<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 /X/
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
AVON PRODUCTS, INC.
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(Name of Registrant as Specified in Its Charter)
AVON PRODUCTS, INC.
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(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:
Common Stock
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(2) Aggregate number of securities to which transactions applies:
72,006,886
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
.50
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(4) Proposed maximum aggregate value of transaction:
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/ / 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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- ---------------
1Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
[LOGO]
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Avon Products, Inc.
9 West 57th Street
New York, NY 10019
March 23, 1994
Dear Shareholder:
You are cordially invited to attend the 1994 Annual Meeting of
Shareholders, which will be held at 10:00 a.m. on Thursday, May 5, 1994 in the
Equitable Auditorium at the Equitable Center, 787 Seventh Avenue, New York City.
The business and operations of Avon will be reviewed at the Annual Meeting.
We hope that you will be able to attend.
Whether or not you plan to attend, please complete, sign, date and return
the enclosed proxy card in the enclosed postage prepaid envelope so that your
shares will be voted at the meeting.
Sincerely yours,
JAMES E. PRESTON
Chairman and Chief Executive Officer
<PAGE> 3
AVON PRODUCTS, INC.
9 West 57th Street
New York, New York 10019
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The 1994 Annual Meeting of Shareholders of Avon Products, Inc. ("Avon")
will be held in the Equitable Auditorium at the Equitable Center, 787 Seventh
Avenue, New York, New York 10019, on Thursday, May 5, 1994 at 10:00 a.m. for the
following purposes:
(1) To elect four (4) directors to three-year terms expiring in 1997;
(2) To elect one (1) director to a two-year term expiring in 1996;
(3) To act upon a proposal to ratify the appointment of Coopers & Lybrand
as Avon's independent accountants for 1994; and
(4) To transact such other business as properly may come before the
meeting.
The Board of Directors has fixed the close of business on March 16, 1994 as
the record date for the purpose of determining the shareholders who are entitled
to notice of, and to vote at, the Annual Meeting and any adjournment or
postponement thereof.
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED
PROXY CARD IN THE ENCLOSED POSTAGE PREPAID ENVELOPE,
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
Siri S. Marshall
Senior Vice President,
General Counsel and Secretary
March 23, 1994
New York, New York
<PAGE> 4
AVON PRODUCTS, INC.
9 West 57th Street
New York, New York 10019
------------------------
PROXY STATEMENT
This Proxy Statement is furnished by and on behalf of the Board of
Directors of Avon Products, Inc. ("Avon" or the "Company") in connection with
the solicitation of proxies for use at the Annual Meeting of Shareholders of the
Company to be held on May 5, 1994 in the Equitable Auditorium at the Equitable
Center, New York, New York 10019 and at any adjournments or postponements
thereof (the "Annual Meeting"). This Proxy Statement and the enclosed proxy card
will be first mailed on or about March 23, 1994 to the shareholders of record of
Avon on the Record Date, as defined below (the "Shareholders").
THE BOARD OF DIRECTORS URGES YOU TO MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PREPAID ENVELOPE.
SHARES ENTITLED TO VOTE
Proxies will be voted as specified by Shareholders. Unless contrary
instructions are specified, if the enclosed proxy card is executed and returned
(and not revoked) prior to the Annual Meeting, the Shares represented thereby
will be voted FOR election as directors of the nominees listed in this Proxy
Statement, and FOR ratification of the appointment of Coopers & Lybrand as
Avon's independent accountants. The submission of a signed proxy will not affect
a Shareholder's right to attend, and to vote in person at, the Annual Meeting.
Shareholders who execute a proxy may revoke it at any time before it is voted by
filing a written revocation with the Secretary of Avon, executing a proxy
bearing a later date or attending and voting in person at the Annual Meeting.
Only Shareholders of record as of the close of business on March 16, 1994
(the "Record Date") will be entitled to vote at the Annual Meeting. As of the
close of business on the Record Date, there were 72,006,886 shares of Avon's
common stock, par value $.50 per share (the "Common Stock"), outstanding (the
"Shares"). Holders of Shares are entitled to vote cumulatively for the election
of directors and to cast one vote per Share on all other matters.
According to New York law, any corporate action taken at a shareholders
meeting is based on the votes cast. "Votes cast" means the votes actually cast
"for" or "against" a particular proposal, whether by signed proxy or in person.
Therefore, under New York law, abstentions and broker non-votes are not
considered in determining whether a proposal is approved by shareholders.
Directors are elected by a plurality of the votes cast; shareholder approval of
each other proposal to be considered at the Annual Meeting requires the
affirmative vote of a majority of the votes cast at the Annual Meeting.
In 1991, the Company adopted a policy relating to proxy voting and
independent tabulation and inspection of elections. The policy provides that all
shareholder proxies, ballots and voting materials that identify the votes of
specific shareholders will be kept permanently confidential, except as may be
required by law, for all matters other than contested elections. In addition,
all proxy cards and other voting materials will be returned by shareholders to
an independent vote tabulator, and the tabulation process and results of
shareholder votes will be inspected by independent inspectors of election. This
policy will be in effect for the Annual Meeting.
<PAGE> 5
PROPOSALS 1 AND 2 -- ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. Effective from and
after the date of the Annual Meeting, the Board has fixed the number of
directors at 12, with four directors in the class whose term expires in 1997
(the "Class of 1997"), four directors in the class whose term expires in 1996
(the "Class of 1996") and four directors in the class whose term expires in 1995
(the "Class of 1995"). Board members serve three-year terms unless otherwise
specified. The terms of five current directors, Remedios Diaz Oliver, Ernesta G.
Procope, Joseph A. Rice, Edward J. Robinson and Cecily Cannan Selby, will expire
at the Annual Meeting. The terms of the other incumbent directors will continue
until either the 1995 or 1996 Annual Meeting. At the Annual Meeting,
Shareholders will elect four members to the Class of 1997 and one member to the
Class of 1996. The elections to the different classes will be conducted as two
separate elections. The Board of Directors has nominated Remedios Diaz Oliver,
Joseph A. Rice, Edward J. Robinson and Cecily Cannan Selby for election to the
Class of 1997 at the Annual Meeting, each to serve for a three-year term to
expire at the 1997 Annual Meeting, and the Board of Directors has nominated
Brenda Barnes for election to the Class of 1996, to serve for a two-year term to
expire at the 1996 Annual Meeting. Mrs. Procope will retire effective as of the
date of the Annual Meeting.
All Shares represented by properly executed proxies received in response to
this solicitation will be voted for the election of directors as specified
therein by the Shareholders. Unless otherwise specified in the proxy, it is the
intention of the persons named on the enclosed proxy card to vote FOR the
election of Remedios Diaz Oliver, Joseph A. Rice, Edward J. Robinson and Cecily
Cannan Selby to the Class of 1997, and FOR the election of Brenda Barnes to the
Class of 1996. Each nominee of the Company has consented to serve as a director
of the Company if elected. If at the time of the Annual Meeting any nominee is
unable or declines to serve as a director, the discretionary authority provided
in the enclosed proxy card may be exercised to vote for a substitute candidate
designated by the Board of Directors. The Board of Directors has no reason to
believe that any of its nominees will be unable or decline to serve as a
director.
Shareholders may withhold their votes from the entire slate of nominees by
so indicating in the space provided on the enclosed proxy card. Shareholders may
withhold their votes from any particular nominee by writing that nominee's name
in the space provided for that purpose on the enclosed proxy card.
In voting for the election of directors, Shareholders are entitled to vote
cumulatively. Each Shareholder is entitled to cast in each election the number
of votes equal to (i) the number of Shares held of record by such person,
multiplied by (ii) the number of directors to be elected in such election.
Because the election of directors to the Class of 1997 and the election of
directors to the Class of 1996 are two separate elections, Shareholders are
entitled to cumulate votes with respect to the election of directors to the
Class of 1997, but they may not cumulate votes they are entitled to cast for the
election of directors to the Class of 1997 with the votes they are entitled to
cast for the election of directors to the Class of 1996, nor vice versa. In the
election of four directors to the Class of 1997, Shareholders will be entitled,
under cumulative voting, to a total of four votes per Share held of record by
them, and they may cast all of such votes in this election for a single nominee,
or distribute them among any two or more nominees, as they see fit. Shareholders
may (but need not) cumulate their votes in the election of directors by
indicating the distribution of their votes among the nominees in the space
provided on the enclosed proxy card. If votes are not so distributed on the
proxy as to the election of directors to the Class of 1997, the persons
appointed therein may exercise the right to vote the Shares represented by such
proxy cumulatively in such Class election, and may distribute the votes
represented by such proxy among one or more of the nominees for the Class of
1997 listed below (or any substitute candidates) for such Class in any manner
they see fit.
Set forth below is certain information furnished to the Company by each
nominee and each director continuing in office after the Annual Meeting.
2
<PAGE> 6
YOUR BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION
AS DIRECTORS OF THE NOMINEES LISTED BELOW.
NOMINEES FOR BOARD OF DIRECTORS FOR THREE-YEAR TERM EXPIRING 1997
<TABLE>
<S> <C>
- ----------------
- ---------------- REMEDIOS DIAZ OLIVER
Director of Avon since 1992 Age: 55
Mrs. Diaz Oliver has been President and Chief Executive Officer of All
American Containers, Inc., which is engaged in the sale and distribution of
glass, plastic and metal containers and closures in the U.S., Central and
South America, the Caribbean, Europe, Africa, Asia and Australia, since
October, 1991. Prior thereto, Mrs. Diaz Oliver founded and was the Chief
Executive Officer and President of American International, Inc. from 1977
to 1991. Mrs. Diaz Oliver is a director of U.S. West, Barnett Banks of
South Florida, Greater Miami Chamber of Commerce, American Cancer Society,
Infants In Need, Jackson Memorial Trauma Center, University of Miami-School
of Medicine-Carlos J. Finlay, and the National Hispanic Leadership Agenda,
and a member of the Advisory Board-Trade Policy and Negotiations for the
President of the United States.
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- ----------------
- ---------------- JOSEPH A. RICE
Director of Avon since 1982 Age: 69
Mr. Rice is the former Chairman and Chief Executive Officer of Irving Bank
Corporation and its major subsidiary, Irving Trust Company, which was
merged with The Bank of New York in December 1988. Mr. Rice was elected
President of Irving Bank Corporation in January 1975 and Chairman in
January 1984. He was elected President of Irving Trust Company in July 1974
and Chairman in January 1984. Mr. Rice is a director of Apache Corporation
and Thiokol Corporation. In addition, he serves on the boards of the John
Simon Guggenheim Memorial Foundation, Historic Hudson Valley, Institutes of
Religion and Health and the Sky Club, and is a member of the Council on
Foreign Relations.
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- ---------------- EDWARD J. ROBINSON
Director of Avon since 1992 Age: 53
Mr. Robinson was elected President and Chief Operating Officer in November
1993 and a member of the Board of Directors of the Company in May 1992. Mr.
Robinson had been Vice Chairman, Chief Financial and Administrative Officer
of Avon since May 1992. He joined the Company in April 1989 as Executive
Vice President and Chief Financial Officer. Immediately prior to joining
Avon, he served as Executive Vice President-Finance and Chief Financial
Officer of RJR Nabisco, Inc. from October 1987 to March 1989. Mr. Robinson
was associated with RJR Nabisco, Inc. and its predecessor companies,
Nabisco Brands, Inc. and Standard Brands Incorporated, for 16 years. During
that time, he served in a number of financial positions, including senior
financial officer capacities, as a Controller, Treasurer or Chief Financial
Officer. Prior to that time, Mr. Robinson was associated with Ward Foods,
Inc. (1970 to 1972) and Peat Marwick Mitchell & Co. (1963 to 1970). Mr.
Robinson currently serves on the Board of Trustees of Iona College where he
is also a member of the Finance and Investment Committees.
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</TABLE>
3
<PAGE> 7
<TABLE>
<S> <C>
- ----------------
- ---------------- CECILY CANNAN SELBY, Ph.D.
Director of Avon since 1972 Age: 67
Dr. Selby is president of CCS, Ltd., a consulting firm, and Adjunct
Professor of Science Education and the former Chair of the Department of
Mathematics, Science, and Statistics Education at New York University,
which she joined in 1984. Dr. Selby is a member of the Science Policy and
Women in Science Committees of the New York Academy of Sciences; Vice
President, New York Hall of Science; trustee of Woods Hole Oceanographic
Institution; trustee of Girls, Incorporated; trustee of National Council of
Women in Medicine; trustee of American Skin Association; member of the
State of New York Governor's Policy Steering Committee for a Science and
Engineering Action Plan for the 1990s; and Chair, New York State Curriculum
Committee for Mathematics, Science & Technology. She is a former director
of RCA Corporation, the National Education Corporation, and the National
Broadcasting Company; former Chair of the Board of Advisors and Academic
Dean of the North Carolina School of Science and Mathematics, and former
trustee of Radcliffe College and the Massachusetts Institute of Technology.
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NOMINEE FOR BOARD OF DIRECTORS FOR TWO-YEAR TERM EXPIRING 1996
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- ---------------- BRENDA BARNES
Director of Avon since 1994 Age: 40
Ms. Barnes is Chief Operating Officer for Pepsi-Cola Company, responsible
for leading all Pepsi-Cola markets in the Southern and Western areas of the
country. Prior to Pepsi's reorganization in 1992, Ms. Barnes was President
of Pepsi-Cola's southern division, responsible for production, distribution
and sales. Ms. Barnes first joined PepsiCo in 1976 as a Business Manager
for Wilson Sporting Goods. In 1981, she was named Vice President, Marketing
for Frito-Lay. Three years later, she was appointed Group Director of
Marketing for Pepsi U.S.A. The following year, she was named Vice President
of Marketing of Pepsi-Cola Bottling Group. She also served as Vice
President of National Sales for Pepsi's eastern division. Two years later,
she was named Vice President of National Sales and Marketing. She was named
Senior Vice President in 1990. A 1975 graduate of Augustana College, Ms.
Barnes received her MBA from Loyola University in 1978. She is a recipient
of the New York City YWCA Women's Achievement Award.
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</TABLE>
4
<PAGE> 8
<TABLE>
<S> <C>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE -- TERM EXPIRING 1996
- ----------------
- ---------------- CHARLES S. LOCKE
Director of Avon since 1986 Age: 65
Mr. Locke is Chairman of the Board, Chief Executive Officer and a director
of Morton International, Inc., a manufacturer and marketer of specialty
chemicals, automotive inflatable restraint systems and salt, which was
formed July 1, 1989. Mr. Locke will retire from these positions effective
March 31, 1994. From 1980 to July 1, 1989, Mr. Locke was Chairman of the
Board, Chief Executive Officer and a director of its predecessor company,
Morton Thiokol, Inc. Mr. Locke is a director of NICOR, Inc. and its
subsidiary, Northern Illinois Gas Company, Thiokol Corporation, and Whitman
Corporation. He is Chairman of the Board of Trustees of the Chicago Museum
of Science and Industry, a director of the Lyric Opera of Chicago and the
National Merit Scholarship Corporation, and a member of The Conference
Board. Mr. Locke was an Avon director from 1980 to 1985 and has served
again on the Board since August 1986.
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- ----------------
- ---------------- ANN S. MOORE
Director of Avon since 1993 Age: 43
Mrs. Moore was appointed publisher of People Magazine in July, 1991 and
President in September, 1993, assuming executive responsibility for all
magazine operations of the Time Inc. weekly. Mrs. Moore graduated from
Vanderbilt University in 1971, received an MBA degree from Harvard
University in 1978, and joined Time Inc. that year in Corporate Finance.
Since then, she has held consumer marketing positions at Sports
Illustrated, Fortune, Money and Discover, moving to general management of
Sports Illustrated for Kids in 1989. She serves on the boards of a number
of non-profit organizations, including the Jackie Joyner-Kersee Community
Foundation and Gilda's Club.
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- ----------------
- ---------------- JAMES E. PRESTON
Director of Avon since 1977 Age: 60
Mr. Preston was elected Chairman of the Board of the Company in January
1989 and has been Chief Executive Officer since 1988, holding the
additional position of President from that time until November 1993. He
joined the Company in 1964 and, after serving in various sales and
marketing positions, was elected a Vice President in 1971. He became a
Group Vice President in charge of Marketing in 1972. Mr. Preston was
elected Executive Vice President and a director of the Company in 1977, and
in 1981 became President of the Avon Division. In 1987, he became President
of the Avon Beauty Group, which included the Direct Selling and Retail
Divisions. Mr. Preston serves on the board of the Cosmetic, Toiletry and
Fragrance Association, is a member of the board and treasurer of the
Fragrance Foundation, and is a director of F. W. Woolworth Co. and The ARA
Group, Inc. Mr. Preston also serves on the boards of The Business Council
of New York State and the American Woman's Economic Development
Corporation. In addition, Mr. Preston serves on The Salvation Army of
Greater New York Advisory Board. He is a past chairman of both the Direct
Selling Association and the Cosmetic, Toiletry and Fragrance Association.
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</TABLE>
5
<PAGE> 9
<TABLE>
<S> <C>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE -- TERM EXPIRING 1995
- ----------------
- ---------------- DANIEL B. BURKE
Director of Avon since 1987 Age: 65
Mr. Burke is a director of Capital Cities/ABC, Inc., a company involved in
the communications industry through the ownership and operation of the ABC
Television Network, cable and radio stations, newspapers and magazines. Mr.
Burke retired as President, Chief Executive Officer of the company on
February 14, 1994. He joined Capital Cities in 1961 as General Manager of
WTEN-TV in Albany. He was elected a Vice President of WTEN-TV in 1962, and
in 1964 was appointed General Manager of WJR AM/FM in Detroit. Mr. Burke
was elected Executive Vice President and a director of Capital Cities in
1967. He served as President of the Publishing Division from 1969 until his
election as President and Chief Operating Officer in 1972. When Capital
Cities completed its acquisition of American Broadcasting Companies, Inc.
on January 3, 1986, Mr. Burke became President and Chief Operating Officer,
Capital Cities/ABC, Inc. Prior to joining Capital Cities, Mr. Burke worked
for General Foods' Jell-O Division in various capacities from 1955 until
1961. Mr. Burke is a director of Consolidated Rail Corporation and Rohm &
Haas Company. He is also a trustee of The Presbyterian Hospital in the City
of New York and past chairman of the Board of Trustees of the University of
Vermont.
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- ----------------
- ---------------- STANLEY C. GAULT
Director of Avon since 1985 Age: 68
Mr. Gault has been Chairman of the Board and Chief Executive Officer of The
Goodyear Tire & Rubber Company, a manufacturer of tires, chemicals,
polymers, plastic film and other rubber products, since June 4, 1991.
Previously, he was Chairman of the Board and Chief Executive Officer of
Rubbermaid Incorporated, a manufacturer and distributor of plastic and
rubber products for the consumer and institutional markets, from May 1,
1980 to May 1, 1991. He also is a director of International Paper Company,
PPG Industries, Inc., Rubbermaid Incorporated, The Timken Company and The
New York Stock Exchange, Inc. He is a trustee and Chairman of the Board of
The College of Wooster, a director of the National Association of
Manufacturers and a member of the United States Advisory Committee for
Trade Policy and Negotiations.
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</TABLE>
6
<PAGE> 10
<TABLE>
<S> <C>
- ----------------
- ---------------- GEORGE V. GRUNE
Director of Avon since 1991 Age: 64
Mr. Grune has been Chairman and Chief Executive Officer of The Reader's
Digest Association, Inc. since 1984. He has been with this global publisher
and direct mail marketing company since 1960. Mr. Grune is a director of
CPC International Inc., Chemical Banking Corporation and Federated
Department Stores, Inc. He is the Chairman-elect of the Boys and Girls
Clubs of America, Inc. and a trustee of Duke University and serves on the
boards of many other business, educational and philanthropic organizations.
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- ----------------
- ---------------- JOHN J. PHELAN, JR.
Director of Avon since 1991 Age: 62
Mr. Phelan is the retired Chairman and Chief Executive Officer of The New
York Stock Exchange, Inc. He is a former President of the International
Federation of Stock Exchanges and a member of the Council on Foreign
Relations. He is a senior adviser to the Boston Consulting Group and an
international speaker and lecturer. Mr. Phelan is a director of the
Metropolitan Life Insurance Company, Eastman Kodak Company, Sonat Inc. and
Merrill Lynch & Co., Inc. Mr. Phelan graduated magna cum laude from Adelphi
University with a B.B.A. and was Chairman of the University's Board of
Trustees from 1981 to 1985. He holds an honorary doctor of laws degree from
Adelphi, as well as from Hamilton College, Notre Dame, Tulane, Niagara,
Fairfield and Polytechnic Universities. He has been active in charitable
and philanthropic causes for many years and has received numerous honors
and awards in recognition of his efforts in this area.
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</TABLE>
7
<PAGE> 11
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Company's Board of Directors held ten meetings in 1993. The Board has
the following regular committees: Audit Committee, Compensation Committee,
Finance Committee and Nominating and Directors' Activities Committee. No
director attended less than 75% of the aggregate number of meetings of the Board
and the Board Committees on which he or she served, except for Mr. Burke.
The Audit Committee, composed of Joseph A. Rice, as Chair, George V. Grune,
Ann S. Moore and Cecily C. Selby, met three times in 1993. The responsibilities
of the Audit Committee include, in addition to such other duties as the Board
may specify: (i) making recommendations to the Board with respect to the
appointment of independent accountants; (ii) reviewing the timing and scope of
the independent accountants' audit examination and the related fees; (iii)
reviewing the audit results, including any material comments on internal
controls or accounting matters by the Company's independent accountants and the
Company's responses thereto; (iv) reviewing the periodic comments and
recommendations of the Company's independent accountants and the Company's
responses thereto; (v) reviewing the scope and effectiveness of internal
auditing activities; (vi) reviewing and making recommendations to the Board with
respect to material changes in accounting policies and procedures; (vii)
reviewing the procedures designed to assure compliance by Company employees with
the Company's policy on standards of business conduct; (viii) reviewing the
internal accounting controls with the Company's financial management; (ix)
monitoring the Company's compliance with environmental rules and regulations;
and (x) meeting with the independent accountants, internal auditors and Company
management at least three times per year.
The Compensation Committee, composed of Charles S. Locke, as Chair, George
V. Grune, Ernesta G. Procope and Joseph A. Rice, met seven times in 1993. The
responsibilities of the Compensation Committee include, in addition to such
other duties as the Board may specify: (i) reviewing management's
recommendations for compensation of officers of the Company and its affiliates
and approving such compensation for all senior officers of the Company; (ii)
making recommendations to the Board with respect to compensation for any
employee of the Company who also is a director of the Company; (iii) reviewing
and approving (or recommending to the Board for approval) the adoption,
modification or amendment of employee benefit plans; (iv) reviewing and
approving (or recommending to the Board for approval) incentive plans for all
officers and key employees of the Company, and approving awards under those
plans for all senior officers of the Company; (v) reviewing and approving (or
recommending to the Board for approval) awards under the Company's 1993 Stock
Incentive Plan; (vi) reviewing the existing compensation and benefit plans for
employees and making recommendations to the Board with respect to changes where
warranted; and (vii) reviewing the Company's management development and
succession planning programs.
The Finance Committee, composed of Stanley C. Gault, as Chair, Daniel B.
Burke, John J. Phelan, Jr. and Remedios Diaz Oliver met twice in 1993. The
responsibilities of the Finance Committee include, in addition to such other
duties as the Board may specify: (i) reviewing with management on a regular
basis the financial matters of the Company and its subsidiaries, including
capital needs, credit ratings, funding activities and investment of surplus
funds; (ii) studying proposed actions in connection with financial strategy and
procedures and making recommendations to the Board as appropriate; (iii)
reviewing the financial terms of proposed acquisitions and sales or other
dispositions of divisions or subsidiaries of the Company and making
recommendations to the Board as appropriate; (iv) reviewing proposals for and
making recommendations to the Board with respect to all offerings of the
Company's equity securities; (v) reviewing the funding programs of the Company
and providing guidance and general parameters for the Company's debt and lease
commitments; (vi) reviewing, approving and recommending Board action with
respect to total permitted indebtedness; and (vii) reviewing the management of
the Company's employee benefit trust funds.
8
<PAGE> 12
The Nominating and Directors' Activities Committee, composed of Ernesta G.
Procope, as Chair, Remedios Diaz Oliver, John J. Phelan, Jr. and Cecily C.
Selby, met twice in 1993. The responsibilities of the Nominating and Directors'
Activities Committee include, in addition to such other duties as the Board may
specify, reviewing and making presentations and recommendations to the Board
with respect to: (i) Board policies regarding the size and composition of the
Board and qualifications for Board membership; (ii) prospective candidates for
Board membership; (iii) candidates to fill vacancies on the Board that occur
between annual meetings of Shareholders; (iv) the slate of nominees for director
to be proposed for election by Shareholders at annual meetings; (v) the number
of Board committees and their composition; and (vi) changes or additions to
Board and committee procedures. Shareholders may submit nominations of
candidates for election to the Board of Directors. Additional information
regarding the Shareholder nomination procedure will be provided upon request to
the Secretary of the Company.
Directors who are officers or employees of the Company or any subsidiary of
the Company receive no remuneration for services as directors. Each other
director receives $40,000 per year (the "Annual Retainer") for serving as a
director, a fee of $1,000 for each special meeting of the Board of Directors and
each committee meeting attended, and an annual retainer of $3,000 for acting as
Chair of any committee of the Board. The Company has adopted a compensation plan
for its non-management directors permitting them by individual election to defer
all or a portion of their fees. The value of such deferred fees, depending upon
elections made by such director, increase or decrease proportionately with the
price of the Common Stock or earn interest on the same basis as a fixed income
investment with interest credited at Moody's composite bond rate plus four
percent for all cash deferred prior to January 1, 1991 and at a rate no lower
than the average annual yield on 30 year U.S. Treasury bonds for all cash
deferred after January 1, 1991.
Effective January 1, 1988, the Company instituted a Retirement Plan for
non-management directors. Under the provisions of this plan, non-management
directors who retire with a minimum of five years' service on the Board will
receive annually 100% of their Annual Retainer for a period of time equal to
their years of Board service. This retirement plan is administered by a
committee consisting of those directors who are also employees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1993, the following persons served on the Compensation Committee:
George V. Grune, Charles S. Locke, Ernesta G. Procope and Joseph A. Rice.
E.G. Bowman Co., Inc., of which Mrs. Procope is the President, Chief
Executive Officer and principal shareholder, has acted as broker for various
business insurance policies for the Company. During 1993, premiums paid by Avon
for such policies yielded commissions to E.G. Bowman Co., Inc. of approximately
$144,000. Mrs. Procope also is Chairperson of Bond, Procope Capital Management,
an institutional investment management services firm of which she is part owner.
In 1993, the firm managed a portion of the assets held for the Company's
Supplemental Executive Retirement Plan, for which it received fees of
approximately $86,000. It is anticipated that both E.G. Bowman Co., Inc. and
Bond, Procope will continue to provide these services during 1994.
9
<PAGE> 13
OWNERSHIP OF SHARES
The following table sets forth certain information as of February 28, 1994
regarding the amount of Common Stock beneficially owned by each director and
director nominee of Avon, each named executive (as defined in the introduction
to the Summary Compensation Table), all directors and executive officers of Avon
as a group and all persons known to Avon who beneficially own more than five
percent of the outstanding shares of Common Stock. All shares shown in the table
reflect sole voting and investment power except as otherwise noted.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
------------------------------------------------------- -------------------- ----------
<S> <C> <C>
Oppenheimer Group, Inc.(1)............................. 9,893,541 13.73
The Travelers Inc. (formerly Primerica
Corporation)(2)...................................... 4,032,922 5.6
Brenda Barnes.......................................... 100 (3)
Daniel B. Burke........................................ 1,000 (3)
Stanley C. Gault....................................... 10,000 (3)
George V. Grune........................................ 1,000 (3)
Walker Lewis........................................... 24,572(4) (3)
Charles S. Locke....................................... 1,000 (3)
Siri S. Marshall....................................... 13,614(5) (3)
Ann S. Moore........................................... 1,000 (3)
John I. Novosad........................................ 6,751(6) (3)
Remedios Diaz Oliver................................... 1,000(7) (3)
John J. Phelan, Jr..................................... 1,000 (3)
James E. Preston....................................... 171,215(8) (3)
Ernesta G. Procope..................................... 4,913 (3)
Joseph A. Rice......................................... 4,579 (3)
Edward J. Robinson..................................... 47,410(9) (3)
Cecily C. Selby........................................ 2,000 (3)
All directors and executive officers as a group (22)... 343,320(10) (3)
</TABLE>
- ---------------
(1) The address of Oppenheimer Group, Inc. is Oppenheimer Tower, World
Financial Center, New York, New York 10281.
(2) The address of The Travelers Inc. is 65 East 55th Street, New York, New
York 10022.
(3) Indicates less than 1% of the outstanding Shares.
(4) Includes 10,000 Shares as to which Mr. Lewis has sole voting but no
investment power.
(5) Includes 6,500 Shares as to which Mrs. Marshall has sole voting but no
investment power.
(6) Includes 6,500 Shares as to which Mr. Novosad has sole voting but no
investment power.
(7) Mrs. Diaz Oliver shares with her spouse voting and investment power as to
these Shares.
(8) Includes 31,020 Shares as to which Mr. Preston disclaims beneficial
ownership; 37,500 Shares as to which Mr. Preston has sole voting but no
investment power; and 20,000 shares which Mr. Preston had a right to
acquire within 60 days of February 28, 1994 through the exercise of stock
options. The percentage shown for Mr. Preston was computed on the basis of
the number of Shares outstanding on February 28, 1994, plus such 20,000
shares.
(9) Includes 27,500 Shares as to which Mr. Robinson has sole voting but no
investment power; and 8,333 Shares which Mr. Robinson had a right to
acquire within 60 days of February 28, 1994 through the exercise of stock
options. The percentage shown for Mr. Robinson was computed on the basis of
the number of Shares outstanding on February 28, 1994, plus such 8,333
Shares.
(10) Includes 31,020 Shares as to which the directors and executive officers in
the group disclaim beneficial ownership. Includes 1,150 Shares as to which
beneficial ownership was shared with others and 28,333 shares which the
directors and executive officers as a group had a right to acquire within
60 days of February 28, 1994 through the exercise of stock options. The
percentage shown for the directors and executive officers as a group was
computed on the basis of the number of Shares outstanding on February 28,
1994, plus such 28,333 shares.
10
<PAGE> 14
Section 16(a) of the Securities Exchange Act of 1934 requires Avon's
executive officers, directors and greater than 10% shareholders ("Reporting
Persons") to file certain reports ("Section 16 Reports") with respect to
beneficial ownership of Avon's equity securities. Based solely on its review of
the Section 16 Reports furnished to the Company by its Reporting Persons and,
where applicable, any written representation by any of them that no Form 5 was
required, all Section 16(a) filing requirements applicable to Avon's Reporting
Persons during and with respect to 1993 have been complied with on a timely
basis.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors sets and administers
the policies which govern annual and long-term executive compensation. The
Committee is composed entirely of outside Directors, whose names are listed
below this report.
OVERVIEW OF COMPENSATION PHILOSOPHY AND PROGRAMS
The Compensation Committee is responsible for the design and implementation
of salary and incentive programs for executive officers and other key executives
which are consistent with Avon's overall compensation philosophy. Key elements
of that philosophy include:
- Assuring that total compensation levels are competitive with those at
peer companies and are commensurate with relative shareholder returns and
financial performance.
- Focusing executives on the financial objectives that support superior
total shareholder returns in the form of stock price appreciation and
dividends.
- Emphasizing long-term financial performance and sustained market value
creation vs. short-term gains.
On an annual basis, working with an independent compensation consulting
firm, the Company evaluates its key executive positions using internal measures
of comparability and relevant peer company market data. In addition, the
consulting firm participates with the Committee in the design of the executive
compensation program and regularly monitors and reports to the Committee on
performance and pay levels for selected peer companies. These are public
companies which compete with Avon in key markets or key channels for customers
and executive talent. These companies (the "Peer Companies") are listed in
footnote (2) of the five-year performance graph set forth below.
In accordance with the long-term focus of Avon's pay philosophy, base
salary levels for executive officers are targeted to fall slightly below the
median of salary levels at Peer Companies. Performance based pay--annual and
long-term incentives -- is positioned above peer medians and represents a
substantial portion of total pay when the Company meets or exceeds aggressive
financial and shareholder return objectives.
The elements of the current compensation program for executive officers and
other key employees are further explained below.
11
<PAGE> 15
BASE SALARY
The base salaries of executive officers are targeted to fall 10% below the
median of the salary levels for comparable officer positions at the Peer
Companies. As indicated below, the CEO's salary has been frozen since 1991 and
is presently more than 10% below the median base salary for CEOs of the Peer
Companies. Base salaries otherwise are not linked to specific Company
performance objectives.
ANNUAL INCENTIVE PLAN
Under the annual management incentive plan, cash bonuses range from 0 to
250% of individual target awards which are set as a percentage of salary by
individual and by management level. These bonuses are earned based on the degree
of attainment of performance objectives recommended by management and approved
by the Committee.
With respect to most executive officers, 1993 awards were determined
pursuant to a specific formula and substantially based on the following 1993
Company performance objectives: (a) operating income, for which the threshold,
but not the target, objective was attained; (b) cash flow, for which the target
objective was exceeded, and (c) consolidated net income, for which the
threshold, but not the target, objective was attained. As a whole, the overall
attainment of these 1993 Company performance objectives resulted in a payout of
102% of target. Certain executive officers, however, had these performance
objectives applied to their particular business unit responsibility, rather than
the Company as a whole, and some had a portion of their award based on
achievement of individual performance objectives. As a consequence, awards as a
percent of individual target levels varied considerably among different
executive officers ranging from 0% up to 165% of target.
LONG-TERM INCENTIVE COMPENSATION
Prior to 1994, long-term incentive compensation principally has been
provided under the 1970 Stock Option Incentive Plan through the issuance of
restricted stock and stock options. Restricted stock grants made in 1991-93
vested 50% in early 1994 as the result of the achievement of an aggressive cash
flow target, with the balance vesting in 1995 and 1996. The Company granted
restricted stock to Mr. Robinson and Mrs. Marshall as additional compensation
for their promotions to higher officer positions in 1993. Mr. Lewis received
options in 1993 based on the achievement of a targeted reduction in budgeted
expenses for the Company's North American business.
Commencing in 1994, long-term incentive compensation will be provided under
the Company's 1993 Stock Incentive Plan which was approved at the Annual Meeting
of Shareholders held May 6, 1993.
DETERMINATION OF CEO COMPENSATION
The CEO's 1993 compensation package consists of salary, annual cash bonus
and long-term incentives awarded prior to 1993 consisting of restricted stock
and stock options.
Mr. Preston's current salary of $610,000 is below the median for the Peer
Companies. In 1991, the Committee approved Mr. Preston's request for a five-year
salary freeze at that level and a reduction in his target bonus opportunity from
65% to 50% of his base salary, in return for a special option of 50,000 shares
of stock. The objective of this action was to make more of Mr. Preston's total
compensation long-term oriented and more directly tied to the performance of
Avon's stock.
12
<PAGE> 16
Mr. Preston's annual bonus for 1993 was based on the same three performance
objectives applicable to other executive officers as described above under
"Annual Incentive Plan", with the same degree of attainment of targets and
thresholds. Each objective was of equal relative importance. Following a review
of the Company's performance with respect to all three objectives, the Committee
approved a bonus award of 102% of target, resulting in an award to Mr. Preston
of $311,478.
Since Mr. Preston became Chairman in January of 1989, shareholder returns
have out-performed the S&P 500 and the Peer Companies composite. Cumulative
total shareholder returns over the five-year period 1989 to 1993 have been 204%,
well in excess of the S&P 500 and Peer Companies returns over the same time
period, which were 97% and 141%, respectively. These returns have directly
increased the value of all shareholders' investments, as well as the value of
Mr. Preston's stock-based awards, thus demonstrating the linkage between his
compensation package, approved by this Committee, and overall corporate
performance.
LIMITATIONS ON THE DEDUCTIBILITY OF COMPENSATION
Pursuant to the 1993 Omnibus Budget Reconciliation Act, a portion of annual
compensation payable after 1993 to any of the Company's five highest paid
executive officers would not be deductible by the Company for federal income tax
purposes to the extent such officer's overall compensation exceeds $1 million.
Qualifying performance-based incentive compensation, however, would both be
deductible and excluded for purposes of calculating the $1 million base. It has
been determined that no portion of anticipated compensation payable to any
executive officer in 1994 would be non-deductible. The Committee will continue
to address this issue when formulating compensation arrangements for executive
officers.
Charles S. Locke, Chair
George V. Grune
Ernesta G. Procope
Joseph A. Rice
13
<PAGE> 17
FIVE-YEAR PERFORMANCE GRAPH
The following indexed line graph indicates the Company's total return to
shareholders for each of the five years ended December 31, 1989 through 1993, as
compared to total return to shareholders for the Standard & Poor's 500 Composite
Index and an industry composite of Avon peer companies (the "Industry
Composite"). The common stocks of the Industry Composite companies have been
included on a weighted basis to reflect the relative market capitalization of
the companies.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN(1)
AVON, S&P 500 INDEX AND INDUSTRY COMPOSITE(2)
(GRAPH)
Assumes $100 invested on December 31, 1988 in Avon Common Stock, the S&P
500 Index and the Industry Composite. The dollar amounts indicated in the graph
above and in the chart below are as of December 31 in each year indicated.
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Avon $100.0 $195.1 $160.3 $274.3 $338.3 $304.6
S&P 500 100.0 131.7 127.6 166.5 179.2 197.2
Industry Composite 100.0 144.2 177.3 242.4 239.3 241.5
</TABLE>
- ---------------
(1) Total Return assumes reinvestment of dividends.
(2) Industry Composite includes Carter Wallace, Gillette, Johnson & Johnson,
Tambrands, Stanhome, Alberto-Culver, Colgate Palmolive, Kimberly Clark,
Bristol-Myers Squibb, Procter & Gamble, Neutrogena and Helene Curtis.
14
<PAGE> 18
TABLES AND PLANS
This section of the proxy statement discloses fiscal 1993 plan and non-plan
compensation awarded or paid to, or earned by, the Company's Chief Executive
Officer and, of the Company's other executive officers during fiscal 1993, each
of the four persons who were most highly compensated in fiscal 1993 (together,
these five persons are sometimes referred to as the "named executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------- -----------------------------------
AWARDS PAYOUTS
OTHER ------------------------ --------- ALL
ANNUAL SECURITIES OTHER
COMPENSATION RESTRICTED UNDERLYING LONG-TERM COMPENSATION
(1992 AND STOCK OPTIONS/ INCENTIVE (1992 AND
SALARY BONUS 1993 ONLY) AWARDS SARS PAYOUTS 1993 ONLY)
NAME AND POSITION YEAR ($) ($)(1) ($)(2) ($)(3) (#) ($) ($)(4)
- ----------------------------------- ----- -------- -------- ------------ ---------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James E. Preston................... 1993 610,000 311,478 0 0 0 36,878
Chairman and 1992 610,000 504,145 0 0 0 33,148
Chief Executive Officer 1991 600,833 583,471 2,643,750 50,000 0
Edward J. Robinson................. 1993 421,667 271,976 490,625 0 0 75,572
President and 1992 348,750 315,420 0 25,000 0 72,615
Chief Operating Officer 1991 306,666 249,050 1,233,250 0 0
Walker Lewis....................... 1993 383,333 0 0 25,000 0 18,416
Executive Vice President 1992 262,500 531,701 1,221,875 25,000 0 221,790
John I. Novosad.................... 1993 207,084 167,414 0 0 0 228,405
Executive Vice President-
Asia/Pacific
Siri S. Marshall................... 1993 230,883 110,505 178,875 0 0 15,918
Senior Vice President,
General Counsel and Secretary
</TABLE>
- ---------------
(1) Mr. Lewis' 1992 bonus amount includes a $250,000 sign-on bonus.
(2) This column would include the value of certain personal benefits only where
the value is greater than the lower of $50,000 or 10% of an executive's
Salary and Bonus for the year. Such threshold was not exceeded for any of
the named executives.
(Footnotes continued on next page)
15
<PAGE> 19
(3) With respect to the 1992 grant for Mr. Lewis, 5,000 shares of restricted
stock vested on March 31, 1993. Cumulative performance goals applicable to
all other shares of restricted stock granted in 1991-93 were achieved as of
January 3, 1994, resulting in the vesting of 50% of all such shares as of
that date. The remaining shares of restricted stock granted in 1991-93 will
vest 60% as of January 3, 1995, and 40% as of January 3, 1996, subject to
forfeiture if the holder does not continue to be an employee until the
applicable vesting date. If, however, the holder dies, is involuntarily
terminated or retires, the holder will vest in that number of shares
proportionate to the period of the holder's employment during the applicable
restricted period. Dividends have been accrued on the shares of restricted
stock granted in 1991-93. Upon vesting, 50% of the accrued accounts was
distributed. Dividends on the balance of such shares will continue to accrue
until the applicable vesting dates in 1995 and 1996 when payment will be
made. In the event of a change of control, all shares of restricted stock
would either vest immediately or be cashed out. The following table presents
information regarding fiscal 1993 awards of restricted stock to, and
aggregate holdings of restricted stock at December 31, 1993 for, the named
executives. The table does not reflect the above-described vesting of shares
as of January 3, 1994.
<TABLE>
<CAPTION>
HOLDINGS OF RESTRICTED SHARES AT 12/31/93
------------------------------------------------------
AGGREGATE MARKET
NUMBER OF TOTAL NUMBER VALUE OF
RESTRICTED OF RESTRICTED
SHARES GRANTED RESTRICTED SHARES
NAME IN FISCAL 1993 SHARES HELD AT 12/31/93(A)
------------------------------------------------------- -------------- ------------ ----------------
<S> <C> <C> <C>
Mr. Preston............................................ -0- 75,000 $3,646,875
Mr. Robinson........................................... 10,000(b) 45,000 $2,188,125
Mr. Lewis.............................................. -0- 20,000 $ 972,500
Mr. Novosad............................................ -0- -0- -0-
Mrs. Marshall.......................................... 3,000(c) 13,000 $ 632,125
</TABLE>
- ---------------
(a) "Market Value" is determined by reference to the per share closing sale
price on December 31, 1993 ($48.625).
(b) These shares vest on June 1, 2001 subject to proportionate vesting in
the event of death, involuntary termination or retirement prior to that
date. Dividends on these shares are paid at the same time as those on
the Company's unrestricted Common Stock.
(c) Dividends on these shares are accrued during the restricted period and
paid to the holder when the shares vest.
(4) The amounts in this column include the following: (i) Company matching
contributions to the Employees' Savings and Stock Ownership Plan and/or
Deferred Compensation Plan--Mr. Preston, $9,125; Mr. Robinson, $6,310; Mr.
Lewis, $5,742; Mr. Novosad, $3,004; and Mrs. Marshall, $3,274; (ii)
above-market portion of interest earned on deferred compensation--Mr.
Preston, $27,753 and Mrs. Marshall, $5,690; (iii) premiums paid by the
Company for life insurance for the direct or indirect benefit of Mr.
Robinson, $69,262; Mr. Lewis, $12,674; Mr. Novosad, $12,523; and Mrs.
Marshall, $6,954; (iv) overseas cost-of-living and housing allowance--Mr.
Novosad, $212,878.
16
<PAGE> 20
OPTION GRANTS
This table presents information regarding options that may be exercised to
purchase shares of the Company's Common Stock. The Company has no outstanding
SARs and granted no SARs during fiscal 1993. Other than Mr. Lewis, none of the
named executives received stock option grants during fiscal 1993.
OPTION GRANTS IN FISCAL 1993
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE(3) AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION FOR OPTION TERM
-------------------------------------------------------------------------
0% 5% 10%
INDIVIDUAL GRANTS ($) ($) ($)
- ----------------------------------------------------- -------------------- --------------------- -----------------------
NUMBER OF % OF TOTAL MARKET MARKET MARKET
SECURITIES OPTIONS PRICE PRICE PRICE
UNDERLYING GRANTED TO REQUIRED REQUIRED REQUIRED
OPTIONS/SARS EMPLOYEES EXERCISE TO REALIZE TO REALIZE TO REALIZE
GRANTED IN FISCAL PRICE EXPIRATION DOLLAR DOLLAR DOLLAR DOLLAR DOLLAR DOLLAR
NAME 4(#)(1) YEAR(2) ($/SH) DATE GAINS GAINS GAINS GAINS GAINS GAINS
- ---- ----------- ------------ -------- ---------- ------ ---------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mr.
Preston... 0 0 N/A N/A N/A N/A N/A N/A N/A N/A
Mr.
Robinson... 0 0 N/A N/A N/A N/A N/A N/A N/A N/A
Mr.
Lewis... 25,000 100% 63.375 03/03/03 0 63.375 996,375 103.23 2,525,125 164.38
Mr.
Novosad... 0 0 N/A N/A N/A N/A N/A N/A N/A N/A
Mrs.
Marshall... 0 0 N/A N/A N/A N/A N/A N/A N/A N/A
</TABLE>
- ---------------
(1) The indicated options have a term of 10 years and were granted pursuant to
the Company's 1970 Stock Option Incentive Plan. If there were a change in
control of the Company, each unexercised option granted under the 1970 Stock
Option Incentive Plan would vest and be cashed out at an amount equal to the
then-current value of the underlying Common Stock, minus the exercise price
of the option.
(2) Based on 25,000 options granted in fiscal 1993.
(3) The Potential Realizable Values are calculated as follows: ((Market Price at
Grant X (1 + Stock Price Appreciation Rate)) -- Exercise Price) X Number of
Underlying Shares. The 1970 Stock Option Incentive Plan requires that the
per share exercise price be not less than "fair market value" at the time of
grant. The plan defines fair market value as the average of the high and low
sales price on the date of grant. Because these potential realizable values
are based on annualized compound rates of increase over a 10-year term, the
total potential appreciation on annual appreciation rates of 5% and 10% is
62.9% and 159.4%, respectively.
17
<PAGE> 21
OPTION EXERCISES AND VALUES
This table presents information regarding options exercised for shares of
the Company's Common Stock during fiscal 1993 and the value of unexercised
options held at December 31, 1993. There were no options exercised by the named
executives and no SARs outstanding during fiscal 1993.
AGGREGATED OPTION EXERCISES IN FISCAL 1993 AND 1993 FISCAL YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FY-END AT FY-END
SHARES ACQUIRED VALUE (#) ($)(2)
ON EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- -------------------------- --------------- -------------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
Mr. Preston............... 0 0 20,000/30,000 168,750/253,125
Mr. Robinson.............. 0 0 8,333/16,667 0/0
Mr. Lewis................. 0 0 0/50,000 0/0
Mr. Novosad............... 0 0 0/0 0/0
Mrs. Marshall............. 0 0 0/0 0/0
</TABLE>
- ---------------
(1) Value Realized is calculated as follows: [(Per Share Closing Sale Price on
Date of Exercise) - (Per Share Exercise Price)] X Number of Shares for Which
the Option was Exercised.
(2) Value of Unexercised, In-the-Money Options at 12/31/93 is calculated as
follows: [(Per Share Closing Sale Price on 12/31/93) - (Per Share Exercise
Price)] X Number of Shares Subject to Unexercised Options. The per share
closing sale price on 12/31/93 was $48.625.
18
<PAGE> 22
RETIREMENT, DEATH AND SEVERANCE BENEFITS
The following table shows the estimated annual retirement allowance for
life annuity under the Retirement Plan and the Supplemental Plan (which are
defined below) for participants retiring at age 65 whose three-year average
compensation and years of service at retirement would be in the classifications
shown:
ESTIMATED ANNUAL RETIREMENT ALLOWANCES AT AGE 65
<TABLE>
<CAPTION>
AVERAGE OF THREE
HIGHEST YEARS'
ANNUAL YEARS OF CREDITABLE SERVICE
COMPENSATION --------------------------------------------------------
IN LAST TEN YEARS 15 20 25 30 35
- ----------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 300,000............................. 90,000 120,000 150,000 165,000 180,000
400,000............................. 120,000 160,000 200,000 220,000 240,000
500,000............................. 150,000 200,000 250,000 275,000 300,000
600,000............................. 180,000 240,000 300,000 330,000 360,000
700,000............................. 210,000 280,000 350,000 385,000 420,000
800,000............................. 240,000 320,000 400,000 440,000 480,000
900,000............................. 270,000 360,000 450,000 495,000 540,000
1,000,000............................. 300,000 400,000 500,000 550,000 600,000
1,100,000............................. 330,000 440,000 550,000 605,000 660,000
1,200,000............................. 360,000 480,000 600,000 660,000 720,000
1,300,000............................. 390,000 520,000 650,000 715,000 780,000
1,400,000............................. 420,000 560,000 700,000 770,000 840,000
1,500,000............................. 450,000 600,000 750,000 825,000 900,000
1,600,000............................. 480,000 640,000 800,000 880,000 960,000
</TABLE>
As of December 31, 1993, Mr. Preston had an average three-year compensation
of $1,317,786 and 34.25 years of creditable service; Mr. Robinson had an average
three-year compensation of $653,330 and 21.0 years of creditable service; Mr.
Lewis had an average three-year compensation of $508,422 and 1.83 years of
creditable service; Mr. Novosad had an average three-year compensation of
$324,056 and 29.67 years of creditable service; and Mrs. Marshall had an average
three-year compensation of $296,966 and 14.92 years of creditable service.
Benefits under Avon's Employees' Retirement Plan (the "Retirement Plan")
are based on the average of a participant's five highest years' compensation
during the ten years prior to retirement and the number of years of creditable
service, and are offset in part by Social Security benefits. The compensation
covered by the Retirement Plan includes base salary, commissions and annual
incentive bonuses.
The Company's Supplemental Executive Retirement Plan (the "Supplemental
Plan") will pay to executive officers and certain other selected executives a
supplemental pension equal to the difference between the annual amount of a
pension calculated under the Supplemental Plan and the amount the participant
will receive under the Retirement Plan. The pension benefit calculation under
the Supplemental Plan is similar to that under the Retirement Plan except that
it takes into account a greater percentage of each participant's final average
earnings computed on the basis of the three highest years' compensation during
the ten years prior to retirement and is not subject to any offset of Social
Security benefits or maximum limitation on qualified plan benefits but is
subject to offset by the benefits provided under the Retirement Plan. The
19
<PAGE> 23
Supplemental Plan provides that certain participants (including Messrs. Preston
and Robinson) who retire at age 65 (or who retire at age 60 with 15 years of
creditable service) will receive a pension benefit which is not less than
one-half of his or her final three-year average compensation.
For purposes of determining benefits and eligibility for benefits under the
Supplemental Plan, the Company has granted Mr. Preston 5 additional years of
creditable service and Mr. Robinson 16 years of creditable service. The pension
benefits payable by Avon to Mr. Robinson will be the higher of (i) the amount
calculated utilizing the additional credited service and including the offset of
prior benefits earned by Mr. Robinson while in the employ of his former employer
or (ii) the benefit amount calculated using his Avon service only. If
recognition of Mr. Robinson's service with his former employer is not necessary
to qualify him for the pension benefit described in the paragraph above, his
pension will not be reduced by the value of the benefits earned with his former
employer.
The Company maintains a supplemental benefits plan (the "SLIP"),
participation in which is restricted to approximately 45 corporate and division
officers, including the named executives. This plan provides for death benefits
ranging from $350,000 to $2,000,000. This death benefit is in addition to the
coverage under the Company's group life insurance program. For participants
eligible prior to January 1, 1990 (including Messrs. Preston, Robinson, Novosad
and Mrs. Marshall), such coverage continues after retirement and provides that
in the event of a change in control (as defined in the plan document) of the
Company prior to a participant's death, vested participants and participants
involuntarily terminated after a change in control will receive a fully-paid
whole-life policy, including an appropriate tax reimbursement, with a face
amount equal to one-half of the death benefits payable under this plan. This
change in control benefit is in lieu of a later death benefit.
CONTRACTS WITH EXECUTIVES
The Company currently has employment contracts ("Employment Contracts")
with each of Messrs. Preston, Robinson, Novosad and Mrs. Marshall. Each of the
Employment Contracts may be terminated for cause by the Company. Mr. Preston's
Employment Contract expires October 31, 1995. During the terms of their
respective Employment Contracts, Mr. Preston's positions with the Company may
not be reduced; the positions of Mr. Robinson may not be reduced below the
corporate officer level during Mr. Preston's tenure or below his then current
position thereafter.
The Employment Contracts provide that if the executive is discharged
without cause or deemed terminated during the course of the contract, the
executive generally shall receive a payment equal to the sum of: (i) Base Salary
and certain Accrued Obligations (as defined in the Employment Contracts) to the
date of termination; (ii) the present value of the executive's Base Salary until
the end of the contract term, in the case of Mr. Preston, or, in the case of the
other executives, for a period equal to two or three years (depending upon the
executive's position at the Company); (iii) continuation of benefits until the
end of the contract term, in the case of Mr. Preston, or, in the case of the
other executives, for two or three years (depending upon the executive's
position at the Company); plus (iv) in certain circumstances, a bonus. Under the
terms of the Employment Contracts, the amounts payable upon termination are
generally reduced by the amounts payable under the Severance Plan (which is
described below).
20
<PAGE> 24
The Employment Contracts also provide that upon the executive's actual or
constructive termination of employment other than for cause in connection with
the occurrence of certain change of control or potential change of control
events (as defined in the Employment Contracts), the executive will receive
payment of an amount equal to the sum of: (a) up to three years' salary and
bonus, (b) the present value of three years' insurance and fringe benefits, and
(c) the value of all then outstanding stock options and Restricted Shares, based
on a cash-out or similar cash amount that reflects Common Stock price
fluctuations surrounding such events. Assuming an actual or potential change of
control on January 3, 1994 and the termination of the executives immediately
thereafter, Mr. Preston would receive $2,764,434; Mr. Robinson would receive
$2,287,689; Mr. Novosad would receive $1,210,242; and Mrs. Marshall would
receive $1,069,140; plus the amounts referred to in (b) and (c) above.
The Employment Contracts also provide for reimbursement by the Company of
any excise taxes incurred under Section 4999 of the Internal Revenue Code by
reason of a change in control, and for any income and excise taxes incurred in
connection with such reimbursement. The actual amount of such reimbursements is
difficult to determine due to, among other things, (i) the number of variables
involved, such as the price of the Common Stock at relevant times and the
circumstances and timing of any termination, and (ii) uncertainties, in the
absence of final or temporary tax regulations, regarding the application of the
relevant tax rules.
The Company has in effect for its employees a severance plan (the
"Severance Plan") under which an employee will receive, in the event his
employment by the Company is terminated other than for cause, disability or
retirement, continuation of his salary for a period of time ranging from two
weeks to 24 months (the "Continuation Period"), depending on the employee's
position with the Company (plus two weeks in lieu of notice and unused, earned
vacation), and, if the employee elects to receive his salary continuation over
the applicable Continuation Period, benefits continuation for the applicable
Continuation Period. All Employment Contracts with executive officers obligate
the Company to provide severance benefits to those executives at a level at
least commensurate with the current Severance Plan.
PROPOSAL 3 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Unless otherwise directed by the Shareholders, proxies will be voted for
ratification of the appointment by the Board of Directors, upon the
recommendation of the Audit Committee, of Coopers & Lybrand, Certified Public
Accountants, as independent accountants for the year 1994. Coopers & Lybrand
began auditing the accounts of the Company in 1989. If the appointment of
Coopers & Lybrand is not ratified by the Shareholders, the Audit Committee will
reconsider its recommendation. The Company is informed that no member of Coopers
& Lybrand has any direct or any material indirect financial interest in the
Company or any of its subsidiaries. A member of the firm will be present at the
Annual Meeting to answer appropriate questions and to make a statement if he or
she desires.
With respect to the proposal to ratify the appointment of Coopers & Lybrand
as independent accountants, Shareholders may direct that their votes be cast for
or against such proposal, or may abstain, by marking the appropriate box on the
proxy card.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND AS INDEPENDENT ACCOUNTANTS
FOR THE YEAR 1994.
21
<PAGE> 25
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if any other matters are properly brought before the
Annual Meeting, the persons appointed in the accompanying proxy intend to vote
the shares represented thereby in accordance with their best judgment.
SOLICITATION OF PROXIES
The cost of the solicitation of proxies on behalf of Avon will be borne by
Avon. Directors, officers and other employees of Avon may, without additional
compensation except reimbursement for actual expenses, solicit proxies by mail,
in person or by telecommunication. In addition, Avon has retained Morrow & Co.,
Inc. at a fee estimated not to exceed $15,000, plus reasonable out-of-pocket
expenses, to assist in the solicitation of proxies. Avon will reimburse brokers,
fiduciaries, custodians and other nominees for out-of-pocket expenses incurred
in sending Avon's proxy materials to, and obtaining instructions relating to
such materials from, beneficial owners.
SHAREHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Any proposal that a shareholder may desire to have included in the
Company's proxy material for presentation at the 1995 Annual Meeting must be
received by the Company at Avon Products, Inc., 9 West 57th Street, New York,
New York 10019, Attention: Secretary, on or prior to November 23, 1994.
Upon the written request of any Shareholder to the Shareholder Relations
Department (Attention: Marilyn Reynolds) at the address listed above (telephone
number 212-546-6786/6788), the Company will provide without charge a copy of its
Annual Report on Form 10-K for 1993, as filed with the Securities and Exchange
Commission.
By Order of the Board of Directors
Siri S. Marshall
Senior Vice President,
General Counsel and Secretary
March 23, 1994
New York, New York
22
<PAGE> 26
- --------------------------------------------------------------------------------
If your Shares are held in the name of a brokerage firm, bank nominee or
other institution, only it can sign a proxy card with respect to your Shares.
Accordingly, please contact the person responsible for your account and give
instructions for a proxy card to be signed representing your Shares.
- --------------------------------------------------------------------------------
If you have any questions about giving your proxy or require assistance, please
contact our proxy solicitor at:
MORROW & CO., INC.
909 Third Avenue
New York, New York 10022
(212) 754-8000
Call Toll-Free 1-800-662-5200
23
<PAGE> 27
PROXY
AVON PRODUCTS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned shareholder of AVON PRODUCTS, INC. (the "Company") hereby
constitutes and appoints Siri S. Marshall, Ward M. Miller and Maureen Boyan,
and each of them, as true and lawful attorneys and proxies the undersigned,
with full power of substitution and resubstitution, to vote and act with
respect to all shares of the Company's Common Stock, par value $.50 per share
(the "Shares"), the undersigned could vote, and with all powers the undersigned
would possess, if personally present, at the Annual Meeting of Shareholders of
the Company to be held on May 5, 1994, and at any adjournments or postponements
thereof (the "Annual Meeting").
IF THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED HEREBY WILL BE VOTED
IN THE MANNER DIRECTED HEREIN BY THE SHAREHOLDER. IF NO DIRECTION IS MADE,
SUCH SHARES WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF THE NOMINEES LISTED
BELOW, FOR PROPOSAL NO. 3, AND IN THE DISCRETION OF THE PROXIES NAMED ABOVE ON
ALL OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
NOMINEES FOR ELECTION AS DIRECTORS
CLASS OF 1997: REMEDIOS DIAZ OLIVER, JOSEPH A. RICE, EDWARD J. ROBINSON AND
CECILY CANNAN SELBY
CLASS OF 1996: BRENDA BARNES
Instruction for Cumulative Voting for the Class of 1997: Unless otherwise
specified in the space provided below, this proxy shall authorize the proxies
listed above to cumulate all votes which the undersigned is entitled to cast at
the Annual Meeting for, and to allocate such votes among, one or more of the
nominees for the Class of 1997 listed above, as such proxies shall determine,
in their sole and absolute discretion, in order to maximize the number of such
nominees elected to such class of Avon's Board of Directors. To specify a
method of cumulative voting, write "Cumulate For" and the number of Shares and
the name(s) of the nominee(s) in the space provided below.
- --------------------------------------------------------------- SEE REVERSE SIDE
1305
[ X ] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3
PROPOSAL 1 FOR WITHHELD
Election of [ ] [ ]
Directors to the
Class of 1997
(see reverse)
- --------------------------------------------------------------------------------
To withhold authority for any nominee(s) for the Class of 1997, write the
name(s) of such nominee(s) in the space provided above.
PROPOSAL 2 FOR WITHHELD
Election of [ ] [ ]
Director to the
Class of 1996
(see reverse)
PROPOSAL 3 FOR AGAINST ABSTAIN
Ratification of [ ] [ ] [ ]
the appointment
of Coopers &
Lybrand as
Avon's independent
accountants.
PLEASE SIGN, DATE AND MAIL YOUR PROXY PROMPTLY!
Please sign exactly as name appears hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURES(S) DATE
THIS PROXY REVOKES ALL PRIOR DATED PROXIES. THE SIGNER HEREBY ACKNOWLEDGES
RECEIPT OF AVON'S PROXY STATEMENT DATED MARCH 23, 1994.
<PAGE> 28
PROXY
AVON PRODUCTS, INC.
EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN
CONFIDENTIAL VOTING INSTRUCTIONS CARD
To: Chase Manhattan Bank, N.A. as Trustee (the "Trustee") under the Avon
Products, Inc. Employee Savings and Stock Ownership Plan (the "Avon Savings
Plan")
THE PROXY FOR WHICH YOUR INSTRUCTIONS ARE REQUESTED IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF AVON PRODUCTS, INC. (THE "COMPANY").
The undersigned, as a participant in the Avon Savings Plan, hereby directs
Chase Manhattan Bank, N.A. as Trustee, to appoint Siri S. Marshall, Ward M.
Miller and Maureen Boyan, and each of them, with full power of substitution and
resubstitution, to vote and act with respect to all shares of the Company's
Common Stock, par value $.50 per share (the "Shares"), credited to my Savings
Plan account, at the Annual Meeting of Shareholders of the Company to be held
on May 5, 1994, and at any adjournments or postponements thereof (the "Annual
Meeting").
The Avon Savings Plan provides that participants may instruct the Trustee as to
the manner in which the Avon Shares held by it for their accounts shall be
voted at shareholders' meetings. The enclosed Notice of Annual Meeting of
Shareholders and Proxy Statement for the Annual Meeting is being provided to
you by the Trustee under the Avon Savings Plan. In order to instruct the
Trustee in the voting of your Avon Savings Plan shares, you must fill in the
reverse side of this Confidential Voting Instructions Card, and date, sign and
return the card to the Trustee in the enclosed envelope so that it is received
by May 2, 1994.
Unless your card is received by May 2, 1994, and unless you have specified your
directions, your shares cannot be voted by the Trustee. Please date and sign
on the reverse side.
NOMINEES FOR ELECTION AS DIRECTORS
CLASS OF 1997: REMEDIOS DIAZ OLIVER, JOSEPH A. RICE, EDWARD J. ROBINSON AND
CECILY CANNAN SELBY
CLASS OF 1996: BRENDA BARNES
Instruction for Cumulative Voting for the Class of 1997: Unless otherwise
specified in the space provided below, these voting instructions shall
authorize the Trustee to authorize the proxies listed above to cumulate all
votes which the undersigned is entitled to cast at the Annual Meeting for, and
to allocate such votes among, one or more of the nominees for the Class of 1997
listed above, as such proxies shall determine, in their sole and absolute
discretion, in order to maximize the number of such nominees elected to such
class of Avon's Board of Directors. To specify a method of cumulative voting,
write "Cumulate For" and the number of Shares and the name(s) of the nominee(s)
in the space provided below.
- ----------------------------------------------------------------SEE REVERSE SIDE
4302
[ X ] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3
PROPOSAL 1 FOR WITHHELD
Election of [ ] [ ]
Directors to the
Class of 1997
(see reverse)
- --------------------------------------------------------------------------------
To withhold authority for any nominee(s) for the Class of 1997, write the
name(s) of such nominee(s) in the space provided above.
PROPOSAL 2 FOR WITHHELD
Election of [ ] [ ]
Director to the
Class of 1996
(see reverse)
PROPOSAL 3 FOR AGAINST ABSTAIN
Ratification of [ ] [ ] [ ]
the appointment
of Coopers & Lybrand
as Avon's independent
accountants.
PLEASE SIGN, DATE AND MAIL YOUR VOTING PROXY PROMPTLY!
Please sign exactly as name appears hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURES(S) DATE
This proxy revokes all prior dated proxies. The signer hereby acknowledges
receipt of Avon's proxy statement dated March 23, 1994.
