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.
Nine West Fifty Seventh Street
New York, NY 10019-2683
Tel. 212 546 6015
March 25, 1996
Dear Shareholder:
You are cordially invited to attend the 1996 Annual Meeting of
Shareholders, which will be held at 10:00 a.m. on Thursday, May 2, 1996 in the
Grand Salon at the Essex House, 160 Central Park South, 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 1996 Annual Meeting of Shareholders of Avon Products, Inc. ("Avon")
will be held in the Grand Salon at the Essex House, 160 Central Park South, New
York, New York 10019, on Thursday, May 2, 1996 at 10:00 a.m. for the following
purposes:
(1) To elect four (4) directors to three-year terms expiring in 1999;
(2) To elect two (2) directors to two-year terms expiring in 1998;
(3) To act upon a proposal to effect a 2-for-1 stock split by amending the
Certificate of Incorporation to change each authorized share of
capital stock, par value $.50 per share, into two shares of capital
stock, par value $.25 per share.
(4) To act upon a proposal to ratify the appointment of Coopers & Lybrand
L.L.P. as Avon's independent accountants for 1996;
(5) To transact such other business as properly may come before the
meeting.
The Board of Directors has fixed the close of business on March 18, 1996 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 25, 1996
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 2, 1996 in the Grand Salon at the Essex House, 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 26, 1996 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, FOR approval of the proposed amendment to the Certificate of
Incorporation to effect a 2-for-1 stock split and FOR ratification of the
appointment of Coopers & Lybrand L.L.P. as Avon's independent accountants for
1996. 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 18, 1996
(the "Record Date") will be entitled to vote at the Annual Meeting. As of the
close of business on the Record Date, there were 67,115,950 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>
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 13, with four directors in the class whose term expires in 1999
(the "Class of 1999"), five directors in the class whose term expires in 1998
(the "Class of 1998") and four directors in the class whose term expires in 1997
(the "Class of 1997"). Board members serve three-year terms unless otherwise
specified. The terms of four current directors, Brenda C. Barnes, Charles S.
Locke, Ann S. Moore and James E. Preston, will expire at the Annual Meeting. Mr.
Daniel B. Burke, whose term expires in 1998, has elected to retire as of the
date of the 1996 Annual Meeting. The terms of the other incumbent directors will
continue until either the 1997 or 1998 Annual Meeting. At the Annual Meeting,
Shareholders will elect four members to the Class of 1999 and two members to the
Class of 1998. The elections to the different classes will be conducted as two
separate elections. The Board of Directors has nominated Brenda C. Barnes,
Charles S. Locke, Ann S. Moore and James E. Preston for election to the Class of
1999 at the Annual Meeting, each to serve for a three-year term to expire at the
1999 Annual Meeting, and the Board of Directors has nominated Edward T. Fogarty
and Charles R. Perrin for election to the Class of 1998, each to serve for a
two-year term to expire at the 1998 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 Brenda C. Barnes, Charles S. Locke, Ann S. Moore and James E.
Preston to the Class of 1999 and FOR the election of Edward T. Fogarty and
Charles R. Perrin 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. Because the election
of directors to the Class of 1999 and the election of directors to the Class of
1998 are two separate elections, Shareholders are entitled to cumulate votes
with respect to the election of directors to the Class of 1999, but they may not
cumulate votes they are entitled to cast for the election of directors to the
Class of 1999 with the votes they are entitled to cast for the election of
directors to the Class of 1998, nor vice versa. In the election of four
directors to the Class of 1999, 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. Similarly, in the election of
two directors to the Class of 1998, Shareholders will be entitled, under
cumulative voting, to a total of two 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 between the two 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 in such Class election and may distribute the votes
represented by such proxy among one or more of the nominees 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 1999
BRENDA C. BARNES
Director of Avon since 1994 Age: 42
Ms. Barnes is President and Chief Executive Officer of Pepsi-Cola
North America, a division of PepsiCo, having previously been the Chief
Operating Officer of that division from July 1994 to March 1996. She
is responsible for the beverage business in the United States and
[PHOTO] Canada, including production, sales and distribution. Ms. Barnes has
held sales, marketing and general management positions at Wilson
Sporting Goods, Frito-Lay and Pepsi-Cola in her 20 years with PepsiCo.
She is a director of Delta Beverages and is on the Board of Trustees
for Augustana College.
- - --------------------------------------------------------------------------------
CHARLES S. LOCKE
Director of Avon since 1986 Age: 67
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.
[PHOTO] 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 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: 45
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
[PHOTO] marketing positions at Sports Illustrated, Fortune, Money and
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 Gilda's Club, a social and emotional support
community for families with cancer.
- - --------------------------------------------------------------------------------
3
<PAGE>
JAMES E. PRESTON
Director of Avon since 1977 Age: 62
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. Mr. Preston serves on the boards
of The Reader's Digest Association, Inc., Woolworth Corporation and
the ARAMARK Corporation. In addition, he serves on the board of The
[PHOTO] Business Council of New York State, the American Woman's Economic
Development Corporation, Catalyst, The Salvation Army of Greater New
York Advisory Board and the Board of Trustees of Spelman College. Mr.
Preston is also a member of the New York City Partnership and Chamber
of Commerce. He is a past Chairman of the Direct Selling Association
and the Cosmetic, Toiletry and Fragrance Association and continues to
be active in both organizations.
================================================================================
NOMINEES FOR BOARD OF DIRECTORS FOR TWO-YEAR TERM EXPIRING 1998
EDWARD T. FOGARTY
Director of Avon since 1995 Age: 59
Mr. Fogarty has been President and Chief Executive Officer of
Tambrands, Inc., the manufacturer of Tampax tampons, since May 1994.
He was President, Colgate USA/Canada/Puerto Rico, for the
[PHOTO] Colgate-Palmolive Company from 1989-1994. From 1983-1989, he was
Senior Vice President and General Manager, Consumer Products Division,
at Corning Inc. Mr. Fogarty is a director of Tambrands, Inc. and
Grocery Manufacturers of America.
- - --------------------------------------------------------------------------------
CHARLES R. PERRIN Age: 50
Mr. Perrin is Chairman of the Board of Directors of Duracell
International, Inc., a manufacturer of batteries, and has been its
Chief Executive Officer since 1994. He joined Duracell in 1985,
becoming President of Duracell North America in 1988 and President and
[PHOTO] Chief Operating Officer in 1992. Prior to 1985 he had held a series of
sales, marketing and general management positions with Chesebrough
Ponds, Inc., and previously was with General Foods Corporation. Mr.
Perrin is a director of Danbury Hospital and Datahr Rehabilitation
Institute.
================================================================================
4
<PAGE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE--TERM EXPIRING
1998
RICHARD S. BARTON
Director of Avon since 1994 Age: 47
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
American Management Association, U.S. Chamber of Commerce and
LiveWorks, Inc., a wholly-owned subsidiary of Xerox Corporation.
- - --------------------------------------------------------------------------------
STANLEY C. GAULT
Director of Avon since 1985 Age: 70
Mr. Gault has been Chairman of the Board of The Goodyear Tire & Rubber
Company, a manufacturer of tires, chemicals, polymers, plastic film
and other rubber products, since June 1991, having also been its Chief
Executive Officer from 1991-1995. Previously, he was Chairman of the
[PHOTO] Board and Chief Executive Officer of Rubbermaid Incorporated 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.
- - --------------------------------------------------------------------------------
GEORGE V. GRUNE
Director of Avon since 1991 Age: 66
Mr. Grune is currently Chairman of Dewitt Wallace-Reader's Digest Fund
and the Lila Wallace-Reader's Digest Fund. He retired as Chairman of
the Board and a director of the Reader's Digest Association, Inc., in
[PHOTO] July 1995, having also been its Chief Executive Officer from 1984 to
1994. He had 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 & Girls Clubs of America, Inc.
================================================================================
5
<PAGE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE--TERM EXPIRING
1997
REMEDIOS DIAZ OLIVER
Director of Avon since 1992 Age: 57
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
the Chief Executive Officer and President of American International
[PHOTO] Container, Inc. from 1977 to 1991. Mrs. Diaz Oliver is a director of
U.S. West, Inc., Barnett Banks, Inc., Barnett Banks of South Florida,
Florida Chamber of Commerce, American Cancer Society, Infants In Need,
Jackson Memorial Trauma Center, University of Miami-School of Medicine
(Carlos J. Finlay), National Hispanic Leadership Agenda, Linda Ray
Center, Women in International Trade and Hamilton Foundation.
- - --------------------------------------------------------------------------------
JOSEPH A. RICE
Director of Avon since 1982 Age: 71
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.
- - --------------------------------------------------------------------------------
6
<PAGE>
EDWARD J. ROBINSON
Director of Avon since 1992 Age: 55
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 had served as Executive
Vice President-Finance and Chief Financial Officer of RJR Nabisco,
[PHOTO] Inc. since October 1987. Mr. Robinson was associated with RJR Nabisco,
Inc. and its predecessor companies, Nabisco Brands, Inc. and Standard
Brands Incorporated, for 16 years serving in a number of senior
financial positions, including Controller, Treasurer or Chief
Financial Officer. Mr. Robinson currently serves on the Board of
Trustees of Iona College where he is also a member of the Finance and
Investment Committees. Mr. Robinson also serves as a National Trustee
of the Boys & Girls Clubs of America, Inc.
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CECILY CANNAN SELBY, Ph.D.
Director of Avon since 1972 Age: 69
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 and trustee of Girls, Incorporated. 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.
================================================================================
7
<PAGE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Company's Board of Directors held eight meetings in 1995. 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, Charles S.
Locke, Ann S. Moore and Cecily C. Selby, met three times in 1995. 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 four times in 1995. 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, Richard S.
Barton, Daniel B. Burke and Remedios Diaz Oliver, met twice in 1995. 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>
The Nominating and Directors' Activities Committee, composed of George V.
Grune, as Chair, Remedios Diaz Oliver, Ann S. Moore and Joseph A. Rice, met
three times in 1995. 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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, the following persons served on the Compensation Committee:
Brenda C. Barnes, Daniel B. Burke, George V. Grune and Charles S. Locke. Prior
to August 1995, Mr. Grune was 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.
9
<PAGE>
OWNERSHIP OF SHARES
The following table sets forth certain information as of February 29, 1996
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
Name of Beneficial Owner Beneficial Ownership of Class
------------------------ -------------------- ---------
<S> <C> <C>
Oppenheimer Group, Inc. (1) ..................................... 7,322,091 10.79
Brinson Partners, Inc. (2) ...................................... 4,685,300 6.80
Putnam Investments, Inc. (3) .................................... 4,358,125 6.40
Richard S. Barton ............................................... 100 *
Brenda C. Barnes ................................................ 1,000 (4) *
Daniel B. Burke ................................................. 1,000 *
Edward T. Fogarty ............................................... 200 *
Christina Gold .................................................. 17,043 (5) *
Stanley C. Gault ................................................ 10,000 *
George V. Grune ................................................. 1,000 *
Charles S. Locke ................................................ 1,000 *
Ward M. Miller, Jr. ............................................. 5,028 (6) *
Ann S. Moore .................................................... 1,000 (4) *
Remedios Diaz Oliver ............................................ 1,000 (4) *
Charles R. Perrin ............................................... 1,000 *
James E. Preston ................................................ 180,040 (7) *
Joseph A. Rice .................................................. 4,579 *
Edward J. Robinson .............................................. 85,381 (8) *
Cecily C. Selby ................................................. 1,100 *
Edwina D. Woodbury .............................................. 12,704 (9) *
All directors and executive officers as a group (20) ............ 351,645 (10) *
</TABLE>
- - ----------
* Indicates less than 1% of the outstanding Shares, inclusive of shares that
may be acquired within 60 days of February 29, 1996 through the exercise of
stock options
(1) The address of Oppenheimer Group, Inc. is Oppenheimer Tower, World
Financial Center, New York, New York 10281.
(2) The address of Brinson Partners, Inc. is 209 South La Salle, Chicago,
Illinois 60604.
(3) The address of Putnam Investments, Inc. is One Post Office Square, Boston,
Massachusetts 02109.
(4) Ms. Barnes, Mrs. Moore and Mrs. Diaz Oliver share with their spouses voting
and investment power as to these shares.
(5) Includes 8,000 shares as to which Mrs. Gold has sole voting but no
investment power and 7,333 shares which Mrs. Gold has a right to acquire
within 60 days of February 29, 1996 through the exercise of stock options.
(6) Includes 4,766 shares which Mr. Miller has a right to acquire within 60
days of February 29, 1996 through the exercise of stock options.
(7) Includes 31,020 shares as to which Mr. Preston disclaims beneficial
ownership and 108,332 shares which Mr. Preston has a right to acquire
within 60 days of February 29, 1996 through the exercise of stock options.
(8) Includes 10,000 shares as to which Mr. Robinson has sole voting but no
investment power and 53,833 shares which Mr. Robinson has a right to
acquire within 60 days of February 29, 1996 through the exercise of stock
options.
(9) Includes 4,000 shares as to which Ms. Woodbury has sole voting but no
investment power and 6,999 shares as to which Ms. Woodbury has a right to
acquire within 60 days of February 29, 1996 through the exercise of stock
options.
(10) Includes 31,020 shares as to which the directors and executive officers as
a group disclaim beneficial ownership. Includes 3,000 shares as to which
beneficial ownership was shared with others and 194,757 shares which the
directors and executive officers as a group have a right to acquire within
60 days of February 29, 1996 through the exercise of stock options.
10
<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 1995 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.
11
<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, 1995 awards were principally based
on consolidated net income performance, the target objective for which was
exceeded, resulting in a payout of 125% 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
85.15% to 220% 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 375
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.
12
<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 1995, one executive officer received such a
grant.
DETERMINATION OF CEO COMPENSATION
The CEO's 1995 compensation package consisted of base salary of $610,000,
an annual cash bonus and a stock option grant for 65,000 shares under the 1994
LTIP. Mr. Preston's annual bonus for 1995 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 125% of target, resulting in an award to Mr. Preston of $381,251.
Since Mr. Preston became Chairman, shareholder returns have out-performed
the S&P 500 and the Peer Companies composite. Cumulative total shareholder
returns over the period 1991 to 1995 have been 219%, well in excess of the S&P
500 and Peer Companies returns over the same time period, which were 113% and
131%, 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.
CEO EMPLOYMENT CONTRACT. As discussed below under the caption "Contracts
with Executives", the Company entered into an Employment Contract with Mr.
Preston effective as of November 1, 1995 ("new contract"), succeeding his prior
contract which expired as of that date. Under the new contract Mr. Preston's
current salary of $610,000 and current target bonus opportunity of 50% continues
to be frozen at those levels through the end of 1996 consistent with the five
year salary and bonus percentage freeze agreed upon in exchange for a special
option award in 1991. Both his salary and target bonus levels are substantially
below the CEO compensation median for the Peer Companies.
Concurrently with the new contract the Committee awarded Mr. Preston a
special stock option grant for 325,000 shares, which options generally cannot be
exercised prior to the end of the new contract term in May 1998. The principal
purpose of the special grant is to assure that the Company may retain Mr.
Preston's full-time services until his age 65 retirement date by means of long
term compensation directly tied to the performance of Avon's stock.
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. 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
13
<PAGE>
PERFORMANCE GRAPH
The following indexed line graph indicates the Company's total return to
shareholders for each of the five years ended December 31, 1991 through 1995, 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)
--GRAPHICAL REPRESENTION OF DATA TABLE BELOW--
Assumes $100 invested on December 31, 1990 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 the year indicated.
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
Avon $100.0 $172.4 $213.5 $193.3 $245.2 $319.3
S&P 500 100.0 130.3 140.3 154.3 156.4 213.8
Industry Composite 100.0 141.6 137.1 136.5 158.5 231.6
- - ----------
(1) Total Return assumes reinvestment of dividends.
(2) Industry Composite includes Carter Wallace, Gillette, Johnson & Johnson,
Tambrands, Stanhome, Alberto-Culver, Colgate Palmolive, Kimberly-Clark,
Bristol Myers Squibb, Procter & Gamble and Helene Curtis.
14
<PAGE>
TABLES AND PLANS
This section of the proxy statement discloses fiscal 1995 plan and non-plan
compensation awarded or paid to, or earned by, the Company's Chief Executive
Officer and, of the Company's other executive officers during fiscal 1995, each
of the four persons who were most highly compensated in fiscal 1995 (together,
these five persons are sometimes referred to as the "named executives").
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long-term Compensation
---------------------------------- ---------------------------------
Securities
Other Restricted Underlying Long-term All
Annual Stock Options/ Incentive Other
Salary Bonus Compensation Awards SARs Payouts Compensation
Name And Position Year ($) ($)(1) (2) ($)(3) (#) ($) ($)(4)
----------------- ---- ----- ------- --------- -------- ------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
James E. Preston .......... 1995 610,000 381,251 0 390,000 0 56,317
Chairman and 1994 610,000 440,412 0 70,000 0 51,971
Chief Executive Officer 1993 610,000 311,478 0 0 0 36,878
Edward J. Robinson ........ 1995 523,946 479,665 0 26,500 0 7,747
President and 1994 500,000 538,300 0 30,000 0 16,219
Chief Operating Officer 1993 421,667 271,976 490,625 0 0 6,310
Christina A. Gold ......... 1995 308,000 168,036 445,000 7,000 0 113,249
Sr. Vice President and 1994 275,000 207,280 0 7,500 0 9,083
President, Avon US
Edwina D. Woodbury ........ 1995 257,754 155,217 0 6,400 0 3,779
Sr. Vice President and 1994 250,000 156,520 0 7,300 0 8,109
Chief Financial Officer
Ward M. Miller, Jr. ....... 1995 240,000 165,768 0 5,300 0 3,590
Sr. Vice President,
General Counsel and
Secretary
</TABLE>
- - ----------
(1) In consideration of a special stock option grant made in 1991, for each of
the years 1992-1996, 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 and
1995 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)
15
<PAGE>
(3) The following table presents information regarding aggregate holdings of
restricted stock at January 3, 1996 for the named executives. Dividends on
these shares are paid at the same time as those on the Company's
unrestricted stock. In the event of a change of control, all shares of
restricted stock would be cashed out.
Holdings of Restricted Shares at 1/3/96
------------------------------------------------
Number of Aggregate Market
Restricted Total Number Value of
Shares Granted of Restricted Restricted Shares
Name in Fiscal 1995 Shares Held at 12/31/95(a)
- - ---- ---------------- -------------- ---------------
Mr. Preston .................. 0 0 0
Mr. Robinson ................. 0 10,000 753,750
Mrs. Gold .................... 8,000 8,000 603,000
Ms. Woodbury ................. 0 0 0
Mr. Miller ................... 0 0 0
- - ----------
(a) "Market Value" is determined by reference to the per share closing
price on December 31, 1995 ($75.375).
(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, $7,747;
Mrs. Gold, $4,620; Ms. Woodbury, $3,779; and Mr. Miller, $3,590; (ii)
above-market portion of interest earned on deferred compensation--Mr.
Preston, $47,192; (iii) relocation expenses reimbursement--Mrs. Gold,
$108,629.
OPTION GRANTS
This table presents information regarding options that may be exercised to
purchase shares of the Company's Common Stock.
<TABLE>
OPTION GRANTS IN FISCAL 1995
<CAPTION>
Individual Grants
-----------------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees Exercise Grant Date
Granted in Fiscal Price Expiration Present
(#)(1) Year(2) ($/Sh) Date Values (3)
---------- ----------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Mr. Preston .............................. 65,000 9.09% $55.625 2/2/05 $1,206,173
325,000 45.44% 69.375 11/2/05 6,676,130
Mr. Robinson ............................. 26,500 3.71% 55.625 2/2/05 491,747
Mrs. Gold ................................ 7,000 .98% 55.625 2/2/05 129,896
Ms. Woodbury ............................. 6,400 .89% 55.625 2/2/05 118,762
Mr. Miller ............................... 5,300 .74% 55.625 2/2/05 98,349
</TABLE>
- - ----------
(1) The indicated options have a term of 10 years and were granted pursuant to
the Company's 1993 Stock Incentive Plan. As described in the Compensation
Committee Report, Mr. Preston received a special retention grant of 325,000
stock options on November 2, 1995.
(2) Based on 715,162 options granted in fiscal 1995.
(3) In accordance with Securities and Exchange Commission rules, the
Black-Scholes option pricing model was chosen to estimate the Grant Date
Present Value of the options set forth in this table. The Company's use of
this model should not be construed as an endorsement of its accuracy at
valuing options. All stock option models require a prediction about the
future movement of the stock price. The following assumptions were made for
purposes of calculating Grant Date Present Values: option term of ten
years, volatility of 20.29% (calculated monthly over the three preceding
calendar years), dividend yield of 3.0% and interest rate of 7.77% (ten
year Treasury note rate at grant date). The option expiring 11/2/05 assumes
a volatility of 22.7% and an interest rate of 6.06%. The real value of the
options in this table depends upon the actual performance of the Company's
stock during the applicable period and upon when they are exercised.
16
<PAGE>
OPTION EXERCISES AND VALUES
This table presents information regarding options exercised for shares of
the Company's Common Stock during fiscal 1995 and the value of unexercised
options held at December 31, 1995. There were no options exercised by the named
executives during fiscal 1995.
<TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL 1995 AND 1995 FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Securities Values of Unexercised
Underlying Unexercised In-the-Money
Shares Acquired Value Options at FY-End (#) Options at FY-End (#)(2)
on Exercise Realized ---------------------------- -------------------------------
Name (#) ($) (1) Exercisable Unexercisable Exercisable Unexercisable
- - ---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Preston ........ 0 0 63,333 446,667 1,941,242 4,653,132
Mr. Robinson ....... 0 0 35,000 46,500 814,625 980,875
Mrs. Gold .......... 0 0 2,500 12,000 57,187 282,625
Ms. Woodbury ....... 0 0 2,433 11,267 55,655 237,733
Mr. Miller ......... 0 0 1,500 8,300 34,312 173,300
</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 12/29/95 is calculated as
follows: [(Per Share Closing Sale Price on 12/29/95)-Per Share Exercise
Price)] x Number of Shares Subject to Unexercised Options. The per share
closing price of 12/29/95 was $75.375.
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:
<TABLE>
ESTIMATED ANNUAL RETIREMENT ALLOWANCES AT AGE 65
<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>
17
<PAGE>
As of December 31, 1995, Mr. Preston had an average three-year compensation
of $1,349,478 and 35 years of creditable service; Mr. Robinson had an average
three-year compensation of $843,713 and 23 years of creditable service; Mrs.
Gold had an average three-year compensation of $370,638 and 26 years of
creditable service; Ms. Woodbury had an average three-year compensation of
$312,519 and 18 years of creditable service; and Mr. Miller had an average
three-year compensation of $248,684 and 3 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 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 and Robinson), such
coverage continues after retirement and provides that in the event of a change
of 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 of 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.
CONTRACTS WITH EXECUTIVES
The Company currently has employment contracts ("Employment Contracts")
with each of the named executives.
A new Employment Contract with Mr. Preston was executed effective November
1, 1995 succeeding a prior contract which by its terms expired on that date. The
term of the new contract will expire as of May 7, 1998, a date which is shortly
after Mr. Preston's attainment of age 65, his Normal Retirement Age under the
Company's retirement program. Under the new contract Mr. Preston will remain
employed on a full time basis as Chairman of the Board until that date, provided
that any time subsequent to May 1, 1997 the Board of Directors may elect another
officer to concurrently serve as the Company's Chief Executive Officer.
18
<PAGE>
The Employment Contracts provide that if the executive's employment is
terminated without cause, the executive generally shall receive a payment equal
to the sum of: (i) 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); (ii) continuation of benefits for two or three years (depending upon
the executive's position at the Company); and (iii) a bonus payment in an amount
not to exceed the executive's target annual bonus for the year of termination.
Under the terms of the Employment Contracts, such amounts payable upon
termination are generally reduced by any amounts payable under the Company's
regular Severance Plan.
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 had occurred on January 2, 1996 and with
termination of the executives immediately thereafter. Mr. Preston would receive
$2,973,753; Mr. Robinson would receive $2,950,791; Mrs. Gold would receive
$1,401,405; Ms. Woodbury would receive $1,209,375; and Mr. Miller would receive
$1,114,875; 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 of 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.
PROPOSAL 3--AMENDMENT OF CERTIFICATE OF INCORPORATION; STOCK SPLIT
The Board of Directors proposes and recommends the approval of an amendment
to the Company's Certificate of Incorporation which would effect a two-for-one
stock split, pursuant to which 200,000,000 shares, $.50 par value, of Common
Stock presently authorized would be changed into 400,000,000 shares, $.25 par
value. Accordingly, it is proposed to amend the first paragraph of Article III
of the Company's Certificate of Incorporation to read as follows:
"ARTICLE III: The total number of shares of all classes of capital
stock which the Corporation shall have authority to issue is 425,000,000
shares, divided into two classes consisting of 400,000,000 shares of Common
Stock, par value $.25 per share (the "Common Stock") and 25,000,000 shares
of Preferred Stock, par value $1.00 per share (the "Preferred Stock")."
If the proposed amendment is adopted, the Company plans to file a
Certificate of Amendment of the Certificate of Incorporation to be effective no
later than May 15, 1996. Each share of Common Stock, $.50 par value, held of
record as of the close of business on the effective date will be changed into
two shares of Common Stock, $.25 par value. Outstanding certificates
representing shares of Common Stock, $.50 par value, will thereafter represent
the same number of shares of Common Stock, $.25 par value, and new certificates
representing the additional shares of capital stock, $.25 par value, will be
mailed to shareholders entitled thereto as soon as practicable thereafter.
Presently outstanding shares of Common Stock should be retained by the holders
and should NOT be forwarded to the Company or the Transfer Agent.
The proposed stock split will increase the number and change the par value
of the outstanding shares, but will not affect the relative rights of
shareholders. Shareholders will continue to be entitled to preemptive rights.
The Board of Directors believes that a stock split is in the best interests
of shareholders because it will place the market price of the Common Stock in a
range more attractive to individual investors and should broaden public interest
in such stock.
19
<PAGE>
As of December 31, 1995, of the 200,000,000 authorized shares of Common
Stock, a total of 86,749,056 shares were outstanding, 19,131,822 were held in
the Company's treasury and 2,226,812 were reserved for issuance for stock
options and other stock incentives authorized by the 1993 Stock Incentive Plan.
The additional shares to be authorized for issuance, apart from the stock split,
would be available for other corporate purposes but no specific transaction is
now contemplated which would result in the issuance of additional shares.
In the opinion of counsel for the Company, the adoption of the proposed
amendment and the issuance of the additional shares in connection with the stock
split will result in no gain or loss or any other form of taxable income for
United States federal income tax purposes. The laws of jurisdictions other than
the United States may impose income taxes on the issuance of the additional
shares in connection with the stock split, and shareholders subject to those
laws are urged to consult their tax advisors.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock authorized to vote thereon is required for adoption of the
proposed amendment.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL
TO AMEND THE CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF
COMMON STOCK AND TO DECREASE THE PAR VALUE PER SHARE OF SUCH STOCK.
PROPOSAL 4--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 1996. 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 1996.
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.
20
<PAGE>
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Any proposal that a Shareholder may desire to have included in the
Company's proxy material for presentation at the 1997 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 25, 1996.
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 1995, 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 25, 1996
New York, New York
21
<PAGE>
- - --------------------------------------------------------------------------------
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
22
<PAGE>
[AVON LOGO]
<PAGE>
APPENDIX
(Pursuant to Rule 304 of Regulation S-T)
1. Page 14 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, 1990 and
ending December 31, 1995, 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 2, 1996,
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 PROPOSALS 1 AND 2 (THE ELECTION AS
DIRECTORS OF THE NOMINEES LISTED BELOW), FOR PROPOSAL NO. 3, FOR PROPOSAL 4
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 1999: BRENDA C. BARNES, CHARLES S. LOCKE, ANN S. MOORE AND
JAMES E. PRESTON
CLASS OF 1998: EDWARD T. FOGARTY AND CHARLES R. PERRIN
Instruction for Cumulative Voting for each Class listed above: 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 1999 listed above
and separately, 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 each 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
- - --------------------------------------------------------------------------------
AVON
ANNUAL MEETING OF SHAREHOLDERS
MAY 2, 1996
10:00 A.M.
THE GRAND SALON
AT THE ESSEX HOUSE
160 CENTRAL PARK SOUTH
NEW YORK, NEW YORK
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4.
1. PROPOSAL 1
Election of Directors to the Class of 1999 (see reverse).
[ ] FOR [ ] WITHHELD
_________________________________________________________________________
To withhold authority for any nominee(s) for the Class of 1999, write the
name(s) of such nominee(s) in the space provided above.
2. PROPOSAL 2
Election of Directors to the Class of 1998 (see reverse).
[ ] FOR [ ] WITHHELD
_________________________________________________________________________
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.
3. PROPOSAL 3
Amendment of Certificate of Incorporation; Stock Split.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL 4
Ratification of the appointment of Coopers & Lybrand as Avon's independent
accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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 25, 1996.
<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 2, 1996, 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 29, 1996.
Unless your card is received by April 29, 1996, 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 1999: BRENDA C. BARNES, CHARLES S. LOCKE, ANN S. MOORE AND
JAMES E. PRESTON
CLASS OF 1998: EDWARD T. FOGARTY AND CHARLES R. PERRIN
Instruction for Cumulative Voting for the Class listed above: 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 1999 listed above, and separately, 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 each 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
- - --------------------------------------------------------------------------------
AVON
ANNUAL MEETING OF SHAREHOLDERS
MAY 2, 1996
10:00 A.M.
THE GRAND SALON
AT THE ESSEX HOUSE
160 CENTRAL PARK SOUTH
NEW YORK, NEW YORK
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
The Board of Directors recommends a vote FOR Proposals 1, 2, 3 and 4.
1. PROPOSAL 1
Election of Directors to the Class of 1999 (see reverse).
[ ] FOR [ ] WITHHELD
_________________________________________________________________________
To withhold authority for any nominee(s) for the Class of 1999, write the
name(s) of such nominee(s) in the space provided above.
2. PROPOSAL 2
Election of Directors to the Class of 1998 (see reverse).
[ ] FOR [ ] WITHHELD
_________________________________________________________________________
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.
3. PROPOSAL 3
Amendment of Certificate of Incorporation; Stock Split.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL 4
Ratification of the appointment of Coopers & Lybrand as Avon's independent
accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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 25, 1996.
