INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the registrant /x/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / 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.
------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
AVON PRODUCTS, INC.
------------------------------------------------------------------------------
(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 Rule
14a-6(i)(2).
/ / $500 per each party per Exchange Act Rule 14a-6(i)(3), or Rule
14a-6(i)(2).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
<PAGE>
[AVON LOGO]
Avon Products, Inc.
9 West 57th Street
New York, NY 10019
March 24, 1995
Dear Shareholder:
You are cordially invited to attend the 1995 Annual Meeting of
Shareholders, which will be held at 10:00 a.m. on Thursday, May 4, 1995 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 the Annual Meeting, 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,
[SIGNATURE]
Chairman and Chief Executive Officer
<PAGE>
AVON PRODUCTS, INC.
9 West 57th Street
New York, New York 10019
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The 1995 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 4, 1995 at 10:00 a.m. for the
following purposes:
(1) To elect four (4) directors to three-year terms expiring in 1998;
(2) To act upon a proposal to ratify the appointment of Coopers & Lybrand
L.L.P. as Avon's independent accountants for 1995;
(3) To transact such other business as properly may come before the
meeting.
The Board of Directors has fixed the close of business on March 15, 1995 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.
Ward M. Miller, Jr.
Senior Vice President,
General Counsel and Secretary
March 24, 1995
New York, New York
<PAGE>
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 4, 1995 in the Equitable Auditorium at the Equitable
Center, New York, New York 10019 and at any adjournment or postponement thereof
(the "Annual Meeting"). This Proxy Statement and the enclosed proxy card will be
first mailed on or about March 27, 1995 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 L.L.P. as
Avon's independent accountants for 1995. 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 15, 1995
(the "Record Date") will be entitled to vote at the Annual Meeting. As of the
close of business on the Record Date, there were 68,696,766 shares of Avon's
common stock, par value $.50 per share ("Common Stock"), outstanding ("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 accordance with Company policy, 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.
<PAGE>
PROPOSAL 1--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 1998
(the "Class of 1998"), four directors in the class whose term expires in 1997
(the "Class of 1997") and four directors in the class whose term expires in 1996
(the "Class of 1996"). Board members serve three-year terms unless otherwise
specified. The terms of four current directors, Daniel B. Burke, Stanley C.
Gault, George V. Grune and John J. Phelan, Jr., will expire at the Annual
Meeting. The terms of the other incumbent directors will continue until either
the 1996 or 1997 Annual Meeting. At the Annual Meeting, Shareholders will elect
four members to the Class of 1998. The Board of Directors has nominated Richard
S. Barton, Daniel B. Burke, Stanley C. Gault and George V. Grune for election to
the Class of 1998 at the Annual Meeting, each to serve for a three-year term to
expire at the 1998 Annual Meeting. Mr. Phelan 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 Richard S. Barton, Daniel B. Burke, Stanley C. Gault and George V.
Grune to the Class of 1998. 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 the number of Shares held of record by such person, multiplied
by the number of directors to be elected in such election. In the election of
four directors to the Class of 1998, 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, the persons appointed therein may exercise the right to vote the Shares
represented by such proxy cumulatively and may distribute the votes represented
by such proxy among one or more of the nominees for the Class of 1998 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>
Your Board of Directors recommends that Shareholders vote FOR the election
as directors of the nominees listed below.
Nominees for The Board of Directors for Three-Year Term Expiring 1998
RICHARD S. BARTON
Director of Avon since 1994 Age: 45
Mr. Barton is President, United States Customer Operations of Xerox
Corporation, which manufactures, markets and services document
processing products and systems. Mr. Barton was appointed to this
position in October 1993 after two years as President, Chairman and
Chief Executive Officer of Xerox Canada Inc. He joined Xerox in 1971
[PHOTO] as a sales representative and held a number of field and regional
sales positions, becoming Executive Assistant to the President of
Xerox in 1985 and later Vice President, Marketing Operations for the
United States Marketing Group. Mr. Barton is a director of the
Pennsylvania Power and Light Company, the American Management
Association, U.S. Chamber of Commerce and LiveWorks, Inc., a
wholly-owned subsidiary of Xerox Corporation.
DANIEL B. BURKE
Director of Avon since 1987 Age: 66
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 and Chief
Executive Officer of that company in 1994. He joined Capital Cities in
1961 as General Manager of WTEN-TV in Albany and in 1964 was appointed
General Manager of WJR AM/FM in Detroit. Mr. Burke was elected
[PHOTO] Executive Vice President and a director of Capital Cities in 1967 and
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. Mr. Burke is a director of
Consolidated Rail Corporation, Rohm & Haas Company and Morgan Stanley
Group Inc. He is also Vice Chairman of The Presbyterian Hospital in
the City of New York and past chairman of the Board of Trustees of the
University of Vermont.
STANLEY C. GAULT
Director of Avon since 1985 Age: 69
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
[PHOTO] 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 and a director of the National Association of
Manufacturers.
3
<PAGE>
GEORGE V. GRUNE
Director of Avon since 1991 Age: 65
Mr. Grune has been Chairman of the Board and a director of The
Reader's Digest Association, Inc. since 1984, having also been its
[PHOTO] Chief Executive Officer from 1984 to 1994. 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
of the Boys and Girls Clubs of America, Inc.
Members of the Board of Directors Continuing in Office--Term Expiring 1997
REMEDIOS DIAZ OLIVER
Director of Avon since 1992 Age: 56
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,
since October 1991. Prior thereto, Mrs. Diaz Oliver founded and was
[PHOTO] the Chief Executive Officer and President of American International
Container, Inc. from 1977 to 1991. Mrs. Diaz Oliver is a director of
U.S. West, Barnett Banks, Inc., 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, Florida Chamber of Commerce and the
National Hispanic Leadership Agenda.
JOSEPH A. RICE
Director of Avon since 1982 Age: 70
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
[PHOTO] 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. 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.
4
<PAGE>
EDWARD J. ROBINSON
Director of Avon since 1992 Age: 54
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 the Company 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
[PHOTO] 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 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.
CECILY CANNAN SELBY, Ph.D.
Director of Avon since 1972 Age: 68
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
President's Council of the New York Academy of Sciences; Vice
[PHOTO] President, New York Hall of Science; trustee of Woods Hole
Oceanographic Institution; trustee of Girls, Incorporated; and trustee
of the American Skin Association. She is a former director of RCA
Corporation, the National Broadcasting Company and the National
Education Corporation, and 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.
Members of the Board of Directors Continuing in Office--Term Expiring 1996
BRENDA C. BARNES
Director of Avon since 1994 Age: 41
Ms. Barnes is Chief Operating Officer Pepsi-Cola North America, a
division of Pepsi-Cola Company, responsible for production, sales and
distribution of soft drinks in the United States and Canada. Prior to
Pepsi's reorganization in 1992, Ms. Barnes was President of
Pepsi-Cola's southern division. Ms. Barnes first joined PepsiCo in
1976 as a Business Manager for Wilson Sporting Goods. In 1981, she was
[PHOTO] 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. Ms. Barnes is a recipient of the New
York City YWCA Women's Achievement Award. She is a director of Delta
Beverages and is on the Board of Trustees for Augustana College.
5
<PAGE>
CHARLES S. LOCKE
Director of Avon since 1986 Age: 66
Mr. Locke retired in 1994 as 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 in 1989. From 1980 to 1989, Mr.
Locke was Chairman of the Board, Chief Executive Officer and a
[PHOTO] 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
and the National Merit Scholarship Corporation. Mr. Locke was an Avon
director from 1980 to 1985 and has served again on the Board since
August 1986.
ANN S. MOORE
Director of Avon since 1993 Age: 44
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 joined Time
Inc. in 1978 in Corporate Finance. Since then, she has held consumer
marketing positions at Sports Illustrated, Fortune, Money and
[PHOTO] Discover, moving to general management of Sports Illustrated in 1983
and becoming founding publisher 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.
JAMES E. PRESTON
Director of Avon since 1977 Age: 61
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 was elected a Vice President
in 1971. He became Group Vice President 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
[PHOTO] 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 and is a director of
Woolworth Corporation, The Reader's Digest Association, Inc. and the
Aramark Corporation. 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.
6
<PAGE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Company's Board of Directors held eight meetings in 1994. 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.
The Audit Committee, composed of Joseph A. Rice, as Chair, Ann S. Moore,
John J. Phelan, Jr., and Cecily C. Selby, met three times in 1994. 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, Brenda
C. Barnes, Daniel B. Burke and George V. Grune, met six times in 1994. 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 five times in 1994. 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.
7
<PAGE>
The Nominating and Directors' Activities Committee, composed of George V.
Grune, as Chair, Remedios Diaz Oliver, Ann S. Moore and Joseph A. Rice, met
twice in 1994. 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 at a rate no lower than the average
annual yield on 30 year U.S. Treasury bonds.
The Company provides 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 1994, the following persons served on the Compensation Committee:
Brenda C. Barnes, Daniel B. Burke, George V. Grune and Charles S. Locke. Ms.
Barnes and Mr. Burke became members of such committee as of May 5, 1994,
replacing Ernesta G. Procope, who retired as a director on that date, and Joseph
A. Rice. Mr. Grune is Chairman of the Board and a director of The Reader's
Digest Association, Inc., of which James E. Preston, an executive officer of the
Company, has been a director since July 1994.
8
<PAGE>
OWNERSHIP OF SHARES
The following table sets forth certain information as of February 28,
1995 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.
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership of Class
------------------------ -------------------- --------
Oppenheimer Group, Inc. (1) ..... 7,362,312 10.58
Putnam Investments, Inc. (2) .... 4,758,930 6.80
J.P. Morgan & Co. Inc. (3) ...... 3,906,745 5.60
Richard S. Barton ............... 100 (4)
Brenda C. Barnes ................ 1,000 (4)
Daniel B. Burke ................. 1,000 (4)
Christina Gold .................. 12,697(5) (4)
Stanley C. Gault ................ 10,000 (4)
George V. Grune ................. 1,000 (4)
Charles S. Locke ................ 1,000 (4)
Ann S. Moore .................... 1,000(6) (4)
John I. Novosad ................. 7,192(7) (4)
Remedios Diaz Oliver ............ 1,000(6) (4)
John J. Phelan, Jr .............. 1,000 (4)
James E. Preston ................ 164,508(8) (4)
Joseph A. Rice .................. 4,579 (4)
Edward J. Robinson .............. 60,863(9) (4)
Cecily C. Selby ................. 2,000 (4)
Edwina D. Woodbury .............. 6,173(10) (4)
All directors and executive
officers as a group (19)....... 308,135(11) (4)
----------
(1) The address of Oppenheimer Group, Inc. is Oppenheimer Tower, World
Financial Center, New York, New York 10281.
(2) The address of Putnam Investments, Inc. is One Post Office Square, Boston,
Massachusetts 02109.
(3) The address of J.P. Morgan & Co. Incorporated is 60 Wall Street, New York,
NY 10260.
(4) Indicates less than 1% of the outstanding Shares.
(5) Includes 9,194 shares as to which Mrs. Gold has sole voting but no
investment power; and 2,500 shares which Mrs. Gold had a right to acquire
within 60 days of February 28, 1995 through the exercise of stock options.
The percentage shown for Mrs. Gold was computed on the basis of the number
of shares outstanding on February 28, 1995, plus such 2,500 shares.
(6) Mrs. Moore and Mrs. Diaz Oliver share with their spouses voting and
investment power as to these shares.
(7) Includes 2,600 shares as to which Mr. Novosad has sole voting but no
investment power; and 1,666 shares which Mr. Novosad had a right to acquire
within 60 days of February 28, 1995 through the exercise of stock options.
The percentage shown for Mr. Novosad was computed on the basis of the
number of shares outstanding on February 28, 1995, plus such 1,666 shares.
(8) Includes 31,020 shares as to which Mr. Preston disclaims beneficial
ownership; 15,000 shares as to which Mr. Preston has sole voting but no
investment power; and 53,333 shares which Mr. Preston had a right to
acquire within 60 days of February 28, 1995 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, 1995, plus such 53,333
shares.
(9) Includes 17,000 shares as to which Mr. Robinson has sole voting but no
investment power; and 26,667 shares which Mr. Robinson had a right to
acquire within 60 days of February 28, 1995 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, 1995, plus such 26,667
shares.
(10) Includes 2,000 shares as to which Ms. Woodbury has sole voting but no
investment power; and 2,433 shares as to which Ms. Woodbury had a right to
acquire within 60 days of February 28, 1995 through the exercise of stock
options. The percentage shown for Ms. Woodbury was computed on the basis of
the number of shares outstanding on February 28, 1995, plus such 2,433
shares.
(11) Includes 31,020 shares as to which the directors and executive officers as
a group disclaim beneficial ownership. Includes 4,150 shares as to which
beneficial ownership was shared with others and 93,764 shares which the
directors and executive officers as a group had a right to acquire within
60 days of February 28, 1995 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,
1995, plus such 93,764 shares.
9
<PAGE>
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 1994 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
following 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:
o Assuring that total compensation levels are competitive with those
at peer companies and are commensurate with relative shareholder
returns and financial performance.
o Focusing executives on the financial objectives that support
superior total shareholder returns in the form of stock price
appreciation and dividends.
o Emphasizing long-term financial performance and sustained market
value creation vs. short-term gains.
Working with an independent compensation consulting firm, the Company
periodically 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 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 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.
10
<PAGE>
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
220% 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, 1994 awards were principally based
on consolidated net income performance, the target objective for which was
exceeded, resulting in a payout of 144.4% of target. Certain executive officers,
however, had their awards principally based on operating income 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 among different executive officers ranging from
110% to 144% of target.
Long-Term Incentive Compensation
Effective commencing in 1994 the Committee recommended, and the Board of
Directors approved, a new Long-Term Incentive Plan ("1994 LTIP"), a "stock
incentive program" created pursuant to the 1993 Stock Incentive Plan approved at
the Annual Meeting of Shareholders held May 6, 1993. Approximately 350
executives, including all officers, are eligible to participate in the 1994
LTIP. The purpose of the plan is to tie a substantial portion of the
participant's compensation to the long-term financial performance of the Company
and to align participants' interests with those of the shareholders by providing
an equity interest in the Company.
Awards under this new plan principally consist of two forms of "at risk"
compensation, namely stock options and cash based Performance Units. Performance
Units will be earned out over the three-year performance period of 1994-96 with
cash awards payable in early 1997. Performance objectives are based on
cumulative earnings-per-share growth for the performance period with the actual
cash payout value of Performance Units determined by the degree to which the
objective has been attained or exceeded, ranging from 0% to 200% of the target
value of $100 per unit.
Under the 1994 LTIP, non-qualified stock options are granted annually for a
term of ten years at 100% of the market price on the date of grant. An option
may not be exercised earlier than one year after the grant date and is
thereafter exercisable in cumulative annual portions at the rate of one-third of
the total shares covered by the grant. The number of options previously granted
to a participant are not considered in determining subsequent grants.
The deemed value of a stock option grant is based on a formula that assumes
a substantial annualized increase in the market value of Company stock over a
period of five years following the date of grant, while Performance Units are
assumed to have their target cash value. In determining the number of options
and Performance Units to be granted to a participant, a ratio of value is
established with weighting for stock options ranging from 70% to 75% of total
long-term compensation for most executive officers down to 40% for operating
business unit executives. In effect, most executive officers have a
substantially greater portion of their potential long-term compensation linked
to stock price appreciation rather than cash Performance Units.
11
<PAGE>
Targeted total compensation includes base salary, annual cash bonuses,
Performance Units at target and the deemed value of stock options. Such
compensation overall places greater emphasis on long-term "at risk" compensation
and for executive officers is targeted at 110% of the median for total
compensation for comparable officer positions at the Peer Companies.
The 1994 LTIP also provides that shares of restricted stock may be granted
to selected key executives. During 1994, one executive officer received such a
grant.
Determination of CEO Compensation
The CEO's 1994 compensation package consists of base salary, an annual cash
bonus and long-term incentive compensation awards under the 1994 LTIP. Pursuant
to that plan Mr. Preston received a stock option grant for 70,000 shares and
cash Performance Units with an annualized target value of $475,000. As noted
above, his Performance Units would be payable in 1997 dependent upon attainment
of performance objectives established for the 1994-1996 performance period.
Mr. Preston's current salary of $610,000 is substantially 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.
Mr. Preston's annual bonus for 1994 was wholly based on the principal
performance objective described above under "Annual Incentive Plan," namely,
consolidated net income growth. Accordingly, the Committee approved a bonus
award of 144.4% of target, resulting in an award to Mr. Preston of $440,412.
Since Mr. Preston became Chairman in 1989, shareholder returns have
out-performed the S&P 500 and the Peer Companies composite. Cumulative total
shareholder returns over the period 1989 to 1994 have been 293%, well in excess
of the S&P 500 and Peer Companies returns over the same time period, which were
98% and 193%, 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, is both deductible
and excluded for purposes of calculating the $1 million base. It has been
determined that no portion of compensation payable to any executive officer in
1994 is non-deductible. The Committee will continue to address this issue when
formulating compensation arrangements for executive officers.
Charles S. Locke, Chair
Brenda C. Barnes
Daniel B. Burke
George V. Grune
12
<PAGE>
PERFORMANCE GRAPH
The following indexed line graph indicates the Company's total return to
shareholders for each of the years ended December 31, 1989 through 1994, 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 Cumulative Total Return(1)
Avon, S&P 500 Index and Industry Composite(2)
---GRAPHICAL REPRESENTATION OF DATA TABLE BELOW---
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.
1988 1989 1990 1991 1992 1993 1994
------ ------ ------ ------ ------ ------ ------
Avon ................... $100.0 $195.2 $160.6 $276.9 $343.0 $310.4 $393.9
S&P 500 ................ 100.0 131.6 127.5 166.2 178.8 196.8 198.0
Industry Composite ..... 100.0 143.6 178.9 249.6 247.0 250.9 293.3
----------
(1) Total Return assumes reinvestment of dividends.
(2) Industry Composite includes Carter Wallace, Gillette, Johnson
& Johnson, Tambrands, Stanhome, Alberto-Culver, Colgate
Palmolive, Kimberly Clark, Bristol Myers Squibb, Procter & Gamble
and Helene Curtis.
13
<PAGE>
TABLES AND PLANS
This section of the proxy statement discloses fiscal 1994 plan and non-plan
compensation awarded or paid to, or earned by, the Company's Chief Executive
Officer and, of the Company's other executive officers during fiscal 1994, each
of the four persons who were most highly compensated in fiscal 1994 (together,
these five persons are sometimes referred to as the "named executives").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
---------------------------- ---------------------------------
Awards Payouts
--------------------- ---------
Securities
Other Restricted Underlying Long-Term All
Annual Stock Options/ Incentive Other
Salary Bonus Compensation Awards SARs Payouts Compensation
Name and Position Year ($) ($)(1) ($)(2) ($)(3) (#) ($) ($)(4)
----------------- ---- ------- ------- ------ -------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
James E. Preston ........ 1994 610,000 440,412 0 70,000 0 51,971
Chairman and 1993 610,000 311,478 0 0 0 36,878
Chief Executive Officer 1992 610,000 504,145 0 0 0 33,148
Edward J. Robinson ...... 1994 500,000 538,300 0 30,000 0 85,481
President and 1993 421,667 271,976 490,625 0 0 75,572
Chief Operating Officer 1992 348,750 315,420 0 25,000 0 72,615
Christina A. Gold ....... 1994 275,000 207,280 0 7,500 0 20,577
Sr. Vice President and
President, Avon US
John I. Novosad ......... 1994 250,000 148,832 0 5,000 0 294,727
Executive Vice 1993 207,084 167,414 0 0 0 228,405
President-Asia/Pacific
Edwina D. Woodbury ...... 1994 250,000 156,520 0 7,300 0 11,775
Sr. Vice President and
Chief Financial Officer
</TABLE>
----------
(1) In consideration of a special stock option grant made in 1991, for each
of the years 1992-1994, Mr. Preston's annual base salary has been frozen at
$610,000 and his target annual bonus opportunity limited to 50% of such
base salary. Mr. Robinson's target annual bonus opportunity for 1994 was
greater than 50% of base salary.
(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)
14
<PAGE>
(3) The following table presents information regarding aggregate holdings of
restricted stock at January 3, 1995 for the named executives. Of the total
held by Mr. Robinson, 10,000 shares were granted in 1993 and will fully vest
no later than June 1, 2001; dividends on these shares are paid at the same
time as those on the Company's unrestricted stock. All other shares shown in
the table vest on January 3, 1996; dividends on such shares accrue and are
payable at the time of distribution of the shares. In the event of a change
of control, all shares of restricted stock would be cashed out.
Holdings of Restricted Shares at 1/3/95
------------------------------------------------
Number of Aggregate Market
Restricted Total Number Value of
Shares Granted of Restricted Restricted Shares
Name in Fiscal 1994 Shares Held at 12/31/94(a)
---- -------------- ------------- -----------------
Mr. Preston .............. 0 15,000 $ 896,250
Mr. Robinson ............. 0 17,000 1,015,750
Mrs. Gold ................ 0 1,194 71,342
Mr. Novosad .............. 0 2,600 155,350
Ms. Woodbury ............. 0 2,000 119,500
-----------------
(a) "Market Value" is determined by reference to the per share closing sale
price on December 30, 1994 ($59.75).
(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 $19,787; Mr. Robinson, $16,219;
Mrs. Gold, $9,083; Mr. Novosad, $8,132; and Ms. Woodbury, $8,109; (ii)
above-market portion of interest earned on deferred compensation -- Mr.
Preston, $32,184; (iii) premiums paid by the Company for life insurance for
the direct or indirect benefit of Mr. Robinson, $69,262; Mrs. Gold, $11,494;
Mr. Novosad, $12,523; Ms. Woodbury, $3,666; (iv) overseas cost-of-living and
housing allowance -- Mr. Novosad, $274,072.
Option Grants
This table presents information regarding options that may be exercised to
purchase shares of the Company's Common Stock. The Company has no outstanding
SARs and granted no SARs during fiscal 1994.
<TABLE>
<CAPTION>
Option Grants in Fiscal 1994
Potential Realizable Value(3) at Assumed Annual Rates
of Stock Price Appreciation for Option Term
--------------------------------------------------------------
0% 5% 10%
Individual Grants ($) ($) ($)
----------------------------------------------- ------------------ ------------------ -------------------
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 (#)(1) Year(2) ($/Sh) Date Gains Gains Gains Gains Gains Gains
---- ------------ ---------- -------- ---------- ------ ---------- ----- ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mr. Preston ....... 70,000 16.9% 52.50 1/7/04 0 52.50 2,311,400 85.52 5,857,600 136.18
Mr. Robinson ...... 30,000 7.2% 52.50 1/7/04 0 52.50 990,600 85.52 2,565,600 136.18
Mrs. Gold ......... 7,500 1.8% 52.50 1/7/04 0 52.50 247,650 85.52 627,600 136.18
Mr. Novosad ....... 5,000 1.2% 52.50 1/7/04 0 52.50 165,100 85.52 418,400 136.18
Ms. Woodbury ...... 7,300 1.7% 52.50 1/7/04 0 52.50 241,046 85.52 610,864 136.18
</TABLE>
-----------------
(1) The indicated options have a term of 10 years and were granted pursuant to
the Company's 1993 Stock Incentive Plan. If there is a change in control of
the Company, each unexercised option granted under the 1993 Stock 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 413,000 options granted in fiscal 1994.
(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 1993 Stock 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 closing price as of the business
day next preceding 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.
15
<PAGE>
Option Exercises and Values
This table presents information regarding options exercised for shares of
the Company's Common Stock during fiscal 1994 and the value of unexercised
options held at December 31, 1994. There were no options exercised by the named
executives and no SARs outstanding during fiscal 1994.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Fiscal 1994 and 1994 Fiscal Year-End Option Value
Number of
Securities Underlying Values 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 30,000/90,000 586,875/898,750
Mr. Robinson ..... 0 0 16,667/38,333 130,169/282,580
Mrs. Gold ........ 0 0 0/ 7,500 0/ 54,375
Mr. Novosad ...... 0 0 0/ 5,000 0/ 36,250
Ms. Woodbury ..... 0 0 0/ 7,300 0/ 52,925
</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 12/30/94 is calculated as
follows: [(Per Share Closing Sale Price on 12/30/94)-(Per Share Exercise
Price)] X Number of Shares Subject to Unexercised Options. The per share
closing sale price on 12/30/94 was $59.75
Long-Term Incentive Plans--Awards in Last Fiscal Year
The following table sets forth information concerning cash based long-term
incentive awards made during 1994 under the 1994 Long-Term Incentive Plan ("1994
LTIP") to each of the named executives.
<TABLE>
<CAPTION>
Estimated Future Payouts
Performance or Under Non-Stock Price-Based Plans
Number of Shares, Other Period -----------------------------------------
Units or Other Until Maturation Threshold Target Maximum
Name Rights(#) or Payout ($) ($) ($)
---- ----------------- ---------------- ----------- ------ -------
<S> <C> <C> <C> <C> <C>
Mr. Preston ............. 14,250 3 years 712,500 1,425,000 2,850,000
Mr. Robinson ............ 8,250 3 years 412,500 825,000 1,650,000
Mrs. Gold ............... 4,620 3 years 231,000 462,000 924,000
Mr. Novosad ............. 5,400 3 years 270,000 540,000 1,080,000
Ms. Woodbury ............ 2,700 3 years 135,000 270,000 540,000
</TABLE>
Awards under the 1994 LTIP are made in the form of Performance Units, each
unit having a payout value of $100 if the performance target is exactly
attained, a payout value of $50 per unit if threshold performance is attained
and a payout value of $200 if a maximum performance objective is attained or
exceeded. Units will have no value if the threshold is not attained.
Awards were made in early 1994 for the three-year performance period
1994-1996 inclusive. Performance objectives were established at the time initial
awards were made and are based on a cumulative earnings per share objective for
such period. In addition, a return on operating assets objective must be
attained. The payout values of units are determined and distributed in cash in
early 1997.
16
<PAGE>
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' Years of Creditable Service
Annual Compensation ----------------------------------------------------------
In Last Ten Years 15 20 25 30 35
------------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
$ 200,000 ..... 60,000 80,000 100,000 110,000 120,000
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
</TABLE>
As of December 31, 1994, Mr. Preston had an average three-year compensation
of $1,317,786 and 35 years of creditable service; Mr. Robinson had an average
three-year compensation of $705,307 and 22 years of creditable service; Mrs.
Gold had an average three-year compensation of $283,334 and 25 years of
creditable service; Mr. Novosad had an average three-year compensation of
$370,669 and 30 years of creditable service; and Ms. Woodbury had an average
three-year compensation of $242,462 and 17 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
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
17
<PAGE>
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 and
Novosad), 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 the named executives. Each of the Employment Contracts may be
terminated for cause by the Company. During the terms of their respective
Employment Contracts, Mr. Preston's positions with the Company may not be
reduced; the position of Mr.Robinson may not be reduced below that of President.
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 for a
period equal to two or three years (depending upon the executive's position at
the Company); (iii) continuation of benefits 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).
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 cash-out value of all then outstanding stock options, Restricted Shares
and the maximum payout value of their 1994 LTIP Performance Units. Assuming an
actual or potential change of control on January 3, 1995 and the termination of
the executives immediately thereafter, Mr. Preston would receive $3,151,236; Mr.
Robinson would receive $3,114,900; Mrs. Gold would receive $1,386,840; Mr.
Novosad would receive $1,196,496; and Ms. Woodbury would receive $1,219,560;
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 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,
18
<PAGE>
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, and 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 2--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 L.L.P., Certified
Public Accountants, as independent accountants for the year 1995. Coopers &
Lybrand L.L.P. began auditing the accounts of the Company in 1989. If the
appointment of Coopers & Lybrand L.L.P. is not ratified by the Shareholders, the
Audit Committee will reconsider its recommendation. The Company is informed that
no member of Coopers & Lybrand L.L.P. 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
L.L.P. 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 L.L.P. as independent
accountants for the year 1995.
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.
19
<PAGE>
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Any proposal that a Shareholder may desire to have included in the
Company's proxy material for presentation at the 1996 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 24, 1995.
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 1994, as filed with the Securities and Exchange
Commission.
By Order of the Board of Directors
Ward M. Miller, Jr.
Senior Vice President,
General Counsel and Secretary
March 24, 1995
New York, New York
20
<PAGE>
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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
21
<PAGE>
[AVON LOGO]
<PAGE>
APPENDIX
(Pursuant to Rule 304 of Regulation S-T)
1. Page 13 contains a description in tabular form of a graph entitled
"Performance Graph" which represents the comparison of the cumulative total
stockholder return on the Company's Common Stock against the cumulative total
return of the Standard and Poor's 500 Stock Index and the Industry Composite
Index for the period of each of the years commencing December 31, 1988 and
ending December 31, 1994, which graph is contained in the paper format of this
Proxy Statement being sent to Stockholders.
<PAGE>
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 Ward M. Miller, Jr., C. Richard Mathews and Martin
P H. Michael, and each of them, as true and lawful attorneys and proxies of
the undersigned, with full power of substitution and resubstitution, to
R 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
O all powers the undersigned would possess, if personally present, at the
Annual Meeting of Shareholders of the Company to be held on May 4, 1995,
X and at any adjournments or postponements thereof (the "Annual Meeting").
Y 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. 2 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 1998: RICHARD S. BARTON, DANIEL B. BURKE, STANLEY C. GAULT AND
GEORGE V. GRUNE
Instruction for Cumulative Voting for the Class of 1998: 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 1998 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
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1305
[X] Please mark your votes as in this example.
The Board of Directors recommends a vote FOR Proposals 1 and 2.
PROPOSAL 1
Election of Directors to the Class of 1998 (see reverse).
[ ] FOR [ ] WITHHELD
PROPOSAL 2
Ratification of the appointment of Coopers & Lybrand as Avon's independent
accountants.
[ ] FOR [ ] WITHHELD [ ] ABSTAIN
To withhold authority for any nominee(s) for the Class of 1998, write the
name(s) of such nominee(s) in the space provided above.
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.
---------------------------------------------------
---------------------------------------------------
SIGNATURE(S) DATE
This proxy revokes all prior dated proxies. The signer hereby acknowledges
receipt of Avon's proxy statement dated March 24, 1995.
<PAGE>
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
P Chase Manhattan Bank, N.A., as Trustee, to appoint Ward M. Miller, Jr., C.
Richard Mathews and Martin H. Michael, and each of them, with full power of
R 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"),
O credited to the undersigned's Savings Plan account, at the Annual Meeting
of Shareholders of the Company to be held on May 4, 1995, and at any
X adjournments or postponements thereof (the "Annual Meeting").
Y 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 April 28, 1995.
Unless your card is received by April 28, 1995, 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 1998: RICHARD S. BARTON, DANIEL B. BURKE, STANLEY C. GAULT AND
GEORGE V. GRUNE
Instruction for Cumulative Voting for the Class of 1998: 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 1998 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
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4302
[X] Please mark your votes as in this example.
The Board of Directors recommends a vote FOR Proposals 1 and 2.
PROPOSAL 1
Election of Directors to the Class of 1998 (see reverse).
[ ] FOR [ ] WITHHELD
PROPOSAL 2
Ratification of the appointment of Coopers & Lybrand as Avon's independent
accountants.
[ ] FOR [ ] WITHHELD [ ] ABSTAIN
To withhold authority for any nominee(s) for the Class of 1998, write the
name(s) of such nominee(s) in the space provided above.
PLEASE SIGN, DATE AND MAIL YOUR VOTING
INSTRUCTIONS PROMPTLY!
Please sign exactly as name appears hereon. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
---------------------------------------------------
---------------------------------------------------
SIGNATURE(S) DATE
This voting instructions card revokes all prior dated cards. The signer hereby
acknowledges receipt of Avon's proxy statement dated March 24, 1995.
