<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant / /
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
The Dial Corp
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
F. G. Emerson
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registrations 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:
- --------------------------------------------------------------------------------
- ---------------
1Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
THE DIAL CORP
DIAL TOWER
PHOENIX, ARIZONA 85077-1424
JOHN W. TEETS
Chairman, President and
Chief Executive Officer
April 1, 1994
Dear Stockholder:
Your 1994 Annual Meeting will be held on Tuesday, May 10, at 9:00 a.m., in
the Ballroom of The Ritz-Carlton Phoenix, 2401 East Camelback Road, Phoenix,
Arizona. As the meeting will begin promptly at 9:00 a.m., please plan to arrive
earlier. The formal notice of the meeting follows on the next page.
No admission tickets or other credentials will be required for attendance
at the meeting. You may use the hotel's free valet parking, and, for your
convenience, arrangements have been made with the hotel to have the gratuity
charged to the Corporation. If you use this valet service, please notify the
valet that you are attending The Dial Corp stockholders meeting.
Directors and officers will be present preceding and following the meeting
to talk with stockholders. During the meeting there will be an opportunity for
stockholder questions regarding the affairs of the Corporation and for
discussion of the business to be considered at the meeting as explained in the
notice and Proxy Statement which follow.
IT IS IMPORTANT THAT YOU VOTE, SIGN AND RETURN THE ENCLOSED PROXY AS SOON
AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
Sincerely,
[John W. Teets signature]
<PAGE> 3
THE DIAL CORP
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 1, 1994
To the Holders of Common Stock of
The Dial Corp:
The Annual Meeting of Stockholders of The Dial Corp, a Delaware
corporation, will be held in the Ballroom of The Ritz-Carlton Phoenix, 2401 East
Camelback Road, Phoenix, Arizona 85016, on Tuesday, May 10, 1994, at 9:00 a.m.,
Mountain Standard Time, for the purpose of considering and voting upon:
1. Election of directors of the Corporation as set forth in the attached
Proxy Statement; and
2. Approval of a Management Incentive Plan for the Corporation; and
3. Approval of a Performance Unit Incentive Plan for the Corporation; and
4. Ratification of the appointment of Deloitte & Touche to audit the
accounts of the Corporation for the year 1994; and
5. Any other matters which may properly come before the meeting and any
adjournment or adjournments thereof.
Only stockholders of record of Common Stock at the close of business March
11, 1994, are entitled to receive notice of and to vote at the meeting. A list
of the stockholders entitled to vote will be available for examination by any
stockholder, for any purpose germane to the meeting, during the time of the
meeting, and for ten days prior to the meeting at the principal executive
offices of the Corporation, Dial Tower, 1850 North Central Avenue, Phoenix,
Arizona.
The Annual Report for the year 1993, including financial statements, was
mailed to stockholders under separate cover beginning March 28, 1994.
To assure your representation at the meeting, please vote, sign and mail
the enclosed proxy, which is being solicited on behalf of the Board of
Directors, as soon as possible. If your registered address is in the United
States, a return envelope which requires no postage if mailed in the United
States is enclosed for that purpose.
FREDERICK G. EMERSON
Vice President and Secretary
<TABLE>
<S> <C> <C>
-----------------------------------
PLEASE VOTE
YOUR VOTE IS IMPORTANT
-----------------------------------
</TABLE>
<PAGE> 4
PROXY STATEMENT
OF
THE DIAL CORP
DIAL TOWER
PHOENIX, ARIZONA 85077-1424
(First Mailed April 1, 1994)
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors for the 1994 Annual Meeting of Stockholders of
the Corporation. The cost of soliciting proxies will be borne by the
Corporation. Solicitation will be made primarily through the use of the mails,
but regular employees of the Corporation may solicit proxies personally, by
telephone or telegram. The Corporation has retained Georgeson & Company Inc. to
assist it in connection with the solicitation at an estimated fee of $11,500
plus out-of-pocket expenses. The Corporation will reimburse banks, brokerage
firms and other custodians, nominees and fiduciaries for reasonable expenses
incurred by them in sending proxy materials to beneficial owners of shares. The
enclosed proxy, if properly executed and returned, will be voted according to
its specifications but may be revoked at any time before it is voted by giving
notice in writing to the Secretary of the Corporation or by voting in person at
the meeting. The election inspectors will treat abstentions or a withholding of
authority as shares that are present and entitled to vote for purposes of
determining the presence of a quorum but as unvoted for purposes of determining
the approval of any matter submitted to the stockholders for a vote. If a broker
indicates on the proxy that it does not have discretionary authority as to
certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter. If a
stockholder is a participant in the Corporation's Stockholder Dividend
Reinvestment Plan, the proxy represents the number of shares in the dividend
reinvestment plan account, as well as shares registered in the participant's
name. If a stockholder is a participant in The Dial Corp Employees' Capital
Accumulation Plan and/or The Dial Corp Employees' Stock Ownership Plan Trust,
the proxy will serve as a voting instruction to the respective Trustee.
Only stockholders of record of Common Stock as of the close of business on
the record date, March 11, 1994, will be eligible to vote at the meeting. The
number of shares of Common Stock then outstanding was 46,005,354 shares. Each
outstanding share will be entitled to one vote. For those proposals for which no
directions are given, the proxy will be voted "for" the election of the
directors set forth herein and in accordance with the recommendations of the
Board of Directors or the best judgment of the proxy holders on other proposals.
To be elected, each director must receive the affirmative vote of
1
<PAGE> 5
the holders of a plurality of the shares voting. Approval of the other proposals
require the affirmative vote of a majority of the shares voting on such
proposal.
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors holds regular quarterly meetings and held five
meetings during 1993. It has established the following committees of certain of
its members to deal with particular areas of responsibility:
1. The Executive Committee, which held six meetings during 1993, exercises
all the powers of the Board in the management of the business and affairs of the
Corporation, except as limited by Delaware law, when the Board is not in
session.
2. The Audit Committee, which met three times in 1993, recommends
appointment of the Corporation's independent public accountants and reviews
audit reports, accounting policies, financial statements, internal auditing
reports, internal controls, audit fees, and certain officer expenses; all
members of this Committee are nonemployee directors.
3. The Executive Compensation Committee which met five times in 1993,
reviews, for recommendation to the Board, salaries and other compensation awards
under various compensation plans, and approves salaries and compensation of
executive officers and also approves grants under the Corporation's incentive
stock plans (see the "Executive Compensation Committee Report" below); all
members of this Committee are nonemployee directors.
4. The Nominating Committee, which met three times in 1993, is responsible
for proposing a slate of directors for election by the stockholders at each
annual meeting and proposing candidates to fill any vacancies on the Board; all
members of this Committee are nonemployee directors. The Committee will consider
candidates for Board membership proposed by stockholders who have complied with
the procedures described under the caption below entitled "Submission of
Stockholder Proposals and Other Information."
Directors who are not employees of the Corporation receive an annual
retainer of $31,200; they also receive a fee of $2,300 for each Board of
Directors meeting attended and for each Audit, Executive, Executive
Compensation, and Nominating Committee meeting attended, except that a fee of
$2,600 per meeting is received for each committee meeting attended not in
conjunction with a meeting of the Board. Each nonemployee member of the
Executive Committee also receives an annual retainer of $5,400.
Nonemployee directors may elect to participate in the Deferred Compensation
Plan for Directors of the Corporation under which payment of part or all of
their directors' fees and retainers is deferred. This Plan provides participants
with the option to defer their compensation in the form of stock units related
to
2
<PAGE> 6
the price of the Corporation's Common Stock, as well as the option to defer in
the form of cash. Messrs. Gossage, Hay, Reichert and Young are active
participants in this Plan. Such accumulated compensation plus interest thereon
at the long-term medium-quality bond rate for cash accounts or dividend
equivalents for stock units accounts, as the case may be, are payable to the
director or to the director's estate or beneficiary, over such period as may be
designated, upon termination as a director.
Pursuant to the Directors' Retirement Benefit Plan, directors may receive
retirement benefits for a period of ten years, such benefits ranging from 15% to
100% of the annual retainer at retirement, based on their years of service
ranging from four to ten years; in the event of a change in control of the
Corporation, the years of service are accelerated to ten. Pursuant to the 1992
Stock Incentive Plan, 2,900 nonqualified options to purchase Common Stock were
issued to each director during August of 1993, at $38.0625, the average market
price on the day of issue. The Corporation also provides directors with
accidental death and dismemberment insurance benefits of $300,000 and, in
addition, travel accident insurance benefits of $250,000 when traveling on the
Corporation's business.
ELECTION OF DIRECTORS
The Board of Directors of the Corporation consists of 11 persons divided
into three classes. At each annual meeting the term of one class of directors
expires and persons are elected to that class for terms of three years. Mr.
James E. Cunningham, who has served as a distinguished member of the Board of
Directors since 1987, has reached the mandatory retirement age for Directors,
and will not be renominated, and upon his retirement the Board of Directors will
consist of 10 persons.
The persons appointed in the enclosed proxy intend to vote at the Annual
Meeting, and any adjournment or adjournments thereof, for the election of the
nominees for directors whose names appear below, for the term indicated or until
their respective successors have been elected and have qualified, or in the
event of disqualification, refusal or inability of any of them to serve, for the
election of such other persons as they believe will carry on the present
policies of the Corporation. Each of the nominees has agreed to serve if
elected.
3
<PAGE> 7
DIRECTOR NOMINEES
The information regarding the director nominees has been furnished by such
nominees and is set forth below:
<TABLE>
<CAPTION>
Principal Occupation, Year First Common Shares
Name Other Directorships and Age Elected Owned
- ---------------------------------------------------------------------- ---------- -------------
<S> <C> <C> <C>
For Terms Expiring at the 1997 Annual Meeting
Thomas L. Gossage...... Chairman, President and Chief Executive Officer 1993 1,000
and a director of Hercules Incorporated, a
worldwide producer of chemicals and related
products and solid fuel systems for aerospace
applications. Also a director of Wilmington
Trust Corporation, the U.S. - Russia Business
Council and Chemical Manufacturers Association.
Age 59.
Dennis C. Stanfill*+... Senior Advisor, Credit Lyonnais, a global bank, 1981 3,500
and prior thereto was: Co-Chairman and Co-Chief
Executive Officer of Metro-Goldwyn-Mayer Inc.;
Chairman or President of AME, Inc., a video
post production company; and President and a
principal stockholder of Stanfill Bowen & Co.,
Inc., a private investment and venture capital
firm. Also a Director of Carter Hawley Hale
Stores, Inc., a diversified retailer. Age 66.
John W. Teets*......... Chairman, President and Chief Executive Officer 1980 249,164
and a director of the Corporation. Also a
director of GFC Financial Corporation, a
financial leasing and insurance company, and
Motor Coach Industries International, Inc., a
manufacturer of intercity coaches and
distributor of bus replacement parts. Age 60.
</TABLE>
4
<PAGE> 8
DIRECTORS CONTINUING IN OFFICE
The information regarding the directors continuing in office has been
furnished by such directors and is set forth below:
<TABLE>
<CAPTION>
Principal Occupation, Year First Common Shares
Name Other Directorships and Age Elected Owned
- ---------------------------------------------------------------------- ---------- -------------
<S> <C> <C> <C>
Terms Expiring at the 1996 Annual Meeting
Donald E. Guinn++...... Chairman Emeritus and a director of Pacific 1986 500
Telesis Group, a telecommunications holding
company, and Chairman Emeritus and a director
of Pacific Bell. Also a director of Brunswick
Corporation, a manufacturer of marine,
recreation and defense products, Pacific Mutual
Life Insurance Company, Pyramid Technology
Corporation, a manufacturer of computers, and
BankAmerica Corporation and its subsidiary,
Bank of America, NT&SA. Age 61.
Judith K. Hofer*+...... President and Chief Executive Officer of Meier 1984 2,264
& Frank, a retail department store division of
The May Department Stores Company. Also a
director of Key Bank of Oregon. Age 54.
Jack F. Reichert*+..... Chairman and Chief Executive Officer and a 1984 500
director of Brunswick Corporation, a
manufacturer of marine, recreation and defense
products. Also a director of First Chicago
Corporation and its subsidiary, The First
National Bank of Chicago; Trustee, Carroll
College; Member, University of Chicago Graduate
School of Business Advisory Council. Age 63.
Terms Expiring at the 1995 Annual Meeting
Joe T. Ford-........... Chairman and Chief Executive Officer and a 1991 4,000
director of ALLTEL Corporation, a telecom-
munications and information services company.
Also a director of Duke Power Company, a public
utility. Age 56.
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
Principal Occupation, Year First Common Shares
Name Other Directorships and Age Elected Owned
- ---------------------------------------------------------------------- ---------- -------------
<S> <C> <C> <C>
Jess Hay-.............. Chairman and Chief Executive Officer and a 1981 1,000
director of Lomas Financial Corporation, a
financial services company, and Chairman and
Chief Executive Officer of Lomas Mortgage USA,
Inc. Also a director of Exxon Corporation,
MCorp., a bank holding company, Southwestern
Bell Corporation and Trinity Industries, Inc.,
a manufacturer of industrial metal products,
and Trustee of Liberte Investors. Age 63.
Linda Johnson Rice++... President and Chief Operating Officer and a 1992 1,500
director of Johnson Publishing Company, Inc.,
publisher of Ebony and other magazines. Also a
director of Bausch & Lomb, a producer of global
health care and optics products, and
Continental Bank Corporation. Age 35.
A. Thomas Young++-..... President and Chief Operating Officer and a 1991 1,000
director of Martin Marietta Corporation, a
manufacturer and designer of aerospace products
and systems, and an information services and
energy company, and prior thereto was its
Executive Vice President. Also a director of
Cooper Industries, Inc., a diversified
manufacturer of electrical, hardware,
automotive and petroleum products. Age 55.
</TABLE>
- ---------------
- - Member of Audit Committee
* Member of Executive Committee
+ Member of Executive Compensation Committee
++ Member of Nominating Committee
6
<PAGE> 10
OWNERSHIP OF THE CORPORATION'S SECURITIES
The following table sets forth certain information at March 15, 1994,
regarding those persons known to the Corporation to be the beneficial owners of
more than 5% of the Corporation's outstanding Common Stock and the beneficial
ownership, as defined by the Securities and Exchange Commission (SEC), of such
Common Stock by all directors and executive officers of the Corporation as a
group:
CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
Amount of
Beneficial Percent
Name and Address Ownership of Class
-------------------------------------------------------------- ----------------- ---------
<S> <C> <C>
First Interstate Bank of Arizona, N.A., 3,923,9331 8.5%
Trustee of The Dial Corp Employee Equity Trust
P. O. Box 53434
Phoenix, Arizona 85072-3434
FMR Corp. 3,492,3982 7.6%
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
- ---------------
1 The ownership information set forth herein is based in its entirety on
material contained in Amendment No. 2 to Schedule 13D, dated January 31, 1994,
filed with the SEC by First Interstate Bank of Arizona, N.A., as Trustee for
The Dial Corp Employee Equity Trust. The Schedule 13D states that the First
Interstate Bank of Arizona, N.A. disclaims beneficial ownership of the shares
of stock in the Trust. Shares are periodically allocated and released from the
Trust to satisfy benefit funding requirements under certain of the
Corporation's compensation and benefit plans (Plans). The Trust's shares will
be voted, under confidential voting procedures, in the same proportion as the
voting instructions received from such Plans' participants with respect to the
Corporation's Common Stock allocated to such participants' accounts.
Unallocated shares held in the Trust are voted in the same proportions as the
shares for which instructions have been received.
2 The ownership information set forth herein is based in its entirety on
material contained in a Schedule 13G, dated February 11, 1994, filed with the
SEC by FMR Corp., which certified therein that the securities were not
acquired for the purpose of changing or influencing the control of the
Corporation. With respect to the shares held, such stockholder has sole voting
power as to 618,656 shares and sole dispositive power as to 3,492,398 shares.
Some of the securities reported are owned by wholly owned subsidiaries of FMR
Corp., viz., Fidelity Management Trust Company and Fidelity Management &
Research Company.
7
<PAGE> 11
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Amount of Percent
Name Beneficial Ownership1 of Class
------------------------------------------------------ --------------------- ---------
<S> <C> <C>
William L. Anthony 39,289 *
Robert H. Bohannon 6,450 *
James E. Cunningham 8,760 *
Frederick G. Emerson 39,698 *
Joe T. Ford 8,034 *
Thomas L. Gossage 1,000 *
Donald E. Guinn 8,760 *
Jess Hay 9,260 *
Karen L. Hendricks 7,954 *
Judith K. Hofer 6,795 *
F. Edward Lake 67,665 *
L. Gene Lemon 156,904 *
Frederick J. Martin 42,838 *
Andrew S. Patti 131,513 *
Jack F. Reichert 8,760 *
Linda Johnson Rice 5,600 *
Norton D. Rittmaster 55,534 *
Mark R. Shook 22,154 *
Dennis C. Stanfill 8,652 *
Richard C. Stephan 82,550 *
John W. Teets 750,092 1.6%
A. Thomas Young 5,034 *
All Directors and Executive Officers as a Group
(22 persons) 1,473,296 3.2%
</TABLE>
- ---------------
1 Includes 945,042 shares of Common Stock with respect to which all the above
directors and executive officers as a group have the right to acquire
ownership within 60 calendar days through the exercise of stock options
granted under the Corporation's stock option plans.
* Less than one percent.
8
<PAGE> 12
The Corporation's management understands the importance of aligning the
financial interests of its officer group with those of stockholders.
Accordingly, the Corporation has established specific guidelines relating to the
minimum amount of stock officers should own on a direct basis, meaning stock
which is at risk in the market, not simply held under option.
The Corporation's guidelines call for the officer group to own stock which
has a value within a range of one and one-half to five times that individual's
annual salary, depending on his or her level of compensation as discussed in the
Executive Compensation Committee Report which follows. Most of these officers
have reached their goals and the remainder are continuing to invest towards
achieving their goals.
9
<PAGE> 13
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth compensation received for the years
1991-1993 by each of the Corporation's five most highly compensated executive
officers in 1993:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------------------
Awards
ANNUAL COMPENSATION -------------------------- Payouts
------------------------------------------------ Securities ----------
Other Annual Restricted Underlying Long-Term All Other
Name and Compensation Stock Awards Options Incentive Compensation
Principal Position Year Salary($) Bonus($) ($)1 ($)2 (#) Payouts($) ($)3
- ------------------ ---- ---------- ---------- ------------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John W. Teets 1993 $1,150,3334 $1,173,300 $717,412 $ 0 93,600 $1,714,900 $ 30,000
Chairman, 1992 $1,099,333 $1,121,300 $518,333 $ 0 81,700 $ 0 $ 30,000
President, 1991 $1,035,667 $1,057,000 $452,006 $636,447 68,714 $ 333,000 $ 30,000
and CEO
Richard W. 1993 $ 238,244 $ 163,500 $ 8,684 $ 0 10,100 $ 295,400 $ 7,128
Gochnauer 1992 $ 225,498 $ 168,700 $ 6,119 $ 0 7,400 $ 315,500 $ 6,765
Executive Vice 1991 $ 205,436 $ 151,000 $ 5,565 $ 21,150 7,083 $ 128,300 $ 6,322
President-
General Manager,
Laundry Division
of
Consumer Products
Group
L. Gene Lemon 1993 $ 346,833 $ 265,300 $129,078 $ 0 18,700 $ 437,600 $ 10,405
Vice President 1992 $ 326,000 $ 249,400 $ 92,931 $ 0 20,400 $ 0 $ 9,780
and 1991 $ 305,133 $ 234,000 $ 81,016 $130,061 13,544 $ 75,000 $ 9,154
General Counsel
Frederick J. 1993 $ 288,000 $ 188,100 $ 78,403 $ 0 12,300 $ 312,100 $ 6,866
Martin 1992 $ 275,000 $ 225,200 $ 54,561 $ 0 11,400 $ 362,300 $ 6,866
President of 1991 $ 259,000 $ 209,800 $ 47,089 $105,146 10,437 $ 246,000 $ 7,208
Dobbs
International
Services, Inc.
Andrew S. Patti 1993 $ 367,653 $ 281,300 $141,392 $ 0 19,800 $ 619,300 $ 11,049
President and COO 1992 $ 346,890 $ 291,900 $100,019 $ 0 21,600 $ 568,600 $ 10,407
of 1991 $ 326,374 $ 274,600 $ 83,816 $138,366 14,414 $ 280,000 $ 9,399
Consumer Products
Group
</TABLE>
- ---------------
1 Perquisites are less than $50,000 or 10% of the total of annual salary and
bonus for each named executive officer; amounts shown represent a gross-up of
the taxes due on the lapse of restrictions on restricted stock during 1993.
2 Dividends are paid on restricted stock and performance based stock at the same
rate as paid to all stockholders. On December 31, 1993, the following persons
held the following amounts of restricted stock and performance based stock,
respectively, valued at then current market values: John W. Teets, 74,067
shares at $2,990,455 and 25,800 shares at $1,041,675; Richard W. Gochnauer,
1,298 shares at $52,407 and 1,900 shares at $76,713; L. Gene Lemon, 13,691
shares at $552,774 and 5,500 shares at $222,063; Frederick J. Martin, 10,351
shares at $417,922 and 3,700 shares at $149,388; and Andrew S. Patti, 14,755
shares at $595,733 and 7,500 shares at $302,813.
3 Amounts represent payments under the 401K Plan and the Supplemental TRIM Plan.
4 Includes payments under an employment agreement, as amended, expiring three
years after notice by the Corporation of termination, providing for an annual
salary of $1,187,000, effective September 1, 1993.
10
<PAGE> 14
STOCK OPTION GRANTS
The following table sets forth information on stock option grants to each
of the five most highly compensated executive officers of the Corporation for
1993. The amounts shown for each executive officer as potential realizable
values are based on assumed annualized rates of stock price appreciation of 5%
and 10% over the full ten-year term of the options, which would result in stock
prices of $64.75 and $103.10, respectively. The amounts shown as potential
realizable values for all stockholders represent the corresponding increases in
the market value of the 46,018,008 outstanding shares of the Corporation's
Common Stock held by all stockholders as of January 1, 1994 at the 1993 year-end
closing price of $40.375, which would total approximately $1.17 billion and
$2.95 billion, respectively. THESE POTENTIAL REALIZABLE VALUES ARE BASED SOLELY
ON ASSUMED RATES OF APPRECIATION REQUIRED BY APPLICABLE SEC REGULATIONS. ACTUAL
GAINS, IF ANY, ON OPTION EXERCISES AND COMMON STOCKHOLDINGS ARE DEPENDENT ON THE
FUTURE PERFORMANCE OF THE CORPORATION'S COMMON STOCK AND OVERALL STOCK MARKET
CONDITIONS. THERE CAN BE NO ASSURANCE THAT THE POTENTIAL REALIZABLE VALUES SHOWN
IN THIS TABLE WILL BE ACHIEVED.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------- Potential Realizable
% of Value at Assumed
Total Annual Rates of
Number of Options Stock Price Appreciation
Securities Granted for Option Term
Underlying to Exercise ------------------------------
Options Employees Price Expiration 5% 10%
Name Granted(#)1 Last Year ($/Share) Date ($) ($)
- ------------------- ----------- --------- -------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
John W. Teets 93,600 9.75% $ 39.750 2/17/03 $ 2,340,000 $ 5,929,560
Richard W. 10,100 1.05% $ 39.750 2/17/03 $ 252,500 $ 639,835
Gochnauer
L. Gene Lemon 18,700 1.95% $ 39.750 2/17/03 $ 467,500 $ 1,184,645
Frederick J. Martin 12,300 1.28% $ 39.750 2/17/03 $ 307,500 $ 779,205
Andrew S. Patti 19,800 2.06% $ 39.750 2/17/03 $ 495,000 $ 1,254,330
ALL STOCKHOLDERS' N/A N/A N/A N/A $1.17 BILLION $2.95 BILLION
STOCK PRICE
APPRECIATION
</TABLE>
- ---------------
1 The exercise prices are the fair market value of the Corporation's Common
Stock on the grant date. Fifty percent of options are exercisable one year
after grant and the balance are exercisable two years after grant; and each
option contains the right to surrender the option for cash, which right is
exercisable only during certain tender offers. The exercise price may be paid
by delivery of already owned shares, and tax withholding obligations related
to exercise may be paid by offset of the underlying shares, subject to certain
conditions.
11
<PAGE> 15
AGGREGATED STOCK OPTION/SAR EXERCISES AND VALUES
The following table sets forth information on aggregated stock option
exercises for 1993, number of unexercised options at 1993 year-end
(exercisable/unexercisable), and 1993 year-end values
(exercisable/unexercisable) for each of the five most highly compensated
executive officers of the Corporation. THE AMOUNTS SET FORTH IN THE TWO COLUMNS
RELATING TO UNEXERCISED OPTIONS, UNLIKE THE AMOUNTS SET FORTH IN THE COLUMN
HEADED "VALUE REALIZED," HAVE NOT BEEN, AND MIGHT NEVER BE, REALIZED. THE
UNDERLYING OPTIONS MIGHT NOT BE EXERCISED; AND ACTUAL GAINS, IF ANY, ON EXERCISE
WILL DEPEND ON THE VALUE OF THE CORPORATION'S COMMON STOCK ON THE DATE OF
EXERCISE. THERE CAN BE NO ASSURANCE THAT THESE VALUES WILL BE REALIZED.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities
Underlying
Unexercised Value of Unexercised
Shares Options at In-the-Money Options
Acquired FY-End(#) at FY-End($)
on Value Exercisable/ Exercisable/
Name Exercise(#) Realized($) Unexercisable Unexercisable1
- --------------------------- ---------- ----------- ------------------ ----------------------
<S> <C> <C> <C> <C> <C> <C>
John W. Teets 0 0 454,128 134,450 $5,971,318 $159,459
Richard W. Gochnauer 0 0 27,558 13,800 $ 362,340 $ 14,950
L. Gene Lemon 0 0 96,808 28,900 $1,220,801 $ 38,354
Frederick J. Martin 0 0 10,919 18,000 $ 79,192 $ 22,013
Andrew S. Patti 0 0 54,431 30,600 $ 537,401 $ 40,613
</TABLE>
- ---------------
1 The closing price of the Corporation's Common Stock on December 31, 1993 was
$40.375. The information shown reflects the value of options accumulated over
periods of up to nine years.
LONG-TERM INCENTIVE PLAN GRANTS AND ESTIMATED PAYOUTS
The following table sets forth information on Performance Unit Incentive
Plan grants and Performance Based Stock grants for 1993 and the performance
period until payout and, for the Performance Unit Incentive Plan, the estimated
ranges of the payout under the Plan, for each of the five most highly
compensated executive officers of the Corporation:
12
<PAGE> 16
LONG-TERM INCENTIVE PLAN AWARDS IN LAST YEAR
<TABLE>
<CAPTION>
Estimated Future Payouts
Performance Under Non-Stock Price Based Plans1
Number Period -----------------------------------------
of Until Threshold Target Maximum
Name Units Payout (# Units) (# Units) (# Units)
- ----------------------------- ------ ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
John W. Teets................ 21,330 2 years 5,333 21,330 42,660
25,8002 3 years
Richard W. Gochnauer......... 2,930 2 years 733 2,930 5,860
1,9002 3 years
L. Gene Lemon................ 5,550 2 years 1,388 5,550 11,100
5,5002 3 years
Frederick J. Martin.......... 3,940 2 years 985 3,940 7,880
3,7002 3 years
Andrew S. Patti.............. 5,880 2 years 1,470 5,880 11,760
7,5002 3 years
</TABLE>
- ---------------
1 The assumed value of the units awarded under the Performance Unit Incentive
Plan is equal to $39.813 which was the price of the Corporation's Common Stock
on the initial date of grant. The assumed value of the units for any payment
of an award is based on the average price of the stock during the month
following the performance period. The closing price of the Corporation's
Common Stock on December 31, 1993 was $40.375. Payouts of awards are dependent
upon achievement of return on equity and income targets which are established
at the beginning of the performance period. The performance period is
generally three years, however, in order to gain the timely approvals required
to obtain the tax deductibility of these payouts, if achieved, the 1993-1995
performance period was later changed to a two-year period (1994-1995).
2 Performance Based Stock is earned only if performance targets are met relative
to the two stock indices set forth in the Performance Graph below.
EXECUTIVE SEVERANCE AND EMPLOYMENT AGREEMENTS
The Corporation has entered into executive severance agreements with
Messrs. Teets, Lemon and another executive officer providing that if their
employment terminates for any reason (other than because of death, disability,
or normal retirement) within 18 months after a change in control of the
Corporation, then they shall receive severance compensation. The maximum amounts
the agreements provide for consist of a lump sum payment of three times such
executive officer's highest salary, incentive plan payments and fringe benefits
and also provide a tax gross-up feature, so that the executive officer does not
have to pay excise taxes imposed by the Internal Revenue Code on payments made
pursuant to the agreement. Benefits paid are reduced by other severance benefits
paid by the Corporation, but shall not be offset by any other amounts. Such
executive officer will also be credited with
13
<PAGE> 17
years of service equal to the greater of the number needed to assure vesting
under the retirement plans or the number of year's salary paid under the
severance plan.
The Corporation has also entered into executive severance agreements with
Messrs. Martin and Patti, which provide benefits similar to those in the
agreements described above, except that if employment terminates involuntarily
or the executive officer leaves for a good reason (as defined) the participant
will receive three times such executive officer's salary, incentive payments and
fringe benefits, and if employment terminates because the participant leaves
voluntarily during the 30-day period following the first anniversary of the
change in control, the participant will receive two times such compensation.
Other executive officers receive similar benefits except some agreements provide
that a maximum of two years of benefits are payable and only if the termination
is involuntary.
In addition to that shown in the Summary Compensation Table, another
executive officer has entered into an employment agreement, as amended, with a
subsidiary expiring December 31, 1994, providing for an annual salary of
$217,300.
PENSION PLANS
The following table shows estimated annual retirement benefits payable to a
covered participant who retires at age 65 or later for the years of service and
remuneration level indicated, under The Dial Companies Retirement Income Plan
and the schedule of the Supplemental Pension Plan which prevents the loss of
pension benefits otherwise payable except for the limitations of Section 415 of
the Internal Revenue Code. The remuneration covered by the Retirement Plan is
annual salary and annual bonus, as reported in the summary compensation table
above. The final remuneration will be calculated on the basis of the average of
participant's last five years of covered remuneration prior to retirement.
PENSION PLAN TABLE1,2
<TABLE>
<CAPTION>
Years of Service3
------------------------------------------------
Remuneration 15 20 25 304
- ------------ -------- -------- ---------- ----------
<S> <C> <C> <C> <C>
125,000.... 31,109 41,478 51,847 62,217
150,000.... 37,671 50,228 62,785 75,342
175,000.... 44,234 58,978 73,722 88,467
200,000.... 50,796 67,728 84,660 101,592
225,000.... 57,359 76,478 95,597 114,717
250,000.... 63,921 85,228 106,535 127,842
300,000.... 77,046 102,728 128,410 154,092
400,000.... 103,296 137,728 172,160 206,592
500,000.... 129,546 172,728 215,910 259,092
600,000.... 155,796 207,728 259,660 311,592
700,000.... 182,046 242,728 303,410 364,092
800,000.... 208,296 277,728 347,160 416,592
900,000.... 234,546 312,728 390,910 469,092
</TABLE>
14
<PAGE> 18
<TABLE>
<CAPTION>
Years of Service3
------------------------------------------------
Remuneration 15 20 25 304
- ------------ -------- -------- ---------- ----------
<S> <C> <C> <C> <C>
1,000,000.. 260,796 347,728 434,660 521,592
1,100,000.. 287,046 382,728 478,410 574,092
1,200,000.. 313,296 417,728 522,160 626,592
1,300,000.. 339,546 452,728 565,910 679,092
1,400,000.. 365,796 487,728 609,660 731,592
1,500,000.. 392,046 522,728 653,410 784,092
1,600,000.. 418,296 557,728 697,160 836,592
1,700,000.. 444,546 592,728 740,910 889,092
1,800,000.. 470,796 627,728 784,660 941,592
1,900,000.. 497,046 662,728 828,410 994,092
2,000,000.. 523,296 697,728 872,160 1,046,592
2,100,000.. 549,546 732,728 915,910 1,099,092
2,200,000.. 575,796 767,728 959,660 1,151,592
2,300,000.. 602,046 802,728 1,003,410 1,204,092
2,400,000.. 628,296 837,728 1,047,160 1,256,592
2,500,000.. 654,546 872,728 1,090,910 1,309,092
2,600,000.. 680,796 907,728 1,134,660 1,361,592
2,700,000.. 707,046 942,728 1,178,410 1,414,092
</TABLE>
- ---------------
1 The Internal Revenue Code (Code), and the Employee Retirement Income Security
Act (ERISA), limit the annual benefits which may be paid from a tax-qualified
retirement plan. As permitted by the Code and ERISA, the Corporation has a
supplemental plan which authorizes the payment of benefits calculated under
provisions of the retirement plan which may be above the limits permitted
under the Code and ERISA for those executives entitled to participate in the
supplemental plan.
2 Benefits are computed on a single-life annuity basis. Such benefits reflect a
reduction to recognize some of the Social Security benefits to be received by
the employee. The amounts set forth are before any adjustment for joint and
survivorship provisions, which would reduce the amounts shown in the table.
3 The number of credited years of service for Messrs. Teets, Gochnauer, Lemon,
Martin, and Patti, are 21, 3, 23, 15, and 25, respectively.
4 The Corporation's Retirement Income Plan limits the years of service credited
for purposes of calculating benefits to a maximum of 30 years. Its
Supplemental Pension Plan contains similar limits and further provides that
pension benefits set forth in this column will be payable to designated
executive officers who have completed twenty or more years of service and
attained age 55, including Messrs. Teets and Lemon.
15
<PAGE> 19
Notwithstanding anything to the contrary set forth in any of the
Corporation's previous filings under the Securities Act of 1933, as amended, or
the Exchange Act, as amended, that might incorporate future filings, including
this Proxy Statement, in whole or in part, the following report and the
Stockholder Return Performance Graph shall not be incorporated by reference into
any such filings.
EXECUTIVE COMPENSATION COMMITTEE REPORT
This report was prepared by the Executive Compensation Committee of the
Board of Directors. Under the Committee's direction, the Corporation has
implemented an executive compensation strategy designed to enhance profitability
and stockholder value. This strategy has served the stockholders of the
Corporation for many years by motivating and rewarding executives for achieving
the Corporation's goals.
EXECUTIVE COMPENSATION STRATEGY
The Corporation's primary executive compensation strategy is to closely
align the financial interests of senior managers with those of the stockholders.
Specific objectives of executive compensation are:
- To maximize stockholder value.
- To attract and retain highly effective executive talent.
- To motivate executives to achieve the Corporation's key business goals.
- To put a significant amount of pay at risk in keeping with the
Corporation's pay-for-performance environment.
- To encourage ownership of the Corporation's common stock.
To support these objectives, a significant portion of executive
compensation is tied to achieving specific business goals that favorably impact
the Corporation's stock price.
MANAGING COMPENSATION
Each year the Committee conducts an in-depth review of the Corporation's
executive compensation program. This review is based in part on a comprehensive
study from a nationally recognized independent consulting firm. The consultant's
report assesses the effectiveness of the compensation program in achieving the
strategy and objectives established by the Committee. In addition, it provides a
comparison relative to practices and costs typical among a group of companies in
comparable industries
16
<PAGE> 20
among which the Corporation competes for executive talent. These comparator
companies are included in the Standard & Poor's Composite-500 Stock Index used
in the "Stockholder Return Performance Graph" shown on page 21, but not in the
size comparable index shown in the performance graph. The compensation program
for the Corporation's executive officers for 1993 was focused on performance
based criteria and was designed by reference to target compensation packages of
executive officers at approximately the 75th percentile of the comparator
companies but such level of compensation would be earned only if aggressive
performance criteria are achieved.
The preceding Summary Compensation Table shows the overall levels of
incentive compensation and the year-to-year variations which indicate the strong
relationship between incentive compensation and performance.
COMPONENTS OF COMPENSATION
Total compensation for the Corporation's executive officers includes:
- Base salary
- Annual and long-term incentives
- Benefits
- Perquisites
A significant amount of compensation is tied to the attainment of corporate
or subsidiary performance goals. For example, annual and long-term incentives at
target comprise approximately 70% of the aggregate compensation package of
executive officers. The Committee believes this reinforces the
pay-for-performance commitment and encourages executive officers to focus on
adding value to the Corporation.
The Committee has directed management to take reasonable action necessary
to maximize the tax deductibility of executive compensation. For instance, below
in this Proxy Statement two incentive plans are being recommended to the
stockholders for approval in order to comply with the provisions of Section
162(m) of the Internal Revenue Code.
BASE SALARY
Each year the Committee evaluates the named executive officers' salaries
based on performance during the prior period and competitive surveys of the
Corporation's comparator companies provided by the Corporation's compensation
consultants. Performance factors considered for the named executive officers,
excluding Mr. Teets, are various aspects of personal qualities, communication
skills, management leadership skills, strategic orientation and commitment to
competitive advantage, with both objective and subjective judgments being made
in the annual performance appraisal process. These executive officers received
an average 5.6% increase in base salary.
17
<PAGE> 21
In Mr. Teets' case the Committee considered his employment agreement which
requires an annual salary review but does not mandate any specific increase of
salary, and increased his annual base salary, effective September 1, 1993, to
$1.187 million, an increase of 4.9% over the prior period, reflecting an
adjustment for an increase in the cost-of-living. In the case of the other named
executive officers, their salaries were targeted at between the 50th and 75th
percentile of the salaries of comparable executives at the Corporation's
comparator companies and for 1993 such officers received increases bringing
them, on average, to the 75th percentile of salaries at such companies.
ANNUAL INCENTIVES
Executives are eligible for an annual bonus based on achieving corporate
and business unit performance objectives established each year. The awards
reflect the extent to which targets for the following goals are approached or
exceeded:
- Corporate level: Return on equity (weighted at 50%) and earnings per
share from continuing operations (weighted at 50%).
- Operating company level: Return on equity (weighted at 50%) and net
income (weighted at 50% but subject to upward or downward adjustment
depending on achievement of a cash flow measure).
Individual target bonuses range from 10% to 60% of the executive's base
salary, depending on the level of responsibility. Actual awards at the corporate
level range from 0% to 170% of target, depending on achievement of corporate
goals. Actual awards at the operating company level range from 0% to a maximum
of 178.5% of target, depending on achievement of operating company goals and
discretionary adjustment based on individual performance.
For 1993, Mr. Teets earned an annual bonus of $1.173 million. The bonuses
for Messrs. Teets and Lemon were based on the Corporation exceeding applicable
return on equity and income targets and achieving two strategic goals for 1993
as set by this Committee. The two strategic goals, which increased the bonuses
by 11%, were the completion of the Corporation's restructuring program,
including the favorable sale of the Corporation's bus manufacturing and
replacement parts businesses, and successful implementation of an acquisition
program to replace the revenues and earnings of those businesses. The bonuses
for the other executive officers were based on exceeding return on equity,
income and cash flow targets for their respective units.
LONG-TERM INCENTIVES
To accomplish the objectives of the executive compensation program and to
discourage short-term actions inconsistent with longer-term improvement, the
long-term incentive plans are designed to reward measurable performance and to
build stock ownership among executive officers. Three long-term
18
<PAGE> 22
incentive vehicles (performance units, stock options, and performance stock)
provide flexibility in delivering incentive pay.
The Performance Unit Incentive Plan is intended to focus participants on
the long-term interests of stockholders by tying incentive payments not only to
the achievement of financial measures but also to common stock performance. The
plan is offered to a limited group of key executives, including the executives
whose compensation is detailed above.
Awards are paid if, at the end of a two-to-five-year performance period,
specific financial objectives are met. Targets are set by the Committee at the
beginning of the performance period. At the corporate level, these goals are
based on earnings per share and return on equity. For the operating companies,
the goals are based on growth in operating income and return on equity.
Performance unit grants are based on the Corporation's Common Stock price
on the date of the grant and a multiple of salary determined by an independent
consulting firm to reflect competitive practice of the comparator companies.
Participant awards can be earned depending on the degree of achievement of two
financial goals based on a matrix of 0% to 200% of the number of award units
originally granted. Award payments depend on the stock price during the month
following the performance period. Such maximum amount of award units will be
earned if the maximum earnings and return on equity targets for the performance
period are met. Proportionately fewer units are earned for less than maximum
results. If average annual income or return on equity are below the threshold
levels, no units are earned.
At the corporate level, due to changes resulting from the spinoff of the
financial and insurance business units in 1992, the 1991-1993 plan was canceled
and replaced with a plan having a two-year performance period, 1992-1993.
For 1993, Mr. Teets earned a long-term bonus of $1.715 million under this
Plan. No bonus was paid under this Plan last year. This bonus for Mr. Teets and
the bonuses of the other executive officers was based on exceeding the earnings
per share or income and return on equity targets for the performance period.
The Stock Incentive Plan provides a long-term incentive for a broader group
of key employees.
Stock options encourage and reward effective management that results in
long-term financial success. Stock options are granted for 10 years with an
exercise price at fair market value on the date of grant. Half the number of
options granted can be exercised after one year and the other half after two
years. Stock option grants are a part of the named executive officers' total
compensation package, and the amounts granted are based on multiples of salaries
based on competitive practices of the Corporation's comparator companies.
Also in 1993, under the Stock Incentive Plan, the Committee awarded certain
executive officers performance based stock for the purposes of focusing
management's attention on value creation as
19
<PAGE> 23
measured by returns to stockholders, retaining the management team, and building
stock ownership by executive officers in the Corporation's Common Stock. The
stock awarded would be earned only if performance targets are met or exceeded,
relative to the two indices shown on the performance graph below: the S&P 500
Index and the Corporation's size comparable index.
In 1993, Mr. Teets received options to purchase 93,600 shares with an
exercise price of $39.75 per share, and including the 1993 grant, at year end he
held options to purchase 588,578 shares. In 1993 Mr. Teets also received a grant
of performance based stock in the amount of 25,800 shares. He now owns 249,164
shares of the Corporation's Common Stock, including the 25,800 shares of
performance based stock mentioned in the previous sentence, which will not be
earned by Mr. Teets unless the performance targets are met.
In determining the amounts of option grants and performance based stock
awards, the Committee did not consider the amounts of options and restricted
stock outstanding or previously granted to each employee; however, it did
consider information on competitive practice in the comparator group in
determining the amount of option grants and performance based stock awards made
in 1993.
Guidelines have been adopted encouraging officers and key executives to own
a dollar amount of the Corporation's Common Stock equal to a multiple of their
base pay, which is at risk in the market and not simply held under option. These
multiples range from one and one-half to five times base pay, depending on the
level of compensation of individuals within the group.
CONCLUSION
The Committee believes that the 1993 grants of stock options and
performance based stock, and short and long-term cash incentive plans have
successfully focused the Corporation's senior management on building
profitability and stockholder value. The grants are competitive with those
offered at comparator companies. Through these programs, a significant portion
of the Corporation's executive compensation is linked directly to individual and
corporate performance and to stock price performance.
In 1993, as in previous years, the overwhelming majority of the
Corporation's executive compensation was at risk. The Committee intends to
continue to link executive compensation to corporate performance and stockholder
return.
EXECUTIVE COMPENSATION COMMITTEE
Dennis C. Stanfill, Chairman
Judith K. Hofer
Jack F. Reichert
20
<PAGE> 24
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Corporation's Common Stock
against the cumulative total return of the Standard & Poor's (S&P) Composite-500
Stock Index and an index consisting of the ten S&P Composite-500 Stock Index
companies which rank closest to the Corporation's market capitalization (five
larger and five smaller) for the five-year period ended December 31, 1993. Over
the past five-year period, the Corporation has restructured its lines of
business to concentrate on consumer products and targeted services, and believes
comparison of its last five years with any index of consumer products companies
or a selected group of consumer products companies and services companies would
not be meaningful because the Corporation was in transition throughout this
period. The ten companies of comparable size consist of: five larger -- Maytag
Corporation, Moore Corporation Limited, Owens-Corning Fiberglas Corporation,
Cummins Engine Company, Inc., Bethlehem Steel Corporation; five
smaller -- Worthington Industries, Inc., Parker-Hannifin Corporation, The New
York Times Company, Liz Claiborne, Inc., and Northrop Corporation.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
MEASUREMENT PERIOD SIZE
(FISCAL YEAR COVERED) DIAL S&P 500 COMPARABLES
<S> <C> <C> <C>
1988 100.0 100.0 100.0
1989 111.1 131.6 102.0
1990 90.0 127.5 88.6
1991 173.7 166.2 114.6
1992 212.8 178.8 125.0
1993 210.3 196.8 136.8
</TABLE>
21
<PAGE> 25
APPROVAL OF A MANAGEMENT INCENTIVE PLAN
AND A PERFORMANCE UNIT INCENTIVE PLAN
The Corporation's Board of Directors has unanimously approved, subject to
the approval of stockholders, a Management Incentive Plan and a Performance Unit
Incentive Plan ("the Plans") pursuant to which certain senior executives and
managers of the Corporation and certain of its subsidiaries may be paid
incentive awards.
The Plans are similar to plans approved by the Board of Directors for many
years, but due to the enactment of Section 162(m) of the Internal Revenue Code,
the Plans must be approved by the Corporation's stockholders to qualify as
"performance based" compensation plans so that all incentive payments earned
thereunder will be deductible by the Corporation for federal income tax
purposes.
The Board of Directors recommends that the stockholders approve these Plans
so that the senior executives and managers of the Corporation and its
subsidiaries will continue to be provided an incentive to increase stockholder
value and so that the Corporation will receive a Federal income tax deduction
for all incentive payments earned thereunder.
No payments will be made under these two Plans unless the Plans are
approved by the stockholders. If the Plans are not approved by the stockholders,
the Board will consider appropriate management incentive alternatives to
accomplish the objectives of such plans.
MATERIAL FEATURES OF THE NEW MANAGEMENT INCENTIVE PLAN
The Plan provides incentive compensation to the following groups:
Employees who occupy a position in which they can significantly affect
operating results as defined by the following criteria:
for Corporation Staff: salary grade 25 and above, but not more than
organization level four below the Chief Executive Officer; approximately
80 persons.
for operating companies: annual base salary is not less than $49,000 or
position not more than the third organizational level below the
corporation Chief Executive Officer; approximately 220 persons.
22
<PAGE> 26
NEW PLAN BENEFITS
THE DIAL CORP MANAGEMENT INCENTIVE PLAN1
<TABLE>
<CAPTION>
Name and Position Value($)
- ------------------------------------------------------------------------------------ ----------
<S> <C>
John W. Teets....................................................................... $ 712,200
Chairman, President and Chief Executive Officer
Richard W. Gochnauer................................................................ $ 100,006
Executive Vice President-General Manager, Laundry Division of Consumer Products
Group
L. Gene Lemon....................................................................... $ 162,225
Vice President and General Counsel
Frederick J. Martin................................................................. $ 132,300
President of Dobbs International Services, Inc.
Andrew S. Patti..................................................................... $ 171,908
President and Chief Operating Officer of Consumer Products Group
Executive Officers as a Group (including the above)................................. $1,913,675
All Employees (including both of the above)......................................... $7,528,535
</TABLE>
- ---------------
1 Under the Plan, the Board's Executive Compensation Committee (Committee)
establishes annual performance targets relating to earnings per share and
return on equity from continuing operations at the corporate level and return
on equity and net income, subject to an upward or downward adjustment
depending on achievement of a cash flow measure, at the subsidiary level. For
each of these measures, the Committee defines a range of performance, from
minimum to maximum, stated as a numerical rating. The maximum award that the
Chairman and Chief Executive Officer could earn under the Plan would be 102%
of his annual base salary. At current salary levels, the maximum amount that
any participant could receive under the Plan would be $1,210,700. The above
table sets forth potential values at 100% of target goal. The Plan may be
amended or terminated by the Board of Directors at any time.
The affirmative vote of the holders of a majority of the shares of Common
Stock voting on this proposal at the meeting will be necessary to approve the
Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THIS PROPOSAL.
MATERIAL FEATURES OF THE PERFORMANCE UNIT INCENTIVE PLAN
The Plan is designed to focus participants on the long-term interests of
stockholders by tying incentive payments to Common Stock performance and
specifically by (i) providing incentives for those key executives who contribute
in a substantial measure to the successful performance of the Corporation or its
affiliates; (ii) reinforcing corporate long-term financial goals; and (iii)
providing competitive levels of long-term compensation for key executives. The
Plan covers approximately 42 persons.
23
<PAGE> 27
NEW PLAN BENEFITS1
THE DIAL CORP PERFORMANCE UNIT INCENTIVE PLAN
<TABLE>
<CAPTION>
Number
of
Name and Position Value($)2 Units
- -------------------------------------------------------------------------- ---------- ------
<S> <C> <C>
John W. Teets............................................................. $ 890,400 22,260
Chairman, President and Chief Executive Officer
Richard W. Gochnauer...................................................... $ 137,600 3,440
Executive Vice President-General Manager, Laundry Division of Consumer
Products Group
L. Gene Lemon............................................................. $ 234,400 5,860
Vice President and General Counsel
Frederick J. Martin....................................................... $ 161,600 4,040
President of Dobbs International Services, Inc.
Andrew S. Patti........................................................... $ 248,400 6,210
President and Chief Operating Officer of Consumer Products Group
Executive Officers as a group (including the above)....................... $2,368,000 59,200
All Employees (including both of the above)............................... $4,444,800 51,920
</TABLE>
- ---------------
1 Awards are made if, at the end of a three-year performance period (1994-1996),
financial objectives are met. Targets are set by the Committee at the
beginning of the performance period. At the corporate level, these targets are
based on earnings per share and return on equity. For the operating companies,
the targets are based on operating income and return on equity.
Performance unit grants are based on the Corporation's Common Stock price on
the date of the grant and are consistent with competitive practice. Award
payments depend on the stock price during the month following the performance
period. Depending upon performance, participant awards can range from 0% to
200% of the number of award units originally granted. Since the award payments
depend on future stock prices, the maximum award is not determinable. The Plan
may be amended or terminated by the Board of Directors at any time, provided
that awards already granted shall not be invalidated without the consent of
the participant.
2 This calculation was made using a performance achievement of 100% and a stock
price of $40.375 (year-end stock price).
The affirmative vote of the holders of a majority of the shares of Common
Stock voting on this proposal at the meeting will be necessary to approve the
Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THIS PROPOSAL.
24
<PAGE> 28
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The following resolution concerning the appointment of independent public
accountants will be offered at the meeting:
RESOLVED, that the appointment of Deloitte & Touche to audit the accounts
of the Corporation and its subsidiaries for the fiscal year 1994 is hereby
ratified and approved.
Deloitte & Touche has audited the accounts of the Corporation and its
subsidiaries for many years and has been appointed by the Board of Directors of
the Corporation upon the recommendation of the Corporation's Audit Committee as
the Corporation's independent public accountants for 1994. It is expected that a
representative of Deloitte & Touche will attend the meeting, respond to
appropriate questions, and be afforded the opportunity to make a statement.
Members of the Audit Committee of the Board of Directors, none of whom are
employees of the Corporation, are James E. Cunningham, Chairman, Joe T. Ford,
Jess Hay, and A. Thomas Young. John W. Teets, Chairman, President and Chief
Executive Officer, attends the committee meetings ex officio.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE
APPOINTMENT OF DELOITTE & TOUCHE AS THE CORPORATION'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR 1994.
SUBMISSION OF STOCKHOLDER PROPOSALS AND OTHER INFORMATION
From time to time stockholders present proposals which may be proper
subjects for inclusion in the Proxy Statement and form of proxy for
consideration at the Annual Meeting of Stockholders. To be considered, proposals
must be submitted on a timely basis. Proposals for the 1995 Annual Meeting of
Stockholders must be received by the Corporation no later than December 2, 1994.
Any such proposals, as well as any questions related thereto, should be directed
to the Secretary of the Corporation.
A copy of the Corporation's 1993 Annual Report on Form 10-K to the
Securities and Exchange Commission may be obtained by stockholders upon written
request to J. R. Farmer, Dial Tower, Phoenix, Arizona 85077-1424.
In the event a stockholder wishes to propose a candidate for consideration
by the Nominating Committee as a possible nominee for election as a director, or
wishes to propose any other matter for consideration at the stockholder meeting,
other than proposals covered by the first paragraph of this section, then
written notice of such stockholder's intent to make such nomination or request
such other
25
<PAGE> 29
action must be given to the Secretary of the Corporation, The Dial Corp, Dial
Tower, Phoenix, Arizona 85077-2427 pursuant to certain procedures set out in the
Corporation's Bylaws, a copy of which is available upon request from the
Secretary of the Corporation. The chairman of the stockholder meeting may refuse
to acknowledge the nomination of any person or the request for such other action
not made in compliance with the foregoing procedure.
OTHER BUSINESS
The Board of Directors knows of no other matters to be brought before the
meeting. If any other business should properly come before the meeting, the
persons appointed in the enclosed proxy have discretionary authority to vote in
accordance with their best judgment.
By Order of the Board of Directors
FREDERICK G. EMERSON
Vice President and Secretary
26
<PAGE> 30
THE DIAL CORP
---------------------------------------
NOTICE OF
ANNUAL MEETING
AND
PROXY STATEMENT
---------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 1994
<PAGE> 31
THE DIAL CORP
MANAGEMENT INCENTIVE PLAN
I. PURPOSE:
The purpose of The Dial Corp Management Incentive Plan (Plan) is to
provide key executives of The Dial Corp and its subsidiaries with an
incentive to achieve goals as set forth under this Plan for each calendar
year (Plan Year) for their respective companies and to provide effective
management and leadership to that end.
II. PHILOSOPHY:
The Plan will provide key executives incentive bonuses based upon
appropriately weighted pre-defined net income, net capital employed or
other cash flow measure (in the case of subsidiaries), and return on
actual or pro forma equity or similar measures of performance.
III. SUBSIDIARIES, SUBSIDIARY GROUPS, AND DIVISIONS:
A. Each subsidiary, subsidiary group, line of business or division listed
below is a "Company" for the purposes of this Plan:
Name of Company
Aircraft Service International group
Brewster Transport Company Limited
Consumer Products group
Food Division
Household Division
International Division
Laundry Division
Soap Division
Crystal Holidays, Limited
Dobbs International Services, Inc. group
Exhibitgroup, Inc.
Greyhound Exposition Services, Inc. group*
Greyhound Leisure Services, Inc. group
Greyhound Lines of Canada Ltd.
Jetsave Inc. group
Premier Cruise Lines, Inc.
Restaura, Inc. group
Travelers Express Company, Inc. group
The Dial Corp may, by action of its Board of Directors, add or remove
business units on the list of participant companies from time to time.
*For purposes of group and Corporate accruals only.
Page 1
<PAGE> 32
B. PERFORMANCE GOALS:
1. BASE EARNINGS:
A realistic "base earnings" target for the plan year for each Company
will be recommended by the Chief Executive Officer of The Dial Corp
to the Executive Compensation Committee of The Dial Corp Board of
Directors (Committee) for approval taking into account historical
income, plan year financial plan income (on the same basis as
determined below), overall corporate objectives, and, if appropriate,
other circumstances.
Income for subsidiary base earnings determination and for calculating
the bonus pool of each Company shall mean net income (after deducting
charges against income for all incentives earned, including those
earned under this Plan) adjusted to appropriately exclude the effects
of gains and losses from the sale or other disposition of capital
assets other than equipment utilized in rental or leasing operations
and vehicles. Further, there will be a deduction from (addition to)
actual net income for the amount by which a Company's excess of
90-day and over receivables over its allowance for doubtful accounts
has increased (decreased) during the year.
Special treatment of any other significant unusual or non-recurring
items (for purposes of base earnings and/or return on equity and/or
net capital employed or other cash flow calculations) arising after a
subsidiary's targets are set may be recommended by the Chief
Executive Officer of The Dial Corp to the Committee for approval,
including, for example, appropriate adjustment of base earnings
and/or return on equity and/or net capital employed targets to
reflect planned effects of an acquisition approved after targets are
set. Other examples include extraordinary items, effects of a change
in accounting principles or a change in federal income tax rates. In
certain extreme cases, unplanned effects of major litigation,
remediation of environmental matters, significant uninsured losses or
a significant restructuring, or the bankruptcy of a major vendor or
customer are further examples of the types of items which could be
(but are not required to be) considered for possible special
treatment.
2. RETURN ON THE DIAL CORP PRO FORMA EQUITY (Except Travelers Express
Company, Inc. group):
A return on equity calculation for each Company will be made by
dividing each year's net earnings after tax by the average quarterly
(beginning of year and each quarter- end, including year-end) pro
forma equity. For purposes of this calculation, pro forma equity
shall be deemed to be 65% of the sum of each Company's actual equity
plus its debt, including intercompany accounts payable less
intercompany accounts receivable (net capital employed) and net
income shall be adjusted (1) to exclude 65% of intercompany interest
income and (2) to deduct (or add) 65% of the pro
Page 2
<PAGE> 33
forma interest, calculated at 8% per annum, on the excess (or
deficiency) of 35% of the average beginning and ending balance of net
capital employed over the average beginning and ending balance of
outstanding debt (pro forma additional or excess debt), so that each
Company's return on equity is based on a pro forma 65% equity and 35%
debt structure (equivalent to a debt/equity ratio of .54 to 1 or a
debt/capital ratio of 35%) for the net capital employed by it. A
realistic return on equity target for the Plan Year will be
recommended by the Chief Executive Officer of The Dial Corp for
approval to the Committee, taking into account historical return on
equity data, plan year financial plan return on equity (on the same
basis as previously described), overall corporate objectives, and,
where appropriate, other circumstances.
3. RETURN ON THE DIAL CORP EQUITY (Travelers Express Company, Inc.
group):
A return on equity calculation for the Travelers Express Company,
Inc. group will be made by dividing each year's net income after
taxes by the average quarterly (beginning of year and each
quarter-end, including year-end) equity. A realistic return on
equity target for the Plan Year will be recommended by the Chief
Executive Officer of The Dial Corp for approval to the Committee,
taking into account historical return on equity data, plan year
financial plan return on equity (on the same basis as previously
described), overall corporate objectives, and, where appropriate,
other circumstances.
4. NET CAPITAL EMPLOYED (or other cash flow measure):
Realistic monthly net capital employed (as defined in [2] above)
targets for the Plan Year will be recommended by the Chief Executive
Officer of The Dial Corp for approval to the Committee, taking into
account planned capital expenditures and working capital levels,
overall corporate objectives, and, where appropriate, other
circumstances. The effects of any major unplanned sale of assets,
acquisition, or capital expenditures will be considered on an
individual basis in determining performance as compared to target.
5. ESTABLISHING TARGETS:
The actual targets for base earnings, return on equity and net
capital employed will be established by the Committee after receiving
the recommendations of the Chief Executive Officer of The Dial Corp.
C. PARTICIPANT ELIGIBILITY:
The Committee will select the Executive Officers as defined under Section
16b of the Securities Exchange Act eligible for participation prior to the
beginning of the year. Other personnel will be eligible for participation
as designated by each
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<PAGE> 34
Company President or Chief Executive Officer and recommended to the Chief
Executive Officer of The Dial Corp for approval, limited only to those
executives who occupy a position in which they can significantly affect
operating results as pre-defined by appropriate and consistent criteria,
i.e., base salary not less than $49,000 per year, or base salary not less
than 50% of the Company's Chief Executive Officer, or position not more
than the third organizational level below the Company Chief Executive
Officer or another applicable criteria.
NOTE: Individuals not qualifying under the criteria established for the
Plan Year who were included in the previous year will be grandfathered
(continue as qualified participants until retirement, reassignment, or
termination of employment) if designated by the Company President or Chief
Executive Officer, and approved by the Chief Executive Officer of The Dial
Corp.
D. TARGET BONUSES:
Target bonuses will be approved by the Committee for each Executive
Officer in writing within the following parameters prior to the beginning
of the Plan Year and will be expressed as a percentage of salary. Target
bonuses for other eligible personnel will be established in writing within
the following parameters subject to approval by the Chief Executive
Officer of The Dial Corp.
Actual bonus awards will be dependent on Company performance versus the
targets established prior to the beginning of the year. A threshold
performance will be required before any bonus award is earned. Awards
will also be capped when stretch performance levels are achieved.
<TABLE>
<CAPTION>
As a Percentage of Salary
Subsidiary Positions Threshold** Target Cap***
----------------------------------------------------------------------------
<S> <C> <C> <C>
Chief Executive Officer/President * 22.5% 45% 76.5%
20.0% 40% 68.0%
Executive Vice President, Senior Vice 20.0% 40% 68.0%
President, and Other Operating Executives
Vice Presidents * 17.5% 35% 59.5%
15.0% 30% 51.0%
Key Management Reporting to Officers * 12.5% 25% 42.5%
10.0% 20% 34.0%
Staff Professionals * 7.5% 15% 25.5%
5.0% 10% 17.0%
----------------------------------------------------------------------------
</TABLE>
* Target Bonus, as determined by the Committee, is dependent upon
organizational reporting relationships.
** Reflects minimum achievement of both performance targets. Threshold
could be one-half of this amount if minimum achievement of only one
performance target is met.
*** Cap could be up to 105% of amounts shown if net capital employed (or
other cash flow measure) targets are achieved.
Page 4
<PAGE> 35
E. BONUS POOL TARGET:
1. The "Bonus Pool Target" will be initially established prior to the
beginning of the Plan Year and will be adjusted to equal the sum of
the target bonuses of all designated participants in each Company
based upon actual Plan Year salaries, as outlined in paragraph D
above, plus 15% for Special Achievement Awards.
2. The bonus pool will accrue ratably such that
a) on 50% of the sum of target bonuses:
i) no bonus will be earned if less than 80% of the base
earnings target is achieved;
ii) 50% to 100% will be earned if 80% to 100% of the base
earnings target is achieved;
iii) 100% to 170% will be earned if 100% to 120% of the base
earnings target is achieved; and
iv) the bonus pool earned shall be subject to a further
calculation whereby 90%, 95%, 100%, 105%, or 110% of such
base earnings bonus pool otherwise accruable will be the
final bonus pool hereunder, depending on the average of the
twelve months' achievement against net capital employed (or
other cash flow) targets.
b) on 50% of the sum of target bonuses:
i) no bonus will be earned if less than 80% of the return on
equity target is achieved;
ii) 50% to 100% will be earned if 80% to 100% of the return on
equity target is achieved; and
iii) 100% to 170% will be earned if 100% to 120% of the return
on equity target is achieved.
c) Notwithstanding 2. a) i), ii), and iii); and b) i), ii), and
iii); of this paragraph E, the ratable accrual of either or both
targets may be established for threshold within the range of
above 80% up to and including 95% and for maximum within the
range of below 120% down to 110%, for certain subsidiaries of
this Company as may be designated by the Committee after
considering the recommendations of the Chief Executive Officer
of The Dial Corp.
Page 5
<PAGE> 36
3. Bonus pool accruals not paid out shall not be carried forward to any
succeeding year.
F. INDIVIDUAL BONUS AWARDS:
1. Indicated bonus awards will be equal to the product of the target
bonus percentage times the weighted average percentage of bonus pool
accrued as determined in paragraph E above times the individual's
actual base salary earnings during the Plan Year, subject to
adjustments as follows:
a) discretionary upward or downward adjustment of formula bonus
awards by the Committee after considering the recommendation of
the Company President or Chief Executive Officer with the
approval of the Chief Executive Officer of The Dial Corp, and
b) discretionary downward adjustment of awards by the Committee for
those executive officers affected by Section 162(m) of the
Internal Revenue Code, and
c) no individual award may exceed the individual's capped target
award and the aggregate recommended bonuses may not exceed the
bonus pool accrued for other than Special Achievement Awards.
2. Bonuses awarded to the participating management staff of subsidiary
groups may be paid from funds accrued based upon the bonus pool
target for such participants times the weighted average performance
of the Companies in the subsidiary group, subject to adjustments as
above.
IV. THE DIAL CORP CORPORATE STAFF:
A. PERFORMANCE GOALS:
1. BASE EARNINGS PER SHARE:
A realistic "base earnings per share" from continuing operations
target for The Dial Corp will be recommended by the Chief Executive
Officer of The Dial Corp to the Committee for approval after
considering historical earnings per share from continuing operations,
plan year financial plan income, overall corporate objectives, and,
if appropriate, other circumstances.
Special treatment of any significant unusual or non-recurring items
(for purposes of base earnings per share and/or return on equity
calculations) arising after targets are set for Corporate staff may
be recommended by the Chief Executive Officer of The Dial Corp for
approval by the Committee, including appropriate adjustment of base
earnings per share and/or return on equity targets to reflect planned
effects of a major acquisition or change in capital structure
approved after targets are set.
Page 6
<PAGE> 37
Other examples include extraordinary items, one time gains or losses
arising from discontinued operations, effects of a change in
accounting principles or a change in federal income tax rates.
Reclassification of a major business unit to discontinued operations
status after targets have been set would also require adjustment
because of effect on continuing operations results. Generally,
restructuring charges, gain or loss on sale of a smaller subsidiary,
or other one-time income or loss items mentioned in the subsidiary
section would not be considered for special treatment for corporate
staff, as the corporate mission is to successfully manage the effects
of such items.
2. RETURN ON COMMON STOCKHOLDERS' EQUITY:
A return on common stockholders' equity calculation will be made by
dividing each year's net income (after taxes) from continuing
operations, less preferred stock dividend requirements, by the
monthly average of common stockholders' equity (return on common
equity). Consideration will be given to any known or anticipated
changes in equity structure and appropriate industry averages, and a
realistic return on common stockholders' equity target for the Plan
Year will be recommended by the Chief Executive Officer of The Dial
Corp to the Committee for approval, taking into account historical
return on common stockholders' equity data, Plan Year financial plan
return on common stockholders' equity (on the same basis as
previously described), overall corporate objectives, and, if
appropriate, other circumstances.
B. PARTICIPANT ELIGIBILITY:
The Committee will select the Executive Officers as defined under Section
16b of the Securities Exchange Act eligible for participation prior to the
beginning of the year. Other personnel will be eligible for participation
as recommended by the appropriate staff Vice President and as approved by
the Chief Executive Officer of The Dial Corp, limited only to those
executives who occupy a position in which they can significantly affect
operating results as defined by the following criteria:
a) Salary grade 25 and above; and
b) Not more than Organizational Level Four below the Chief Executive
Officer.
NOTE: Individuals not qualifying under the criteria established for the
Plan Year who were included in the previous year will be grandfathered
(continue as qualified participants until retirement, reassignment, or
termination of employment) if designated by the appropriate Vice President
and approved by the Chief Executive Officer of The Dial Corp.
Page 7
<PAGE> 38
C. TARGET BONUSES:
Target bonuses will be approved by the Committee for each Executive
Officer in writing within the following parameters prior to the beginning
of the Plan Year and will be expressed as a percentage of salary. Target
bonuses for other eligible personnel will be established in writing within
the following parameters subject to approval by the Chief Executive
Officer of The Dial Corp.
Actual bonus awards will be dependent on Company performance versus the
targets established prior to the beginning of the year. A threshold
performance will be required before any bonus award is earned. Awards
also will be capped when stretch performance levels are achieved.
<TABLE>
<CAPTION>
As a Percentage of Salary
Corporate Positions Threshold** Target Cap
-----------------------------------------------------------------------------------
<S> <C> <C> <C>
Chairman, President & Chief Executive 30.00% 60% 102.0%
Officer
Senior Advisory Group 22.50% 45% 76.5%
Corporate Staff Officers 20.00% 40% 68.0%
Staff Directors * 17.50% 35% 59.5%
15.00% 30% 51.0%
12.50% 25% 42.5%
10.00% 20% 34.0%
Staff Professionals * 7.50% 15% 25.5%
5.00% 10% 17.0%
-----------------------------------------------------------------------------------
</TABLE>
* Target Bonus, as determined by the Committee, is dependent upon
Organizational Reporting Relationships.
** Reflects minimum of achievement of both performance targets. Threshold
could be one-half of this amount if minimum achievement of only one
performance target is met.
D. BONUS POOL TARGET
1. The "Bonus Pool Target" will be established prior to the beginning of
the Plan Year and will be adjusted to equal the sum of the target
bonuses of all qualified participants based upon actual Plan Year
base salaries, as outlined in paragraph C above, plus 15% for Special
Achievement Awards.
2. The bonus pool will accrue ratably such that
a) on 50% of the sum of the target bonuses:
i) no bonus will be earned if less than 80% of earnings
per share target is achieved;
ii) 50% to 100% will be earned if 80% to 100% of earnings
Page 8
<PAGE> 39
per share target is achieved; and
iii) 100% to 170% will be earned if 100% to 120% of earnings per
share target is achieved.
b) on 50% of the sum of target bonuses:
i) no bonus will be earned if less than 80% of the return on
equity target is achieved;
ii) 50% to 100% will be earned if 80% to 100% of the return on
equity target is achieved; and
iii) 100% to 170% will be earned if 100% to 120% of the return
on equity target is achieved
provided no less than an amount equal to 12.5% of the actual bonus
accruals earned under section III of this Plan or any spin-off Line
of Business Incentive Plan established after 1984, for participants
under section III herein will be earned hereunder, up to an aggregate
maximum of 170% of Bonus Pool Target and transferred by the companies
covered in section III, herein, to The Dial Corp. For purposes of
this determination only, the 170% (plus up to 8.5% upward cash flow
adjustment) upper limit shall not apply on such actual bonus accrual
calculations for subsidiaries, subsidiary groups and divisions.
c) Notwithstanding 2. a)i),ii) and iii); and b)i),ii), and iii); of
this paragraph D, the ratable accrual of either or both targets
may be established for threshold within the range of 80% up to
and including 95% and for maximum within the range of below 120%
down to 105% as may be designated by the Committee.
3. Bonus pool accruals not paid out shall not be carried forward to any
succeeding year.
E. INDIVIDUAL BONUS AWARDS:
Indicated bonus awards will be equal to the product of the target bonus
percentage times the weighted average percentage of bonus pool accrued as
determined in paragraph D above times the individual's actual Plan Year
base salary earnings, subject to adjustments as follows:
a) discretionary upward or downward adjustment of formula awards
by the Committee after considering the recommendations of the
Chief Executive Officer of The Dial Corp,
b) discretionary downward adjustment of awards by the Committee
Page 9
<PAGE> 40
for those Executive Officers affected by Section 162(m) of the
Internal Revenue Code, and
c) no individual award may exceed the individual's capped target
award and the aggregate recommended bonuses may not exceed the
bonus pool accrued for other than Special Achievement Awards.
V. SPECIAL ACHIEVEMENT AWARDS:
Special bonuses of up to 15% of base salary for exceptional performance to
exempt employees who are not participants in this Plan, including newly
hired employees, may be recommended at the discretion of the Chief
Executive Officer to the Committee from the separate funds for
discretionary awards provided for under paragraphs III E and IV D.
Special Achievement Awards may be granted to participants in exceptional
cases from any funds accrued under this Plan, as recommended by the
Chief Executive Officer to the Committee for approval.
VI. APPROVAL AND DISTRIBUTION:
The individual incentive bonus amounts and the terms of payment thereof
will be fixed following the close of the Plan Year by the Committee.
Any award made under this Plan is subject to the approval of this Plan by
the stockholders of The Dial Corp.
VII. COMPENSATION ADVISORY COMMITTEE:
The Compensation Advisory Committee is appointed by the Chief Executive
Officer of The Dial Corp to assist the Committee in the implementation
and administration of this Plan. The Compensation Advisory Committee
shall propose administrative guidelines to the Committee to govern
interpretations of this Plan and to resolve ambiguities, if any, but
the Compensation Advisory Committee will not have the power to terminate,
alter, amend, or modify this Plan or any actions hereunder in any way at
any time.
VIII. SPECIAL COMPENSATION STATUS:
All bonuses paid under this Plan shall be deemed to be special
compensation and, therefore, unless otherwise provided for in another
plan or agreement, will not be included in determining the earnings of
the recipients for the purposes of any pension, group insurance or
other plan or agreement of a Company or of The Dial Corp.
Participants in this Plan shall not be eligible for any contractual or
other short-term (sales, productivity, etc.) incentive plan except in
those cases where participation is weighted between this Plan and any
such other short-term incentive plan.
IX. DEFERRALS:
Participants subject to taxation of income by the United States may
submit to the Committee, prior to November 15 of the year in which the
bonus is being earned a written request that all or a portion, but not
less than $1,000, of their bonus awards to be determined, if any, be
irrevocably deferred substantially in accordance with the terms
Page 10
<PAGE> 41
and conditions of a deferred compensation plan approved by the Board of
Directors of The Dial Corp or, if applicable, one of its subsidiaries.
Participants subject to taxation of income by other jurisdictions may
submit to the Committee a written request that all or a portion of their
bonus awards be deferred in accordance with the terms and conditions of
a plan which is adopted by the Board of Directors of a participant's
Company. Upon the receipt of any such request, the Committee thereunder
shall determine whether such request should be honored in whole or in
part and shall forthwith advise each participant of its determination
on such request.
X. PLAN TERMINATION:
This Plan shall continue in effect until such time as it may be canceled or
otherwise terminated by action of the Board of Directors of The Dial Corp
and will not become effective with respect to any Company unless and until
its Board of Directors adopts a specific plan for such Company. While it
is contemplated that incentive awards from the Plan will be made, the
Board of Directors of The Dial Corp, or any other Company hereunder, may
terminate, amend, alter, or modify this Plan at any time and from time to
time. Participation in the Plan shall create no right to participate in
any future year's Plan.
XI. EMPLOYEE RIGHTS:
No participant in this Plan shall be deemed to have a right to any part
or share of this Plan. This Plan does not create for any employee or
participant any right to be retained in service by any Company, nor affect
the right of any such Company to discharge any employee or participant from
employment. Except as provided for in administrative guidelines, a
participant who is not an employee of The Dial Corp or one of its
subsidiaries on the date bonuses are paid will not receive a bonus payment.
Page 11
<PAGE> 42
THE DIAL CORP
PERFORMANCE UNIT INCENTIVE PLAN
1. PURPOSE:
The purpose of the Plan is to promote the long-term interests of the
Corporation and its shareholders by providing a means for attracting and
retaining designated key executives of the Corporation and its Affiliates
through a system of cash rewards for the accomplishment of long-term predefined
objectives.
2. DEFINITIONS:
The following definitions are applicable to the Plan:
"Affiliate" - Any "Parent Corporation" or "Subsidiary Corporation" of the
Corporation as such terms are defined in Section 425(e) and (f), or the
successor provisions, if any, respectively, of the Code (as defined
herein).
"Award" - The grant by the Committee of a Performance Unit or Units as
provided in the Plan.
"Board" - The Board of Directors of The Dial Corp.
"Code" - The Internal Revenue Code of 1986, as amended, or its successor
general income tax law of the United States.
"Committee" - The Executive Compensation Committee of the Board.
"Corporation" - The Dial Corp.
"Participant" - Any executive of the Corporation or any of its Affiliates
who is selected by the Committee to receive an Award.
"Performance Period" - The period of time selected by the Committee for
the purpose of determining performance goals and measuring the degree of
accomplishment. Generally, the Performance Period will be a period of
three successive fiscal years of the Corporation.
"Performance Unit Award" - An Award.
"Plan" - The Performance Unit Incentive Plan of the Corporation.
"Unit" - The basis for any Award under the Plan.
1
<PAGE> 43
3. ADMINISTRATION:
The Plan shall be administered by the Committee. Except as limited by the
express provisions of the Plan, the Committee shall have sole and complete
authority and discretion to (i) select Participants and grant Awards; (ii)
determine the number of Units to be subject to Awards generally, as well as to
individual Awards granted under the Plan; (iii) determine the targets that must
be achieved in order for the Awards to be payable and the other terms and
conditions upon which Awards shall be granted under the Plan; (iv) prescribe
the form and terms of instruments evidencing such grants; and (v) establish
from time to time regulations for the administration of the Plan, interpret the
Plan, and make all determinations deemed necessary or advisable for the
administration of the Plan.
4. PERFORMANCE GOALS:
The Performance Unit Incentive Plan is intended to provide Participants with a
substantial incentive to achieve or surpass two pre-defined long-range
financial goals which have been selected because they are key factors (goals)
in increasing shareholder value. One of the key goals for Corporate and
Subsidiary Participants is Average Three-Year Return on Equity, utilizing a pro
forma return on equity calculation for subsidiaries (other than Travelers
Express) which effectively adjusts each to the overall financial objective of a
capital structure of 35% debt and 65% equity.
The second goal for each Subsidiary Participant principally emphasizes Average
Three-Year Real Earnings Growth. The targets for this goal will take several
different forms in recognition of the need to tailor the target to the most
important factors for the unit (as well as to overall corporate objectives).
For example, while operating income is normally the best indicator of earnings
growth, the target will be based on net income when tax-exempt income
(Travelers Express) or income from equity in joint ventures (Dobbs
International, GLSI) come into play, as operating income would not give the
full picture in such circumstances. Goals for subsidiaries should be
meaningful, easily understood and consistent with the overall objectives.
The second goal for Corporate Participants also emphasizes Average Three-Year
Real Earnings Growth but the target will be based on earnings per share, the
most appropriate measure in increasing shareholder value.
5. DETERMINATION OF TARGETS:
A. Average Three-Year Subsidiary Pro Forma Return on Equity (Except Travelers
Express Company, Inc., group)
A Return on Equity calculation for each Subsidiary Company except Travelers
Express will be made by dividing each year's net earnings after tax by the
average quarterly (beginning of year and each quarter-end, including year-end)
pro forma equity. For purposes of this calculation, pro forma equity shall be
deemed to be 65% of the sum of each Subsidiary Company's actual equity plus its
debt, including intercompany accounts payable less intercompany accounts
receivable (net capital employed). Net income shall be adjusted (1) to exclude
the after-tax effect of intercompany interest expense and the after-tax effect
of intercompany interest income and (2) to deduct the after-tax effect of the
pro forma interest, calculated at 8% per annum, on
2
<PAGE> 44
the excess of 35% of the average beginning and ending balance of net capital
employed over the average beginning and ending balance of net capital employed
over the average beginning and ending balance of outstanding debt (pro forma
debt), so that each company's Return on Equity is based on a pro forma 65%
equity and 35% debt structure for the net capital employed by it. In all
cases, the after-tax calculations are to be made using the statutory federal
income tax rate applicable to such year. In establishing a realistic weighted
average annual Return on Equity target for the Performance Period,
consideration will be given to industry averages whenever known as well
as the Performance Period Financial Plan year-by-year Return on Equity (on the
same basis as previously described), overall Corporate objectives and, where
appropriate, other circumstances. An appropriate range of values above and
below such target will then be selected to measure achievement above or
below the target.
B. Average Three-Year Return on Equity (Travelers Express)
A Return on Equity calculation for Travelers Express will be made by dividing
each year's net income after taxes by the average quarterly (beginning of year
and each quarter-end, including year-end) equity. Consideration will then be
given to any known or anticipated changes in equity structure and available
industry averages, and a realistic weighted average annual Return on Equity
target for the three-year Performance Period will be established, taking into
account all factors mentioned as well as the three-year Performance Period
Financial Plan year-by-year Return on Equity (on the same basis as previously
described), overall Corporate objectives and, where appropriate, other
circumstances. An appropriate range of values above and below such target will
then be selected to measure achievement above or below the target.
C. Average Three-Year Dial Return on Common Stockholders' Equity
A return on common stockholders' equity calculation will be made for The Dial
Corp by dividing each year's net income after taxes less preferred dividend
requirements by the year's monthly average of common stockholders' equity
(return on common equity). Consideration will then be given to any known or
anticipated changes in equity structure and to appropriate industry averages,
and a realistic weighted average annual Return on Equity target for the three-
year Performance Period will be established taking into account all factors
mentioned as well as the three-year Performance Period Financial Plan year-by-
year return on equity (on the same basis as previously described), overall
Corporate objectives and, where appropriate, other circumstances. An
appropriate range of values above and below such target will then be selected
to measure achievement above or below the target.
D. Average Three-Year Subsidiary Earnings Growth
A realistic average three-year earnings target for the Performance Period for
each Subsidiary Company will be established taking into account historical
income, financial plan income for the Performance Period, overall Corporate
objectives, and if appropriate, other circumstances. An appropriate range of
values above and below such target will then be selected to measure achievement
above or below the target.
3
<PAGE> 45
E. Average Three-Year Dial Earnings Per Share Growth
A realistic "Earnings Per Share" from continuing operations target for The Dial
Corp will be established after considering historical earnings per share from
continuing operations, financial plan income for the Performance Period,
overall Corporate objectives and, if appropriate, other circumstances. An
appropriate range of values above and below such target will then be selected
to measure achievement above or below the target.
The appropriate targets and the Performance Period to be used as a basis for
the measurement of performance for Awards under the Plan will be determined by
the Committee after giving consideration to the recommendations of the Chief
Executive Officer of The Dial Corp. Performance Units will be earned based
upon the degree of achievement of the pre-defined targets over the Performance
Period following the date of grant. Earned Units can range, based on operating
company performance using an award matrix, from 0% to 200% of the target Units.
6. OTHER PLAN PROVISIONS
Special treatment of any significant unusual or non-recurring items (for
purposes of earnings and/or Return on Equity calculation) arising after targets
are set may be recommended by the Chief Executive Officer of The Dial Corp to
the Committee for approval including revision to either or both targets in the
event of any significant acquisition or divestiture made during the Performance
Period to give effect, as appropriate, to planned effects of such acquisition
or divestiture during the Performance Period. Other examples include
extraordinary items, gains or losses arising from discontinued operations,
effects of a change in accounting principles or a change in federal income tax
rates. Reclassification of a major business unit to discontinued operations
status after targets have been set would also require adjustment because of
effect on continuing operations results.
For subsidiaries, in certain extreme cases, unplanned effects of major
litigation, remediation of environmental matters, significant uninsured losses,
a significant restructuring or the bankruptcy of a major vendor or customer are
further examples of the types of items which could be (but are not required to
be) considered by the Chief Executive Officer of The Dial Corp for
recommendation to the Committee for possible special treatment.
Conversely, the general rule for Corporate measurements is that restructuring
charges affecting years after 1992, gain or loss on sale of a smaller
subsidiary or other one-time income or loss items mentioned above regarding
subsidiaries would not be considered for special treatment as the Corporate
mission is to successfully manage the effects of such items.
Incentives to be paid under this plan must be provided out of corporation's
earnings during the Performance Period (generally in the third year, when the
amounts to be paid can be reasonably estimated). Goals must be achieved after
deducting from actual results all incentive compensation applicable to such
performance periods, including those incentives earned under this plan.
4
<PAGE> 46
7. AWARD MATRIX
The range of values for the Corporation's or a Subsidiary Company's performance
is set at a minimum of 80% of target for threshold and capped at 120% of the
target. Targets may be established for threshold within the range of above 80%
up to and including 95% and for maximum within the range of below 120% down to
105% for certain Subsidiary Companies. The Return on Equity target and range
of values will be entered on the vertical axis of the appropriate Performance
Unit Award Matrix. The weighted average annual Return on Equity target for
the Performance Period will represent a meaningful improvement over average
historical returns except in extremely unusual circumstances. Actual weighted
average annual Return on Equity performance for each Participant will be
determined at the end of the three-year Performance Period based on the
appropriate definition set forth above. Similarly, the average three-year Real
Earning Growth target and range of values will be entered on the horizontal
axis of the Performance Unit Award Matrix, and actual results will be
determined at the end of the three-year Performance Period based on the
appropriate definition.
Performance Units will be earned based upon the degree of achievement of the
pre-defined goals using the Performance Unit Award Matrix.
PERFORMANCE UNIT AWARD MATRIX:
<TABLE>
<CAPTION>
Percent
of Award
Earned
<S> <C> <C> <C> <C> <C>
Return 100% 125% 150% 175% 200%
on 75% 100% 125% 150% 175%
Equity 50% 75% 100% 125% 150%
25% 50% 75% 100% 125%
0% 25% 50% 75% 100%
</TABLE>
Improvement in Net Income
8. PARTICIPANT ELIGIBILITY:
Personnel will be eligible for participation as recommended by The Dial Corp
Chief Executive Officer for approval by the Committee prior to the beginning of
each new Performance Period during the life of the Plan, limited only to those
key executives who contribute in a substantial measure to the successful
performance of the Corporation or its Affiliates. The Chief Executive Officer
will recommend for approval by the Committee which Affiliates among its
Affiliates should be included in the Plan.
9. AWARD DETERMINATION:
The number of Units to be awarded will be determined, generally, by multiplying
a factor times the Participant's annual base salary in effect at the time the
Award is granted and dividing the result by the average of the high and low of
the Corporation's Common Stock on the date of approval of the grant by the
Committee. The Award factor will be recommended by the Chief
5
<PAGE> 47
Executive Officer of The Dial Corp for approval by the Committee annually prior
to the beginning of each new performance period. The Committee may adjust the
number of Units awarded in its discretion.
10. GENERAL TERMS AND CONDITIONS:
The Committee shall have full and complete authority and discretion, except as
expressly limited by the Plan, to grant Units and to provide the terms and
conditions (which need not be identical among Participants) thereof. Without
limiting the generality of the foregoing, the Committee may specify a
Performance Period of not less than two years or not more than five years,
rather than the three-year Performance Period provided for above, and such time
period will be subsitututed as appropriate to properly effect the specified
Performance Period. No Participant or any person claiming under or through
such person shall have any right or interest, whether vested or otherwise, in
the Plan or in any Award thereunder, contingent or otherwise, unless and until
all the terms, conditions, and provisions of the Plan and its approved
administrative requirements that affect such Participant or such other person
shall have been complied with. Nothing contained in the Plan or its
Administrative Guidelines shall (i) require the Corporation to segregate cash
or other property on behalf of any Participant or (ii) affect the rights and
power of the Corporation or its Affiliates to dismiss and/or discharge any
Participant at any time.
11. PAYMENT OF AWARDS:
(a) Performance Unit Awards which may become payable under this Plan
shall be calculated as determined by the Committee but any resulting
Performance Unit Award payable shall be subject to the following
calculation: each Unit payable shall be multiplied by the average of
the daily means of the market prices of the Corporation's Common
Stock during the month following the Performance Period. Performance
Unit Awards earned will be determined as of the third Thursday of
February following the close of the Performance Period and
distribution of the Award will be made within ninety (90) days
following the close of the Performance Period. Awards will be
subject to discretionary downward adjustment, for those executive
officers affected by Section 162(m) of the Internal Revenue Code, by
the Committee.
(b) Performance Unit Awards granted under this Plan shall be payable
during the lifetime of the Participant to whom such Award was granted
only to such Participant; and, except as provided in (d) and (e) of
this Section 7, no such Award will be payable unless at the time of
payment such Participant is an employee of and has continuously since
the grant thereof been an employee of, the Corporation or an
Affiliate. Neither absence on leave, if approved by the Corporation,
nor any transfer of employment between Affiliates or between an
Affiliate and the Corporation shall be considered an interruption or
termination of employment for purposes of this Plan.
(c) Prior to the expiration of the Performance Period, all
Participants will be provided an irrevocable option to defer all or a
portion of any earned Performance Unit Award, if there be one, but
not less than $1,000, in written
6
<PAGE> 48
form as prescribed by the Board under the provisions of a
deferred compensation plan for executives of the Corporation and its
Affiliates, if one be adopted.
(d) If a Participant to whom a Performance Unit Award was granted
shall cease to be employed by the Corporation or its Affiliate for
any reason (other than death, disability, or retirement) prior to the
completion of any applicable Performance Period, said Performance
Unit Award will be withdrawn and subsequent payment in any form at
any time will not be made.
(e) If a Participant to whom a Performance Unit Award was granted
shall cease to be employed by the Corporation or its Affiliate due to
early, normal, or deferred retirement, or in the event of the death
or disability of the Participant, during the Performance Period
stipulated in the Performance Unit Award, such Award shall be
prorated for the period of time from date of grant to date of
retirement, disability or death, as applicable, and become payable
within ninety (90) days following the close of the Performance Period
to the Participant or the person to whom interest therein is
transferred by will or by the laws of descent and distribution.
Performance Unit Awards shall be determined at the same time and in
the same manner (except for applicable proration) as described in
Section 11(a).
(f) There shall be deducted from all payment of Awards any taxes
required to be withheld by any Federal, State, or local government
and paid over to any such government in respect to any such payment.
12. ASSIGNMENTS AND TRANSFERS:
No Award to any Participant under the provisions of the Plan may be assigned,
transferred, or otherwise encumbered except, in the event of death of a
Participant, by will or the laws of descent and distribution.
13. AMENDMENT OR TERMINATION:
The Board may amend, suspend, or terminate the Plan or any portion thereof at
any time provided, however, that no such amendment, suspension, or termination
shall invalidate the Awards already made to any Participant pursuant to the
Plan, without his consent.
14. EFFECTIVE DATE AND TERM OF PLAN:
The Plan shall be effective January 1, 1994, provided however, that any Award
made under this Plan is subject to the approval of this Plan by the
stockholders of The Dial Corp.
7
<PAGE> 49
PROXY
The Dial Corp
DIAL TOWER, PHOENIX, ARIZONA 85077-1424
The undersigned hereby appoints Jack F. Reichert, Dennis C. Stanfill
and John W. Teets, and each of them, to have all the powers hereunder,
including full power of substitution, as Proxies for the undersigned to vote at
the Annual Meeting of Stockholders of The Dial Corp to be held on Tuesday, May
10, 1994, and at any adjournment or adjournments thereof, all shares of stock
which the undersigned is entitled to vote, with all voting rights the
undersigned would have if personally present.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is given, this proxy
will be voted FOR proposals 1 through 4.
PLEASE COMPLETE, SIGN AND DATE ON REVERSE SIDE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR:
1. Election of directors whose terms expire in 1997:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all
(except as marked to the nominees listed below
contrary below)
INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through that nominee's name in the list
below.
Thomas L. Gossage Dennis C. Stanfill John W. Teets
2. [ ] FOR [ ] AGAINST [ ] ABSTAIN Approval of a Management Incentive Plan
3. [ ] FOR [ ] AGAINST [ ] ABSTAIN Approval of a Performance Unit Incentive
Plan
4. [ ] FOR [ ] AGAINST [ ] ABSTAIN Ratification of appointment of Deloitte &
Touche as independent public
accountants for 1994
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
________________________________________________________________________________
SIGNATURE(S) (Please mark, sign, date and return this card promptly.) DATE
Please sign exactly as name appears
on your account. If shares are held
by joint tenants, both should sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.
If a corporation, please sign in full
corporate name by president or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
<PAGE> 50
PROXY
The Dial Corp
The undersigned hereby appoints Jack F. Reichert, Dennis C. Stanfill
and John W. Teets, and each of them, to have all the powers hereunder,
including full power of substitution, as Proxies for the undersigned to vote at
the Annual Meeting of Stockholders of The Dial Corp to be held on Tuesday, May
10, 1994, and at any adjournment or adjournments thereof, all shares of stock
which the undersigned is entitled to vote, with all voting rights the
undersigned would have if personally present.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is given, this proxy
will be voted FOR proposals 1 through 4.
PLEASE COMPLETE, SIGN AND DATE ON REVERSE SIDE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR:
1. Election of directors whose terms expire in 1997:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for all nominees listed
below
INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through that nominee's name in the list below
Thomas L. Gossage Dennis C. Stanfill John W. Teet
2. [ ] FOR [ ] AGAINST [ ] ABSTAIN Approval of a Management Incentive Plan
3. [ ] FOR [ ] AGAINST [ ] ABSTAIN Approval of a Performance Unit Incentive
Plan
4. [ ] FOR [ ] AGAINST [ ] ABSTAIN Ratification of appointment of Deloitte &
Touche as independent public
accountants for 1994
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
_______________________________________________________________________________
SIGNATURE(S) (Please mark, sign, date and return this card promptly.) DATE
Please sign exactly as name appears
on your account. If shares are held
by joint tenants, both should sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.
If a corporation, please sign in full
corporate name by president or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
