are changed into or exchanged for a different number or kind of
shares of the Company or other securities of the Company by reason of
merger, consolidation, recapitalization, reclassification, stock
split-up, stock dividend, or combination of shares, the Board shall
make an appropriate and equitable adjustment in the number and kind of
shares as to which the Option, or portions thereof then unexercised,
shall be exercisable. Such adjustment shall be made with the intent
that after the change or exchange of shares, the Optionee's
proportionate interest shall be maintained as before the occurrence of
such event. Such adjustment in the Option may include a necessary
corresponding adjustment in the option price per share, but shall be
made without change in the total price applicable to the unexercised
portion of the Option (except for any change in the aggregate price
resulting from rounding-off of share quantities or prices).
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ARTICLE III
PERIOD OF EXERCISABILITY
3.1 Commencement of Exercisability
(a) The Option shall become exercisable in two cumulative
installments as follows:
(i) The first installment shall consist of fifty percent
(50%) of the shares covered by the Option and shall
become exercisable on the first anniversary of the
date the Option was granted.
(ii) The second installment shall consist of an additional
fifty percent (50%) of the shares covered by the
Option and shall become exercisable on the second
anniversary of the date the Option was granted.
The installments provided for in this Subsection (a) are
cumulative. Each installment which becomes exercisable shall
remain exercisable during the term of the Option, subject to
Sections 3.3 and 3.4.
(b) No portion of the Option which is an unexercisable installment
under Subsection (a) above at Termination shall thereafter
become exercisable.
(c) Notwithstanding Subsection 3.1(a) above, upon a Change of
Control, all Option installments not yet exercisable shall
become immediately exercisable.
(d) Notwithstanding Subsection 3.1(a) above, when the Optionee,
who is a director, reaches his seventy-second birthday, all
Option installments not yet exercisable shall become
immediately exercisable.
3.2 Term of Option
The Option will expire and will not, under any condition, be
exercisable after the tenth (10th) anniversary of the date the Option
was granted. Such date shall be the Option's Expiration Date.
3.3 Exercise of Option after Termination
This Option is exercisable by the Optionee only while he is a Director
of the Company, subject to the following exceptions:
(a) If the Optionee dies while the Option is exercisable under the
terms of this Agreement, the Optionee's Beneficiary may
exercise such rights, subject to the limitation in Subsection
3.1(b). The Option must be exercised within twelve (12)
months after the Optionee's death, but not later than the
Option's Expiration Date.
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(b) If the Optionee ceases to be a Director due to his retirement,
the Optionee may exercise the Option, subject to the
limitation in Subsection 3.1(b), within twenty-four (24)
months after Termination, but not later than the Option's
Expiration Date.
(c) If the Optionee ceases to be a Director other than for the
reasons set forth in Subsections (a) or (b) above, the
Optionee may exercise the Option, subject to the limitations
of Subsection 3.1(b), within three (3) months after
Termination, but not later than the Option's Expiration Date.
3.4 Exercise of Option Upon Merger or Consolidation
(a) Notwithstanding Section 3.3, the Option may not be exercised
to any extent by anyone after the effective date of either the
merger or consolidation of the Company into another
corporation, the exchange of all or substantially all of the
assets of the Company for the securities of another
corporation, the acquisition by another corporation of 80% or
more of the Company's then outstanding voting stock, or the
liquidation or dissolution of the Company. At least twenty
(20) days prior to the effective date of such merger,
consolidation, exchange, acquisition, liquidation, or
dissolution, the Company shall give the Optionee notice of
such event if the Option has then neither been fully exercised
nor become unexercisable.
(b) In the event of such merger, consolidation, exchange,
acquisition, liquidation, or dissolution, then for a period of
ten (10) days prior to the effective date of such event, the
Option shall be exercisable as to all shares covered hereby,
notwithstanding that the Option may not yet have become fully
exercisable under Subsection 3.1(a).
ARTICLE IV
EXERCISE OF OPTIONS
4.1 Partial Exercise
Any exercisable portion of the Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time
prior to the time when the Option or portion thereof becomes
unexercisable under Section 3.2. Each partial exercise shall be for
not less than one hundred (100) shares (or a smaller number, if it is
the maximum number which may be exercised under Section 3.1), and
shall be for whole shares only.
4.2 Manner of Exercise
The Option, or any exercisable portion thereof, may be exercised
solely by delivering to the Secretary or his office all of the
following:
(a) A written notice, complying with the applicable rules
established by the Board, stating that the Option or portion
is thereby exercised. The notice shall be signed by the
Optionee or the other person then entitled to exercise the
Option;
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(b) Full payment (in cash or by cashier's check) for the shares
with respect to which the Option or portion is exercised.
Payment may be made by surrendering Company common stock owned
by the Optionee, with a fair market value (as defined in
Paragraph 5(c) of the Plan) on the date the Option is
exercised equal to the aggregate purchase price of the shares
with respect to which the Option, or portion thereof, is
exercised; and
(c) In the event the Option or portion thereof shall be exercised
by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the
Option.
4.3 Conditions to Issuance of Stock Certificates
The shares of stock deliverable upon the exercise of the Option, or
any part thereof, may be either previously authorized but unissued
shares or issued shares which have then been reacquired by the
Company. Such shares shall be fully paid and non-assessable. The
Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of the
Option or part thereof prior to fulfillment of all of the following
conditions:
(a) The admission of such shares to listing on all stock exchanges
on which such class of stock is then listed;
(b) The completion of any registration or other qualification of
such shares under any state or federal law, or under rulings
or regulations of the Securities and Exchange Commission or
any other governmental regulatory body which the Board shall,
in its absolute discretion, deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Board shall, in
its absolute discretion, determine to be necessary or
advisable;
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Board may from time to time
establish for reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such shares.
4.4 Rights as Stockholders
The holder of the Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares
purchasable upon the exercise of any part of the Option unless and
until certificates representing such shares shall have been issued by
the Company to such holder.
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ARTICLE V
MISCELLANEOUS
5.1 Administration
The Board shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith
and to interpret or revoke any such rules. All actions taken and all
interpretations and determinations made by the Board in good faith
shall be final and binding upon the Optionee, the Company and all
other interested persons. No member of the Board shall be personally
liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Option.
5.2 Option Not Transferable
Neither the Option nor any interest or right therein or part thereof
may be sold, pledged, assigned or transferred in any manner other than
by will or by the applicable laws of descent and distribution. The
Option shall be exercised during the Optionee's lifetime only by the
Optionee, or his guardian or legal representative.
5.3 Notices
Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary and
any notice to be given to the Optionee shall be addressed to him at
the address given beneath his signature hereto. By a notice given
pursuant to this Section, either party may hereafter designate a
different address for notices to be given to him. Any notice which is
required to be given to Optionee shall, if Optionee is then deceased,
be given to Optionee's personal representative if such representative
has previously informed the Company of his status and address by
written notice under this Section. Any notice shall have been deemed
duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States
Postal Service.
5.4 Adoption by the Board, Approval by Stockholders and Receipt of
Interpretive Letter
The Plan was approved and adopted by the Board on January 28, 1988 and
approved by the Company's stockholders on March 31, 1988. The Company
received an interpretive letter dated April 22, 1988 from the
Securities and Exchange Commission to the effect that the Plan meets
the requirements of Rule 16b-3 of the Securities Exchange Act of 1934
and that non-employee directors receiving Options under the Plan are
disinterested persons within the meaning of Rule 16b-3 for the purpose
of administering certain compensation plans of the Company.
5.5 Titles
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.
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5.6 Construction
This Agreement shall be administered and interpreted under the laws of
the State of California.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.
AVERY DENNISON CORPORATION
By______________________________________*
Chairman and Chief Executive Officer
By______________________________________*
Secretary
_______________________________*
Optionee
Address: _______________________*
_______________________*
_______________________*
_______________________*
* Refer to attached Notice.
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