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 ss.240.14a-11(c) or ss.240.14a-12
AVON PRODUCTS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
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4) Proposed maximum aggregate value of transaction:
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
A V O N
March 25, 1999
Dear Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of
Shareholders, which will be held at 10:00 a.m. on Thursday, May 6, 1999 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,
/s/ CHARLES R. PERRIN
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Charles R. Perrin
Chief Executive Officer
<PAGE>
AVON PRODUCTS, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NY 10105
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The 1999 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 6, 1999 at 10:00 a.m. for the following
purposes:
(1) To elect four (4) directors to three-year terms expiring in 2002;
(2) To act upon a proposal to amend the Certificate of Incorporation to
increase the number of authorized shares of Common Stock;
(3) To act upon a proposal to ratify the appointment of
PricewaterhouseCoopers L.L.P. as Avon's independent accountants for
1999;
(4) To transact such other business as properly may come before the
meeting.
The Board of Directors has fixed the close of business on March 18, 1999 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, 1999
New York, New York
<PAGE>
AVON PRODUCTS, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NY 10105
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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 6, 1999 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 25, 1999 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, and FOR ratification of the appointment of PricewaterhouseCoopers
L.L.P. as Avon's independent accountants for 1999. 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, 1999
(the "Record Date") will be entitled to vote at the Annual Meeting. As of the
close of business on the Record Date, there were 261,907,336 shares of Avon's
common stock, par value $.25 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 2002 (the
"Class of 2002"), three directors in the class whose term expires in 2001 (the
"Class of 2001") and five directors in the class whose term expires in 2000 (the
"Class of 2000"). Board members serve three-year terms unless otherwise
specified. The terms of three incumbent directors, Brenda C. Barnes, Ann S.
Moore and James E. Preston, will expire at the Annual Meeting. Mr. Preston as of
that date concurrently will retire as Chairman and a director. George V. Grune,
whose term expires in 2001, has elected to retire as of the date of the 1999
Annual Meeting and Charles S. Locke, whose term would have expired at the 1999
Annual Meeting, elected to retire as of December 31, 1998. The terms of the
other incumbent directors will continue until either the 2000 or 2001 Annual
Meeting. At the 1999 Annual Meeting, Shareholders will elect four members to the
Class of 2002. The Board of Directors has nominated Brenda C. Barnes, Fred
Hassan, Ann S. Moore and Lawrence A. Weinbach for election at the Annual
Meeting, each to serve for a three-year term to expire at the Annual Meeting in
2002.
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, Fred Hassan, Ann S. Moore and Lawrence A. Weinbach
to the Class of 2002. 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 2002, 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 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
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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 A THREE-YEAR TERM EXPIRING 2002
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BRENDA C. BARNES
Director of Avon since 1994 Age: 45
Ms. Barnes retired at the end of 1997 as President and
Chief Executive Officer of Pepsi-Cola North America, where
she was responsible for the beverage business in the United
[PHOTO] States and Canada, including production, sales and
distribution. Ms. Barnes previously held sales, marketing
and general management positions at Wilson Sporting Goods,
Frito-Lay and Pepsi-Cola in her 22 years with PepsiCo. She
is a director of Sears & Roebuck, Inc., The New York Times,
Starwood Hotels & Resorts and is on the Board of Trustees
for Augustana College.
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FRED HASSAN Age 53
Mr. Hassan is the President and Chief Executive Officer of
Pharmacia & Upjohn, Inc., a research based global
pharmaceutical company. He was elected to that position in
May 1997 having previously held senior divisional and
corporate positions with American Home Products Corporation
[PHOTO] since 1989, including that of Executive Vice President and
Board member. Prior to joining that company, he had held
various executive positions with Sandoz Pharmaceuticals
Corporation from 1972 to 1989 where he became CEO of its
U.S. operations and research and development. Mr. Hassan is
a director of Pharmacia & Upjohn, Inc.
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ANN S. MOORE
Director of Avon since 1993 Age: 48
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
[PHOTO] Corporate Finance. Since then, she has held consumer
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.
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LAWRENCE A. WEINBACH Age 59
Mr. Weinbach is Chairman of the Board, President and Chief
Executive Officer of Unisys Corporation, a worldwide
information services and technology company. He was elected
[PHOTO] to that position in September 1997. He previously was
Managing Partner--Chief Executive of Andersen Worldwide, a
global professional services, organization from 1989 to
1997 and had held various senior executive positions with
Andersen for a number of years prior thereto. Mr.
Weinbach is a director of Unisys Corporation.
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MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE--TERM EXPIRING 2001
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RICHARD S. BARTON
Director of Avon since 1994 Age: 50
Mr. Barton is the Chairman and Chief Executive Officer of
Adatom Corporation, which sells name brand products through
retail electronic stores. Mr. Barton was formerly
President, United States Customer Operations of Xerox
Corporation, which manufactures, markets and services
document processing products and systems. He had been
[PHOTO] appointed to that position in October 1993 after two years
as President, Chairman and Chief Executive Officer of Xerox
Canada Inc. He had joined Xerox in 1971 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 US Wireless
Data, the American Management Association and U.S. Chamber
of Commerce.
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EDWARD T. FOGARTY
Director of Avon since 1995 Age: 62
Mr. Fogarty is the former Chairman of Tambrands, Inc., the
manufacturer of Tampax tampons, and its Chief Executive
Officer from May 1994 to September 1997. Previously, he was
[PHOTO] President, Colgate USA/Canada/Puerto Rico, for the
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 UST, Inc.
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<PAGE>
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CHARLES R. PERRIN
Director of Avon since 1996 Age: 53
Mr. Perrin was elected Chief Executive Officer of the
Company effective July 1, 1998 having previously been Vice
Chairman and Chief Operating Officer of the Company since
January 5, 1998. He has been a member of the Board of
Directors since May 1996. Mr. Perrin was Chairman of the
Board and Chief Executive Officer of Duracell
International, Inc., a manufacturer of batteries and
[PHOTO] related products from 1994 to December 1996. He joined
Duracell in 1985, becoming President of Duracell North
America in 1988 and President and 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 the New Israel
Fund, the Cosmetic, Toiletry and Fragrance Association and
the Catalyst group. He is also a member of the Business
Roundtable and the World Wildlife Fund National Council.
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MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE--TERM EXPIRING 2000
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STANLEY C. GAULT
Director of Avon since 1985 Age: 73
Mr. Gault is the former Chairman of the Board of The
Goodyear Tire & Rubber Company, a manufacturer of tires,
chemicals, polymers, plastic film and other rubber
products. Mr. Gault was Chairman and Chief Executive
[PHOTO] Officer of that Company from 1991-1995. Previously, he was
Chairman of the Board and Chief Executive Officer of
Rubbermaid Incorporated from May 1, 1980 to May 1, 1991. He
also is a director of The Timken Company, H. Freelander,
Wal-Mart Stores, Inc. and Vencor, Inc. He is a trustee and
Chairman of the Board of The College of Wooster and a
director of the National Association of Manufacturers.
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ANDREA JUNG
Director of Avon as of January 1998 Age 40
Ms. Jung was elected President and Chief Operating Officer
of the Company effective July 1, 1998, having previously
been President and a member of the Board of Directors since
January 5, 1998. She had been elected an Executive Vice
[PHOTO] President of the Company in March 1997 concurrently
continuing as President, Global Marketing, a position she
held from July 1996 to the end of 1997. Ms. Jung joined the
Company in January 1994 as President, Product Marketing for
Avon U.S. Previously she was Executive Vice President,
Neiman Marcus and a Senior Vice President for I. Magnin.
Ms. Jung is a director of the Zale Corporation, General
Electric Company, the Fragrance Foundation and a trustee of
the Fashion Institute of Technology.
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SUSAN J. KROPF
Director of Avon as of January 1998 Age 50
Mrs. Kropf was elected an Executive Vice President of the
Company and President, Avon North America in March 1997 and
a member of the Board of Directors of the Company effective
January 5, 1998. She had been appointed President of the
[PHOTO] Company's New and Emerging Markets in July 1996 and
previously was Senior Vice President, Eastern Europe and
during 1993 and 1994 Senior Vice President, Global Product
Management. Mrs. Kropf joined the Company in 1971 and held
various positions in manufacturing, marketing and product
development prior to 1993. Mrs. Kropf is a director of The
Mead Corporation and Greenpoint Financial Corporation.
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REMEDIOS DIAZ OLIVER
Director of Avon since 1992 Age: 60
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
[PHOTO] Officer and President of American International Container,
Inc. from 1977 to 1991. Mrs. Diaz Oliver is a director of
Nation Banks of South Florida, 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, Hamilton Foundation and Florida
Council of 100.
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PAULA STERN, Ph.D
Director of Avon since 1997 Age 53
Dr. Stern is President of The Stern Group, Inc., an
economic analysis and trade advisory firm established in
1988. She is a member of the President's Advisory Committee
for Trade Policy and Negotiations (ACTPN) and
[PHOTO] Co-Chairperson, International Competition Policy Advisory
Committee (ICPAC) of the U.S. Department of Justice
Antitrust Division. She previously had been with the U.S.
International Trade Commission from 1978 to 1986, and was
its Chairwoman 1984-1986. Dr. Stern is a director of CBS,
Harcourt General, Wal-Mart Stores, Inc. and Infinity
Broadcasting Corporation.
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6
<PAGE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Company's Board of Directors held seven meetings in 1998. 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 Charles S. Locke, as Chair, Richard S.
Barton, Remedios Diaz Oliver, Edward T. Fogarty and Paula Stern, met four times
in 1998. Mr. Fogarty succeeded Mr. Locke as Chair upon Mr. Locke's retirement in
December 1998. 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 Brenda C. Barnes, as Chair, Edward
T. Fogarty, George V. Grune, and Ann S. Moore met five times in 1998. 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, Remedios Diaz Oliver and Paula Stern met four times in 1998. 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.
The Nominating and Directors' Activities Committee, composed of Ann S.
Moore, as Chair, Brenda C. Barnes, George V. Grune and Stanley C. Gault, met
three times in 1998. The responsibilities of the Nominating and Directors'
7
<PAGE>
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 a director. Effective on and
after May 1, 1997, each non-management director receives an Annual Retainer
consisting of $25,000 plus an annual grant of shares of the Company's Common
Stock having a market value as of the date of grant of approximately $25,000,
based on the average mean price of Common Stock as reported on the New York
Stock Exchange for the preceding ten trading days. The first such grant was made
immediately after the 1997 Annual Meeting of Shareholders with subsequent grants
to be made immediately after future Annual Meetings. All shares so granted to a
non-management director will be restricted as to transfer until he or she
retires from the Board, but will immediately be entitled to regular dividends
and eligible for voting rights similar to all other outstanding shares of Common
Stock.
In addition to the Annual Retainer, each non-management director receives 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 based on the prime rate.
Also effective as of May 1, 1997, the Retirement Plan for non-management
directors was discontinued. Those non-management directors who had participated
in that plan prior to that date had the actuarial value of their accrued
retirement benefits converted to a one-time grant of the Company's Common Stock,
restricted as to transfer in the same manner as an Annual Retainer grant.
In replacement of such plan, each non-management director receives an
annual grant of options to purchase 2,000 shares of the Company's Stock, at an
exercise price based on the price of a share of Common Stock as reported on the
New York Stock Exchange on the date of grant. The first such grant was made
immediately after the 1997 Annual Meeting; an additional grant was made
immediately after the 1998 Annual Meeting and subsequent grants will be made
immediately after future Annual Meetings. Each grant of options will have a ten
year term as to exercise but the options covered by any one grant may not be
exercisable until one year after the date of such grant.
8
<PAGE>
OWNERSHIP OF SHARES
The following table sets forth certain information as of March 10, 1999
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
have been adjusted for the two-for-one stock split in September 1998 and reflect
sole voting and investment power except as otherwise noted.
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership of Class
------------------------ -------------------- ---------
FMR Corporation (1) .......................... 24,136,814 9.18%
Oppenheimer Capital (2) ..................... 20,363,992 7.7
Richard S. Barton (3) ........................ 13,252 *
Brenda C. Barnes (3)(4) ...................... 21,178 *
Jose Ferreira, Jr. (5) ....................... 79,397 *
Edward T. Fogarty (3) ........................ 16,864 *
Stanley C. Gault (3) ......................... 60,732 *
George V. Grune (3) .......................... 19,952 *
Fred Hassan .................................. 10,000 *
Andrea Jung (6) .............................. 305,934 *
Susan J. Kropf (7) ........................... 182,438 *
Fernando Lezama (8) .......................... 166,768 *
Ann S. Moore (3)(4) .......................... 18,272 *
Remedios Diaz Oliver (3)(4) .................. 19,284 *
Charles R. Perrin (9) ........................ 136,643 *
James E. Preston (10) ........................ 1,573,569 *
Paula Stern (3) .............................. 9,860 *
Lawrence A. Weinbach ......................... 500 *
All directors and executive officers
as a group [20] ........................... 2,813,838(11) *
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* Indicates less than 1% of the outstanding Shares, inclusive of shares that
may be acquired within 60 days of March 10, 1999 through the exercise of
stock options.
(1) The address of FMR Corporation is 82 Devonshire Street, Boston,
Massachusetts 02109; most shares are held by its subsidiary, Fidelity
Management and Research Company.
(2) The address of Oppenheimer Capital is Oppenheimer Tower, World Financial
Center, New York, New York 10281.
(3) Includes 1460 restricted shares granted to the indicated non-management
director as part of his or her 1997 and 1998 Annual Retainer compensation
plus additional restricted shares granted to certain non-management
directors upon discontinuance in 1997 of the Directors' Retirement Plan, as
follows: Ms. Barnes 4,060 shares, Mr. Barton 3,392 shares, Mrs. Diaz Oliver
5,824 shares, Mr. Fogarty 2,204 shares, Mr. Gault 11,272 shares, Mr. Grune
6,492 shares, and Mrs. Moore 4,812 shares. For all such restricted shares,
the director has sole voting but no investment power. In addition, there is
included for each indicated non-management director 8,000 shares which he
or she has the right to acquire within 60 days of March 10, 1999 through
the exercise of stock options granted May 1, 1997 and May 7, 1998.
(4) Ms. Barnes, Mrs. Moore, and Mrs. Diaz Oliver share with their spouses
voting and investment power as to these shares.
(5) Includes 40,000 shares as to which Mr. Ferreira has sole voting but no
investment power and 30,016 shares as to which Mr. Ferreira has the right
to acquire within 60 days of March 10, 1999 through the exercise of stock
options.
(6) Includes 120,000 shares as to which Ms. Jung has sole voting but no
investment power and 121,934 shares as to which Ms. Jung has the right to
acquire within 60 days of March 10, 1999 through the exercise of stock
options.
(7) Includes 60,000 shares as to which Ms. Kropf has sole voting but no
investment power and 88,874 shares as to which Ms. Kropf has the right to
acquire within 60 days of March 10, 1999 through the exercise of stock
options.
(8) Includes 40,000 shares as to which Mr. Lezama has sole voting but no
investment power and 74,248 shares as to which Mr. Lezama has the right to
acquire within 60 days of March 10, 1999 through the exercise of stock
options.
(9) Includes 400 shares as to which Mr. Perrin disclaims beneficial ownership,
105,000 shares as to which Mr. Perrin shares voting and investment power
with his wife and 29,000 shares as to which Mr. Perrin has the right to
acquire within 60 days of March 10, 1999 through the exercise of stock
options.
(10) Includes 124,080 shares as to which Mr. Preston disclaims beneficial
ownership and 1,361,060 shares which Mr. Preston has a right to acquire
within 60 days of March 10, 1999 through the exercise of stock options.
(11) Includes 124,480 shares as to which the directors and executive officers as
a group disclaim beneficial ownership. Includes 120,658 shares as to which
beneficial ownership was shared with others and 1,888,042 shares which the
directors and executive officers as a group have a right to acquire within
60 days of March 10, 1999 through the exercise of stock options.
9
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT
The Compensation Committee is made up of outside, non-employee members of
the Board of Directors whose names are listed at the end of this report. The
Committee sets and administers the policies that govern compensation programs of
the Company's executive officers. This includes reviewing and recommending for
approval by non-management directors of the Board specific overall compensation
packages for the Chief Executive Officer (CEO), Chief Operating Officer (COO)
and any other executive officer who is also a member of the Board.
EXECUTIVE COMPENSATION GUIDING PRINCIPLES
The Company's executive compensation program is designed to attract,
motivate and retain the key talent necessary to run this highly competitive
business and support the Company's overall business strategy. The guiding
principles used in the design of the program are:
o Total compensation levels must be competitive with the compensation
practices of other leading beauty, direct selling and consumer
products companies and commensurate with relative shareholder returns
and financial performance.
o Compensation opportunities must be related to performance such that
individual, operating business unit and/or global performance results
in compensation awards that are higher or lower than target.
o Compensation programs must be designed to balance short and long-term
financial objectives that build shareholder value and reward for team
and overall Company performance.
o Compensation programs should focus executives on the financial
objectives that support increased total shareholder returns.
Working with an independent compensation consulting firm, the Company
annually evaluates the compensation of its key executives against a Compensation
Peer Group consisting of 16 direct selling, beauty and consumer goods companies
to ensure that our total compensation program is competitive. The total target
compensation of executive officers is positioned slightly above the median rate
of the Compensation Peer Group. The three components of total compensation
include base salary, an annual bonus plan named the Management Incentive Plan
and a Long-Term Incentive Plan.
BASE SALARY
The midpoints of salary ranges for executive officers is set at the median
of the Compensation Peer Group companies. With the Company's pay for performance
philosophy, exceptional performers are eligible for salaries above the median of
the peer group. Annual salary increases are based on individual performance, job
responsibilities, competitive data of the Compensation Peer Group, and the
Company's overall salary budget guidelines. In 1998, salaries for executive
officers overall were slightly ahead of the median of the peer group for similar
positions.
10
<PAGE>
MANAGEMENT INCENTIVE PLAN
The Management Incentive Plan (MIP) provides incentive compensation aligned
with the short-term performance of the Company. Bonuses range from 0 to 200% of
individual target awards, which are set as a percentage of salary by management
level. Incentives are payable based upon the degree of attainment of
pre-established performance measures set by the Compensation Committee at the
beginning of each year. For 1998 pre-established performance measures for the
Chairman, CEO and COO were based on the achievement of earnings per share
(E.P.S.) objectives. The performance measures for most other executive officers
included operating profit objectives for their business unit or a combination of
E.P.S. and individual performance objectives. The Committee took into
consideration the fact that 1998 E.P.S. results would have been substantially
above target absent significant adverse developments in two key markets that
were beyond the control of management, and accordingly approved awards based on
E.P.S. performance that were 150% of target.
LONG-TERM INCENTIVE COMPENSATION
Effective commencing in 1997, the Committee recommended, and the Board of
Directors approved, a new Long-Term Incentive Plan ("1997 LTIP"), which plan was
approved at the Annual Meeting of Shareholders held May 1, 1997. Approximately
400 executives, including all officers, are eligible to participate in the 1997
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 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 1997-1999
with cash awards payable in early 2000.
The cash value of all Performance Units will be determined immediately
following the conclusion of the 1997-1999 performance period and shall be based
on the degree to which applicable performance objectives have been attained. The
principal performance objective for executive officers consists of cumulative
Earnings Per Share ("EPS") objectives for the three year period which are
applicable to the Performance Units of all participants. Participants who are
with the management of an operating business unit or country unit will have an
additional performance objective based on the cumulative operating profit or
cumulative pre-tax contribution of the applicable unit or country. The actual
cash payment value will be determined by the degree to which objectives have
been obtained or exceeded, ranging from 0% to 200% of a target value of $100 per
unit.
Under the 1997 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.
DETERMINATION OF CEO COMPENSATION
Charles R. Perrin became the Company's Chief Executive Officer as of July
1, 1998, having served as Vice Chairman and Chief Operating Officer since the
beginning of 1998. In connection with his employment, the Company entered into
an employment agreement with Mr. Perrin which is described on page 18. His
annual rate of base salary was increased from $750,000 to $850,000 when he
became CEO. Mr. Perrin's annual bonus for 1998, which had a target performance
percentage equal to 84% of base salary, was based on achievement of the
principal
11
<PAGE>
performance objective described above under "Annual Incentive Plan", namely
earnings per share growth. Accordingly, the Committee approved an award of 150%
of his bonus target amount resulting in an award to Mr. Perrin of $998,163.
James E. Preston stepped down as CEO effective July 1, 1998 after serving
in that position since 1988; he remains Chairman until May 6, 1999 when he is
scheduled to retire. For 1998 he received a base salary of $1,000,000 which was
also his salary in 1997. He received an award under the Annual Incentive Plan
for 1998 based on the same principal performance objective and target percentage
applicable to Mr. Perrin. Accordingly, the Committee approved a bonus award of
$1,260,000 for Mr. Preston.
LIMITATIONS ON THE DEDUCTIBILITY OF COMPENSATION
Pursuant to the 1993 Tax Act, a portion of annual compensation payable to
any of the Company's five highest paid executive officers (apart from stock
options) may not be deductible by the Company for federal income tax purposes to
the extent such officer's overall compensation exceeds $1 million. It is
anticipated that non-deferred 1999 compensation payable to several executive
officers during 1999 may be somewhat in excess of $1 million, inclusive of
performance-based incentive compensation. The Committee has determined that it
is in the best interests of the Company that it retain the discretion of
providing its senior executive officers with the opportunity of earning
appropriate performance-based incentive compensation notwithstanding that a
portion thereof may not be eligible for a tax deduction under current Internal
Revenue Code laws.
Brenda C. Barnes, Chair
Edward T. Fogarty
George V. Grune
Ann S. Moore
12
<PAGE>
FIVE-YEAR PERFORMANCE GRAPH
The following indexed line graph indicates the Company's total return to
shareholders for each of the five years ended December 31, 1994 through 1998, as
compared to total return to shareholders for the Standard & Poor's 500 Composite
Index and an industry composite of certain 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.
[GRAPHICAL REPRESENTATION OF DATA TABLE BELOW]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN(1)
AVON, S&P 500 INDEX, AND INDUSTRY COMPOSITE(2)
Assumes $100 invested on December 31, 1993 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.
1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------ ------
Avon $100.0 $126.9 $165.2 $256.6 $281.5 $413.4
S&P 500 100.0 101.4 139.3 171.2 228.3 293.4
Industry Composite 100.0 112.8 167.3 257.8 316.5 396.6
- ----------
(1) Total Return assumes reinvestment of dividends.
(2) Industry Composite includes Carter Wallace, Gillette, Johnson & Johnson,
Enesco, Alberto-Culver, Colgate Palmolive, Kimberly-Clark, Bristol Myers
Squibb, and Procter & Gamble.
13
<PAGE>
TABLES AND PLANS
This section of the proxy statement discloses fiscal 1998 plan and non-plan
compensation awarded or paid to, or earned by, the Company's Chief Executive
Officers and, of the Company's other executive officers during fiscal 1998, each
of the four persons who were most highly compensated in fiscal 1998 (together,
these persons are sometimes referred to as the "named executives").
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long-term Compensation
------------------------------ ------------------------------
Securities
Other Restricted Underlying Long-term All
Annual Stock Options/ Incentive Other
Salary Bonus Compensation Awards Sars Payouts Compensation
Name and Position Year ($) ($)(1) (2) ($)(3) (#) ($) ($)(4)
----------------- ---- ----- --------- ------------ ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
James E. Preston(1) 1998 1,000,000 1,260,000 0 0 0 92,629
Chairman and 1997 1,000,000 424,147 0 311,060 0 71,970
Chief Executive Officer 1996 610,000 561,556 0 0 1,514,063 59,166
Charles R. Perrin(1) 1998 800,000 998,163 0 225,000 0 14,292
Chief Executive Officer
Andrea Jung 1998 550,000 629,899 3,847,500 105,484 0 17,149
President and 1997 380,576 139,930 0 25,046 0 5,709
Chief Operating Officer
Fernando Lezama 1998 461,100 345,742 911,250 22,786 0 0
Executive Vice President 1997 332,010 302,422 654,380 59,068 0 0
and President, Latin
America
Susan J. Kropf 1998 450,000 513,447 1,822,500 25,634 0 13,451
Executive Vice President 1997 353,803 190,640 0 21,094 0 5,282
and President, North
America
Jose Ferreira 1998 410,000 514,529 1,215,000 22,786 0 16,589
Executive Vice President
and President, Europe,
Asia and Africa
</TABLE>
- ----------
1) Mr. Perrin succeeded Mr. Preston as Chief Executive Officer effective July
1, 1998 having previously been Vice Chairman and Chief Operating Officer.
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.
(3) As indicated in this column, substantial grants of restricted stock were
made in early 1998 to four key senior executives. Vesting over a three year
period, these grants constitute special "retention" incentive awards.
(Footnotes continued on next page)
14
<PAGE>
The dollar amount shown equals the number of shares of restricted stock
granted, multiplied by stock price on grant date. The following table
presents information regarding aggregate holdings of restricted stock at
December 31, 1998 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 12/31/98
--------------------------------------------------
Number of Aggregate Market
Restricted Total Number Value of
Shares Granted of Restricted Restricted Shares
Name in Fiscal 1998 Shares Held At 12/31/98(a)
- ---- -------------- ------------- -----------------
Mr. Preston ............. 0 0 0
Mr. Perrin .............. 0 2,180 96,465
Ms. Jung ................ 120,000 120,000 5,310,000
Mr. Lezama .............. 30,000 40,000 1,770,000
Ms. Kropf ............... 60,000 60,000 2,655,000
Mr. Ferreira ............ 40,000 40,000 1,770,000
- ----------
(a) "Market Value" is determined by reference to the per share closing
price on December 31, 1998 ($44.25).
(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, $32,269; Mr. Perrin, $14,292;
Ms. Jung, $17,149; Ms. Kropf, $13,451 and Mr. Ferreira, $12,376; (ii)
above-market portion of interest earned on deferred compensation--Mr.
Preston $60,360 and Mr. Ferreira, $4,213. In addition, not included in this
column, Mr. Ferreira received an aggregate overseas housing and
cost-of-living allowance totaling $577,272.
OPTION GRANTS
This table presents information regarding options that may be exercised to
purchase shares of the Company's Common Stock.
OPTION GRANTS IN FISCAL 1998
Individual Grants
----------------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees Exercise Grant Date
Granted in Fiscal Price Expiration Present
Name (#)(1) Year(2) ($/Sh) Date Values (3)
- -------- ---------- ---------- -------- -------- ----------
Mr. Preston ....... 0 0% -- -- --
Mr. Perrin ........ 75,000 12.9% 30.25 12/10/07 836,062
150,000 40.16 6/4/08 1,672,125
Ms. Jung .......... 44,854 6.1% 30.78 2/1/08 500,000
60,600 40.16 6/4/08 675,538
Mr. Lezama ........ 22,786 1.3% 30.78 2/5/08 254,007
Ms. Kropf ......... 25,634 1.5% 30.78 2/5/08 285,755
Mr. Ferreira ...... 22,786 1.3% 30.78 2/5/08 254,007
- ----------
(1) The indicated options have a term of 10 years and were granted pursuant to
the Company's 1993 Stock Incentive Plan. The number of options and their
exercise prices reflect adjustments for the two-for-one stock split that
occurred in September 1998 subsequent to their grants.
(2) Based on 1,738,168 options granted in fiscal 1998.
(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: average option term of
ten years, volatility of 20.66% (calculated monthly over the three
preceding calendar years), dividend yield of 2.01% and interest rate of
6.9% (ten year Treasury note rate at November 24, 1997). The real value of
options in this table depends upon the actual performance rate of the
Company's stock during the applicable period and upon when they are
exercised.
15
<PAGE>
OPTION EXERCISES AND VALUES
This table presents information regarding options exercised for shares of
the Company's Common Stock during fiscal 1998 and the value of unexercised
options held at December 31, 1998.
<TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL 1998 AND 1998 FISCAL YEAR-END OPTION VALUE
<CAPTION>
Number of Securities Values of
Underlying Unexercised 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 ........... 350,000 8,956,308 1,150,000 311,060 $30,942,130 $4,354,840
Mr. Perrin ............ 0 0 29,000 325,000 403,750 3,064,055
Ms. Jung .............. 0 0 86,636 134,152 2,374,047 1,379,975
Mr. Lezama ............ 0 0 54,258 79,596 1,483,072 1,106,779
Ms. Kropf ............. 0 0 62,628 50,368 1,667,596 803,568
Mr. Ferreira .......... 0 0 12,198 72,332 242,319 996,678
</TABLE>
- ----------
(1) Value Realized is calculated as follows: [(Per Share Closing Sale Price on
Date of Exercise)--(Per Share Exercise Price)] x Number of Shares for
Which the Option was Exercised.
(2) Value of Unexercised, In-the-Money Options at 12/31/98 is calculated as
follows: [(Per Share Closing Sale Price on 12/31/98)--(Per Share Exercise
Price)] x Number of Shares Subject to Unexercised Options. The per share
closing price on 12/31/98 was $44.25.
16
<PAGE>
RETIREMENT, DEATH AND SEVERANCE BENEFITS
Four of the named executives accrue retirement benefits under a
Supplemental Executive Retirement Plan (the "Supplemental Plan") which is
described below, namely Mr. Preston, Ms. Jung, Mrs. Kropf and Mr. Ferreira.
Benefits under the Supplemental Plan are based on the average of a participant's
three highest years compensation during the ten years of service prior to
retirement and the number of years of creditable service. Such compensation
includes base salary and annual incentive bonuses. Benefits payable under the
Supplemental Plan are offset by benefits payable to the participant under the
Company's Employees' Retirement Plan (the "Retirement Plan"). The following
table shows the estimated annual retirement benefits for a life annuity under
the Supplemental Plan (inclusive of benefits payable by the Retirement Plan) for
participants retiring at age 65 whose three year average compensation and years
of service at retirement would be in the classification shown.
ESTIMATED ANNUAL RETIREMENT ALLOWANCES AT AGE 65
Average of Three
Highest Years' Years of Creditable Service
Annual Compensation ---------------------------------------------------
in Last Ten Years 15 20 25 30 35
- ------------------- ------- ------- ------- ------- -------
$ 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
As of December 31, 1998, Mr. Preston had an average three year compensation
of $1,632,683 and 38 years of creditable service; Ms. Jung had an average three
year compensation of $612,237 and 5 years of creditable service; Mrs. Kropf had
an average three year compensation of $623,035 and 28 years of creditable
service and Mr. Ferreira had an average three year compensation of $529,966 and
19 years of creditable service.
Mr. Perrin and Mr. Lezama are not participants in the Supplemental Plan.
Mr. Perrin's retirement benefits are set forth in a separate agreement which
provides for a normal annual retirement allowance upon his retirement at any
time on or after July 1, 2004. Such allowance would be 50% of his final three
year average compensation (salary plus annual incentive bonuses) reduced by the
sum of the value of all benefits provided by the Company's overall retirement
program plus benefits provided him under retirement programs maintained by his
prior employers. The retirement benefits of Mr. Lezama, who is a resident of
Mexico, are determined under separate plans applicable to executives employed in
Mexico. Overall his benefits are based on factors that include length of service
and compensation earned over his last few years of employment. Based on his 1998
level of compensation, it is estimated that Mr. Lezama's net annual pension
benefit, assuming age 60 retirement, would be approximately $135,000 based on
the current rate of exchange for Mexican pesos.
17
<PAGE>
CONTRACTS WITH EXECUTIVES
In accordance with his employment agreement Mr. Preston will retire as both
Chairman and a Director effective May 6, 1999. The Company has employment
contracts ("Employment Contracts") with four of the other named executives,
namely Mr. Perrin, Ms. Jung, Mrs. Kropf and Mr. Ferreira.
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.
The Employment Contracts also provide that upon the executive's actual or
constructive termination of employment 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 1997 LTIP Performance Units. Assuming an actual or potential change of
control had occurred on January 2, 1999 and with termination of the executives
immediately thereafter, Mr. Perrin would receive $5,394,000; Ms. Jung would
receive $3,687,000; Mrs. Kropf would receive $2,889,000 and Mr. Ferreira would
receive $3,192,000 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.
18
<PAGE>
PROPOSAL 2--AMENDMENT OF CERTIFICATE OF INCORPORATION
The Board of Directors proposes and recommends the approval of an amendment
to the Company's Certificate of Incorporation pursuant to which the 400,000,000
shares, $.25 par value, of Common Stock presently authorized would be changed
into 800,000,000 shares. 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 825,000,000
shares, divided into two classes consisting of 800,000,000 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, 1999.
During 1998 the Company effected a 2-for-1 split of its Common Stock. The
current number of authorized shares of Common Stock that are not issued or
reserved is not sufficient to enable the Company to effect another 2-for-1 stock
split. Although there is no certainty that the Board would declare a stock split
in the future, it is believed that the proposed increase in the number of
authorized shares will provide the Company with the desired flexibility to do so
(in the form of a stock dividend) without having to wait until a later meeting
of shareholders.
As of December 31, 1998, of the 400,000,000 authorized shares of Common
Stock, a total of 262,520,726 shares were issued and outstanding, 88,793,640
were held in the Company's treasury and 7,859,561 were reserved for issuance for
stock options and other stock incentives authorized by the 1993 Stock Incentive
Plan. The proposed additional shares to be authorized for issuance, apart from
any possible future 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.
The affirmative vote of 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.
19
<PAGE>
PROPOSAL 3--RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Unless otherwise directed by the Shareholders, proxies will be voted for
ratification of the appointment by the Board of Directors, upon the
recommendation of the Audit Committee, of PricewaterhouseCoopers L.L.P.,
Certified Public Accountants, as independent accountants for the year 1999.
PricewaterhouseCoopers L.L.P. began auditing the accounts of the Company in
1989. If the appointment of PricewaterhouseCoopers L.L.P. is not ratified by the
Shareholders, the Audit Committee will reconsider its recommendation. The
Company is informed that no member of PricewaterhouseCoopers 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
PricewaterhouseCoopers 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 PRICEWATERHOUSECOOPERS L.L.P. AS INDEPENDENT
ACCOUNTANTS FOR THE YEAR 1999.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if any other matters are properly brought before the
Annual Meeting, the persons appointed in the accompanying proxy intend to vote
the shares represented thereby in accordance with their best judgment.
SOLICITATION OF PROXIES
The cost of the solicitation of proxies on behalf of Avon will be borne by
Avon. Directors, officers and other employees of Avon may, without additional
compensation except reimbursement for actual expenses, solicit proxies by mail,
in person or by telecommunication. In addition, Avon has retained Morrow & Co.,
Inc. at a fee estimated not to exceed $15,000, plus reasonable out-of-pocket
expenses, to assist in the solicitation of proxies. Avon will reimburse brokers,
fiduciaries, custodians and other nominees for out-of-pocket expenses incurred
in sending Avon's proxy materials to, and obtaining instructions relating to
such materials from, beneficial owners.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any proposal that a Shareholder may desire to have included in the
Company's proxy material for presentation at the 2000 Annual Meeting must be
received by the Company at Avon Products, Inc., 1345 Avenue of the Americas, New
York, New York 10105, Attention: Secretary, on or prior to November 24, 1999.
Upon the written request of any Shareholder to the Shareholder Relations
Department (Attention: Marilyn Reynolds) at the address listed above (telephone
number 212-282-5619), the Company will provide without charge a copy of its
Annual Report on Form 10-K for 1998, 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, 1999
New York, New York
20
<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.
445 Park Avenue
New York, New York 10022
(212) 754-8000
Call Toll-Free 1-800-662-5200
21
<PAGE>
A V O N
<PAGE>
- --------------------------------------------------------------------------------
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 $.25 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 6, 1999
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 PROPOSAL 1 (THE ELECTION AS DIRECTORS
OF THE NOMINEES LISTED BELOW), FOR PROPOSALS 2 AND 3, AND, IN THE
DISCRETION OF THE PROXIES NAMED ABOVE, ON ALL OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE ANNUAL MEETING.
NOMINEES FOR ELECTION AS DIRECTORS
CLASS OF 2002: BRENDA C. BARNES, FRED HASSAN, ANN S. MOORE AND
LAWRENCE A. WEINBACH
Instruction for Cumulative Voting for The Class of 2002: 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 2002 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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FOLD AND DETACH HERE
<PAGE>
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[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. 1305
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, AND 3.
1. Proposal 1
Election of Directors to the Class of 2002 (see reverse).
[ ] FOR [ ] WITHHELD
- ---------------------------------------------------------------------------
To withhold authority for any nominee(s) for the Class of 2002, write the
name(s) of such nominee(s) in the space provided above.
2. Proposal 2
Amend Certificate of Incorporation
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal 3
Ratification of the appointment of PricewaterhouseCoopers 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, 1999.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
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AVON PRODUCTS, INC.
PERSONAL SAVINGS ACCOUNT PLAN
CONFIDENTIAL VOTING INSTRUCTIONS CARD
To: Chase Manhattan Bank, N.A. or Trustee (the "Trustee") under the Avon
Products, Inc. Personal Savings Account 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
R of substitution and resubstitution, to vote and act with respect to all
shares of the Company's Common Stock, par value $.25 per share (the
O "Shares"), credited to the undersigned's Savings Plan account, at the
Annual Meeting of Shareholders of the Company to be held on May 6, 1999,
X and at any 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 Instruction
Card, and date, sign and return the card to the Trustee in the enclosed
envelope so that it is received by April 30, 1999.
Unless your card is received by April 30, 1999, 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 2002: BRENDA C. BARNES, FRED HASSAN, ANN S. MOORE AND LAWRENCE A.
WEINBACH
Instruction for Cumulative Voting for The Class of 2002: 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 2002 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
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
- --------------------------------------------------------------------------------
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. 4302
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, AND 3.
1. Proposal 1
Election of Directors to the Class of 2002 (see reverse).
[ ] FOR [ ] WITHHELD
- ------------------------------------------------------------------------------
To withhold authority for any nominee(s) for the Class of 2002, write the
name(s) of such nominee(s) in the space provided above.
2. Proposal 2
Amend Certificate of Incorporation
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal 3
Ratification of the appointment of PricewaterhouseCoopers as Avon's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE SIGN, DATE AND MAIL YOUR 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 PROXY REVOKES ALL PRIOR DATED PROXIES. THE SIGNER HEREBY ACKNOWLEDGES
RECEIPT OF AVON'S PROXY STATEMENT DATED MARCH 25, 1999.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
