<PAGE> 1
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED by the registrant X
Filed by a party other than the registrant
Check the appropriate box:
Preliminary proxy statement
Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
X Definitive proxy statement
Definitive additional materials
Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
U.S. CAN CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(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:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
Fee paid previously with preliminary materials.
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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[US CAN LOGO]
U.S. CAN CORPORATION
900 COMMERCE DRIVE
OAK BROOK, ILLINOIS 60523
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 22, 1999
The 1999 Annual Meeting of Stockholders of U.S. Can Corporation (the
"Company") will be held on Thursday, April 22, 1999, at 10:00 a.m. (local time),
at The Chicago Club, located at 81 East Van Buren Street, Chicago, Illinois, for
the following purposes:
(1) To elect three directors, each to hold office for a term of three
years;
(2) To consider and act on the proposed 1999 Equity Incentive Plan;
and
(3) To transact any other business which may properly be brought
before the Annual Meeting or any adjournment thereof.
Only stockholders of record as of February 26, 1999, are entitled to notice
of, and to vote at, the Annual Meeting and any adjournment thereof. For a period
of at least ten days prior to the Annual Meeting, a complete list of
stockholders entitled to vote at the Annual Meeting will be available for
examination by any stockholder, for any purpose germane to the meeting, during
regular business hours at the offices of Harris Trust and Savings
Bank/Shareholder Services, the Company's transfer agent, located at 311 West
Monroe Street, 11th Floor, Chicago, Illinois.
Whether or not you plan to attend the Annual Meeting, please vote on all
Proposals, sign and date the enclosed proxy card and return it in the reply
envelope (included in this package) as soon as possible. Following these
instructions will ensure that your shares are represented and voted in
accordance with your wishes.
IF YOU HAVE QUESTIONS, OR NEED ASSISTANCE IN VOTING YOUR SHARES CORRECTLY,
PLEASE CALL MACKENZIE PARTNERS, INC., WHICH IS ASSISTING US WITH THIS
SOLICITATION, TOLL-FREE AT (800) 322-2885.
By Order of the Board of Directors
Steven K. Sims
Steven K. Sims
Vice President,
General Counsel and Secretary
Oak Brook, Illinois
March 24, 1999
<PAGE> 3
U.S. CAN CORPORATION
900 COMMERCE DRIVE
OAK BROOK, ILLINOIS 60523
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 22, 1999
The enclosed proxy is solicited by the Board of Directors of U.S. Can
Corporation (the "Company") for use at the Annual Meeting of Stockholders to be
held on Thursday, April 22, 1999 (the "1999 Annual Meeting"). Shares of the
Company's common stock, par value $0.01 per share (the "Common Stock"),
represented by a properly executed proxy in the accompanying form, will be voted
at the Annual Meeting. The proxy may be revoked at any time before its exercise
by (i) sending written notice of revocation to Steven K. Sims, Corporate
Secretary, U.S. Can Corporation, 900 Commerce Drive, Oak Brook, Illinois, 60523,
(ii) signing and delivering a subsequently dated proxy or (iii) attending the
1999 Annual Meeting in person and giving notice of revocation to the Inspectors
of Election. This Proxy Statement and the accompanying Notice of Annual Meeting
of Stockholders and proxy card are being mailed to stockholders beginning on or
about March 24, 1999.
February 26, 1999 was the record date for the determination of stockholders
entitled to notice of, and to vote at, the 1999 Annual Meeting. On that date,
there were outstanding and entitled to vote 13,254,730 shares of Common Stock,
which is the Company's only class of outstanding voting securities. Each
stockholder is entitled to one vote for each share of Common Stock held of
record.
Two Inspectors of Election, each from Harris Trust and Savings Bank and
appointed by the Board of Directors, will determine the shares represented at
the 1999 Annual Meeting and the validity of proxies and ballots, and tabulate
the votes cast at the 1999 Annual Meeting. A plurality of the votes cast at the
1999 Annual Meeting is required for the election of directors. An affirmative
vote of a majority of the shares of Common Stock present in person or
represented by proxy and entitled to vote at the 1999 Annual Meeting is required
for approval of all other matters submitted to the stockholders for their
consideration.
Abstentions and broker non-votes will be included when determining whether
a quorum is present at the 1999 Annual Meeting. Abstentions and broker non-votes
have no effect on voting for the election of directors because neither is
considered a vote cast. An abstention has the effect of voting against a matter
where a vote of a majority of the shares present and entitled to vote is
required since an abstention is counted as a share present and entitled to vote
but is not counted as a vote for such matter. Broker non-votes have no effect
where a majority of the shares present and entitled to vote is required since
they are not counted as shares present and entitled to vote with respect to such
matter. A broker non-vote occurs when a nominee holding shares for a beneficial
owner does not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that proposal and has not received
instructions from the beneficial owner (despite voting on at least one other
proposal for which the nominee has discretionary voting power or has received
such instructions).
<PAGE> 4
PROPOSAL 1
ELECTION OF DIRECTORS
In accordance with the By-Laws of the Company, the Board of Directors has
at present fixed the number of directors constituting the Board at nine. In
accordance with the Company's Restated Certificate of Incorporation, the
directors have been divided into three classes, as nearly equal in number as is
reasonably possible. The class of directors whose term expires at the 1999
Annual Meeting consists of two persons. There is also one vacancy in this class,
which Charles W. Gaillard has been nominated to fill. The Company proposes to
elect three directors, each to hold office for a term of three years and until
his successor has been duly elected and qualified. Unless otherwise instructed
by the stockholder, the persons named in the enclosed form of proxy will vote
the shares represented by such proxy for the election of the three nominees
named in this Proxy Statement.
The Company has no reason to believe that any nominee named herein will be
unavailable to serve as a director. However, if any nominee for any reason is
unable to serve or for good cause will not serve, the proxy may be voted for
such substitute nominee as the persons appointed in the proxy may in their
discretion determine. Stockholders may not cumulate their votes in the election
of directors.
The following nominees, other than Charles W. Gaillard, are currently
directors of the Company and its wholly owned subsidiary, United States Can
Company ("U.S. Can"):
CHARLES W. GAILLARD. Mr. Gaillard has been President of General Mills since
1995. General Mills is one of the largest consumer foods companies in the United
States. Mr. Gaillard joined General Mills in 1966 and advanced through various
food marketing management positions, becoming Executive Vice President in 1989
and Vice Chairman in 1993. From 1989 to 1993 he was Chief Executive Officer of
Cereal Partners Worldwide, a joint venture of General Mills and Nestle, S.A. Mr.
Gaillard is a director of Whitman Corporation. He also serves on the Board of
Overseers for The Carlson School of Management of the University of Minnesota
and is Vice President of the Minnesota Orchestral Association Board. He is
currently standing for election to the Board of Directors of Valspar
Corporation.
RICARDO POMA. Ricardo Poma has served as a Director of the Company since
1983. Mr. Poma is Managing Partner and Chief Executive Officer of Grupo Poma, a
family holding company involved in automobile distribution, hotels, real estate
development and manufacturing. Mr. Poma has held this position since June 1979.
Mr. Poma is also Vice Chairman of International Bancorp of Miami, Inc.; a member
of the Advisory Board of Bain Capital, an investment fund; and President of the
School for Economics and Business, a private university in El Salvador. Mr. Poma
is a member of the Audit Committee and the Nominating and Corporate Governance
Committee of the Board of Directors.
LOUIS B. SUSMAN. Louis B. Susman has served as a Director of the Company
since 1998. Mr. Susman is Vice Chairman of Investment Banking and Managing
Director of Salomon Smith Barney Inc. ("Salomon Smith Barney"). He is also a
member of its Investment Banking Management Committee, with responsibility for
all Investment Banking offices outside of New York City. Prior to joining
Salomon Brothers Inc (one of the predecessors of Salomon Smith Barney) in June
1989, Mr. Susman was a senior partner at the St. Louis-based law firm of
Thompson & Mitchell. Mr. Susman is a Director of Drury Inns and has previously
served on the Boards of the St. Louis National Baseball Club, Inc., Silver
Eagle, Inc., Hasco International, PennCorp Financial, Avery, Inc. and other
publicly-held corporations. Mr. Susman serves as Chairman of the Nominating and
Corporate Governance Committee and as a member of the Audit Committee and the
Compensation and Management Development Committee of the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE ELECTION OF ALL OF THE NOMINEES.
2
<PAGE> 5
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information, as of February 28,
1999, with respect to (i) each executive officer or director of the Company,
(ii) each executive officer of U.S. Can, who is deemed to be an executive
officer of the Company due to his responsibilities (as indicated below), and
(iii) Mr. Gaillard, a Director nominee.
<TABLE>
<CAPTION>
NAME AGE TITLE
- ---- --- -----
<S> <C> <C>
Paul W. Jones........................ 50 Chairman of the Board, President and Chief Executive
Officer
Frank J. Galvin...................... 57 Executive Vice President and General Manager, Aerosol
Products and Assistant Secretary
John L. Workman...................... 47 Executive Vice President and Chief Financial Officer
Roger B. Farley...................... 55 Senior Vice President, Human Resources
David R. Ford........................ 52 Senior Vice President, International, U.S. Can, and
President, European Operations
Lawrence T. Messina.................. 53 Senior Vice President and General Manager, Paint,
Plastic and General Line, U.S. Can
Peter J. Andres...................... 55 Vice President, Treasurer and Assistant Secretary
John R. McGowan...................... 57 Vice President and Controller
Larry S. Morrison.................... 45 Vice President and General Manager, Custom and
Specialty Products, U.S. Can
Steven K. Sims....................... 34 Vice President, General Counsel and Secretary
Calvin W. Aurand, Jr................. 68 Director
Benjamin F. Bailar................... 64 Director
Carl Ferenbach....................... 56 Director
Ricardo Poma......................... 52 Director
Francisco A. Soler................... 53 Director
Louis B. Susman...................... 61 Director
Charles W. Gaillard.................. 58 Director Nominee
</TABLE>
Each member of the Board of Directors of the Company is also a member of
the Board of Directors of U.S. Can.
The Company's Board of Directors is divided into three classes serving
staggered three-year terms. Each Director of the Company is elected at the
annual meeting at which such Director's class stands for election and serves
until the annual meeting of the Company's stockholders three years later, or
until such Director's successor is duly elected and qualified. Messrs. Poma and
Susman are serving three-year terms expiring at the 1999 Annual Meeting; Mr.
Gaillard has been nominated to be elected to the same class of directors and, if
elected, his term would begin following the 1999 Annual Meeting; Messrs. Bailar
and Jones are serving three-year terms expiring at the 2000 Annual Meeting; and
Messrs. Aurand, Soler and Ferenbach are serving three-year terms expiring at the
2001 Annual Meeting.
In connection with the Company's initial public offering of Common Stock in
March 1993 (the "IPO"), the Company entered into an agreement (the "Stockholders
Agreement") with its stockholders immediately prior to the IPO pursuant to which
each of Salomon Smith Barney (successor-in-interest to Salomon Brothers Inc) and
Messrs. William J. Smith (former Chairman and CEO of the Company), Poma and
Soler, for so long as each of them owns beneficially at least 175,000 shares of
Common Stock, has the right to submit a name to the Board of Directors to be
included in the slate of nominees for election to the Board of Directors. Mr.
Susman is Salomon Smith Barney's current director designate, and Messrs. Poma
and Soler are self-designated directors. Mr. Smith was, until his resignation in
July 1998, a self-designated director. Mr. Poma has designated himself to serve
a three-year term which would commence at the 1999 Annual Meeting upon his
reelection.
3
<PAGE> 6
The Stockholders Agreement provides that, if a designee ceases to serve for
any reason, the party who submitted the name of such designee has the right to
name such designee's successor for approval by the Board of Directors to fill
the vacancy on the Board of Directors, and any director so chosen shall hold
office for a term expiring at the Annual Meeting at which the term of office of
the class to which such director has been added expires, or until such
director's successor has been duly elected and qualified. Mr. Smith relinquished
all rights under the Stockholders Agreement in connection with his resignation
from the Board in July 1998.
BUSINESS EXPERIENCE
The following biographical information is provided, as of February 28,
1999, with respect to each person named in the management table, other than the
three nominees for election:
Paul W. Jones joined the Company as President and Chief Executive Officer
in April 1998, and was elected Chairman of the Board in July 1998. Previously,
Mr. Jones was the President of Greenfield Industries, Inc. ("Greenfield"), from
1989 to 1998, and its Chief Executive Officer and a Board member from 1993 to
1998. Greenfield is an international tool manufacturer. Prior to that, Mr. Jones
was with General Electric ("GE") for 19 years, holding many positions. From 1988
to 1989, he served as General Manager -- Manufacturing for GE Transportation
Systems. Prior to that time, Mr. Jones was the General Manager of GE Drives,
Motor and Generator Operations. Mr. Jones is a member of the Board of Directors
of Omniquip International, Inc. and Federal Signal Corporation.
Frank J. Galvin was appointed Executive Vice President and General Manager,
Aerosol Products of U.S. Can in 1998. Prior to that, Mr. Galvin served as
Executive Vice President, Operations of U.S. Can from February 1991 to his most
recent appointment. From April 1987 to February 1991, Mr. Galvin served as
Senior Vice President, Sales and Marketing for U.S. Can. Before joining U.S.
Can, Mr. Galvin spent 22 years with Continental Can Company ("CCC"), serving in
various positions including General Manager of the Midwest Division, Director of
Finance of Central Operations and National Sales Manager for the General
Packaging Division.
John L. Workman has been Executive Vice President and Chief Financial
Officer of the Company since his appointment in August 1998. Prior to his
appointment, Mr. Workman served as Executive Vice President and Chief
Restructuring Officer at Montgomery Ward Holding Corporation. Ward is one of the
nation's largest privately-held retailers. Mr. Workman joined Ward in 1984 as a
general auditor and held a variety of financial positions with Ward, including
Vice President -- Controller, Vice President -- Finance and Chief Financial
Officer. Mr. Workman was an executive officer of Ward in July 1997 when it filed
for reorganization under Chapter 11 of the Federal bankruptcy laws. Prior to
joining Ward, Mr. Workman was a partner in Main Hurdman CPAs which later merged
into KPMG.
Roger B. Farley joined U.S. Can as Senior Vice President, Human Resources
in August 1998. Prior to joining U.S. Can, Mr. Farley was Senior Vice President,
Human Resources (July 1997 to July 1998) and Vice President, Human Resources
(June 1994 to June 1997) of Greenfield. Greenfield is an international tool
manufacturer. Before joining Greenfield, Mr. Farley spent 28 years with GE in
various operating and human resources positions.
David R. Ford was appointed Senior Vice President, International of U.S.
Can and President, European Operations in November 1997. From 1987 until this
appointment, Mr. Ford held a number of senior management positions with CMB
Packaging Group, a division of CarnaudMetalbox (a Crown, Cork & Seal company),
including Vice President, Eastern Europe; Vice President, European Food Can
business; Regional Vice President, Northern Europe; and Managing Director, CMB
Food Can UK. Crown, Cork & Seal is a global metal and plastic packaging company.
Lawrence T. Messina was appointed to serve as Senior Vice President and
General Manager, Paint, Plastic and General Line of U.S. Can in 1998. Prior to
that, Mr. Messina served as Senior Vice President, U.S. Aerosol, Paint, Plastic
and General Line of U.S. Can from August 1997 to his most recent appointment.
From February 1996 to August 1997, Mr. Messina served as Senior Vice President,
International of U.S. Can. Mr. Messina had previously served as Vice President,
Western and Machine Center Operations since
4
<PAGE> 7
September 1994, and Group Executive overseeing U.S. Can's International
operations since December 1995. Mr. Messina also served as Vice President and
General Manager, Paint and Oblong from April 1992 to September 1994, and as
Director of Operations for U.S. Can's Commerce and Bayside, California plants
from 1990 to 1992. Mr. Messina joined U.S. Can in March 1988 as Area Sales
Director, U.S. Can West.
Peter J. Andres has served as U.S. Can's Treasurer since September 1987,
Vice President since January 1988, and Assistant Secretary since January 1990.
He has served as Vice President, Treasurer and Assistant Secretary of the
Company since January 1990. From March to August 1987, Mr. Andres served as
Director of Financial Services of U.S. Can. Prior to joining U.S. Can, Mr.
Andres held a number of financial and sales positions during his 18-year tenure
with American Can Company.
John R. McGowan has served as Vice President and Controller of U.S. Can
since August 1989. Mr. McGowan joined U.S. Can in May 1987 and served as Vice
President, Planning for U.S. Can from September 1987 to July 1989. Prior to
joining U.S. Can, Mr. McGowan held a number of financial and management
positions during his 25-year tenure with CCC. Mr. McGowan was employed in CCC's
general packaging operations as Division Manager, Finance from February to May
1987 and as Division Controller from February 1982 to January 1987.
Larry S. Morrison was appointed to serve as Vice President and General
Manager, Custom & Specialty Products of U.S. Can in 1998. Prior to that, Mr.
Morrison served as Vice President of Manufacturing of Custom and Specialty from
July 1995 to his most recent appointment. From October 1991 to July 1995, Mr.
Morrison served as Director of Operations at U.S. Can's Hubbard, Ohio and
Baltimore, Maryland plants. Mr. Morrison was with Sherwin-Williams' container
division for 10 years prior to U.S. Can's acquisition of the division in 1983.
Steven K. Sims has served as Vice President, General Counsel and Secretary
of the Company and U.S. Can since June 1998. Prior to his election, Mr. Sims
served as Assistant General Counsel of U.S. Can from April 1995 to May 1998.
From September 1989 to March 1995, Mr. Sims was engaged in private practice at
the Chicago-based law firm of Ross & Hardies, representing public and private
companies in corporate and securities matters and mergers and acquisitions.
Calvin W. Aurand, Jr. has served as a Director of the Company since 1995.
In April 1995, Mr. Aurand retired as Chairman of the Board of Banta Corporation
("Banta"), Menasha, Wisconsin, a printing company where he was employed for over
five years. Mr. Aurand also served as President and Chief Executive Officer of
Banta during this period. Prior to joining Banta, Mr. Aurand was President and
Chief Operating Officer of American Bank Note Company, New York; President and
Chief Executive Officer of Charles P. Young Company, New York; President and
Chief Operating Officer of Stecker-Traung-Schmidt Corporation, Detroit; and had
held key financial positions in Bemis Company, Minneapolis. Mr. Aurand is a
director of Riverside Paper Corp., Schiele Graphics Corp., and Deluxe Corp.
Benjamin F. Bailar has served as a Director of the Company since 1986. He
is the Dean Emeritus of the Jones Graduate School of Administration at Rice
University, where he served as Dean from 1987 to 1997. He is also a director of
Dana Corporation, Smith International, Inc. and Trico Marine Services Inc.
Carl Ferenbach has served as a Director of the Company since 1983. Mr.
Ferenbach is a Managing Director of Berkshire Partners LLC, a private equity
investment firm. From March 1986 until June 1996, he was a general partner of
Berkshire Partners, Boston, Massachusetts, a private partnership sponsoring and
investing in private company acquisitions and recapitalizations and managing
five investment funds. Mr. Ferenbach is Chairman of the Board of Crown Castle
International Corporation. He also serves as a director of Wisconsin Central
Transportation Corporation; Tranz Rail Holdings Limited, a holding company that
owns Trans Rail Limited, which is the principal provider of rail transportation
services in New Zealand; English, Welsh and Scottish Railways Ltd., which
controls certain freight rail assets in the United Kingdom; and Australian
Transport Network, a rail freight operator in Australia.
Francisco A. Soler has served as a Director of the Company since 1983. Mr.
Soler is Chairman of International Bancorp of Miami, Inc., a holding company for
The International Bank of Miami, N.A., and has
5
<PAGE> 8
held this position since 1985. Mr. Soler is also President of Harbour Club
Milano Spa. and a director of various industrial and commercial companies in the
United Kingdom and El Salvador.
INFORMATION ABOUT THE BOARD OF DIRECTORS
The Board of Directors of the Company held nine meetings in 1998. The Board
has a standing Audit Committee, Compensation and Management Development
Committee and Nominating and Corporate Governance Committee. During 1998, no
director attended fewer than 75% of the aggregate of (1) all meetings of the
Board of Directors held while he was serving as a director and (2) all meetings
of any committee held while he was a member of such committee.
Audit Committee. The Audit Committee consists of Dean Bailar (Chairman)
and Messrs. Poma and Susman, each of whom is a non-employee director. Among the
Committee's functions are making recommendations to the Board of Directors
regarding the continued engagement of the Company's independent auditors,
reviewing with the independent auditors and the Company's financial management
the financial statements and results of the audit engagement, reviewing the
adequacy of the Company's system of internal accounting controls and reviewing
and approving audit and non-audit fees of the independent auditors. The Audit
Committee held six meetings in 1998.
Compensation and Management Development Committee. The Compensation and
Management Development Committee consists of Mr. Ferenbach (Chairman) and
Messrs. Bailar, Soler and Susman, each of whom is a non-employee director. The
Compensation and Management Development Committee develops and administers the
compensation programs for the Company's executive officers and other salaried
employees. The Compensation and Management Development Committee also works with
the Chief Executive Officer in the assessment of the organization's
effectiveness, leadership depth and the development of highly valued executives
and other managers throughout the Company. The Compensation and Management
Development Committee held seven meetings in 1998.
Nominating and Corporate Governance Committee. The Nominating and
Corporate Governance Committee consists of Mr. Susman (Chairman) and Messrs.
Aurand, Ferenbach and Poma. All of the members are non-employee directors. The
Nominating and Corporate Governance Committee makes recommendations to the Board
of Directors concerning the size and composition of the Board of Directors, the
qualifications of potential new directors and the formation of a slate of
directors to stand for election at each Annual Meeting of Stockholders. The
Nominating and Corporate Governance Committee will consider Board nominees
recommended by stockholders. The Nominating and Corporate Governance Committee
also advises the Board on the Company's relations with its stockholders and all
matters concerning corporate governance to the extent these matters are not the
responsibility of other committees. The Nominating and Corporate Governance
Committee held two meetings in 1998.
COMPENSATION OF DIRECTORS
Outside directors of the Company receive annual retainers of $30,000 and
meeting fees of $1,500 for each Board of Directors meeting attended, $1,000 for
each Board Committee meeting attended, and $500 for each telephonic Board
meeting in which a director participates. Each director is reimbursed for
reasonable expenses incurred in connection with services provided as a director.
In payment of his 1998 retainer, each outside director or his designate received
an award of 1,690 shares in April 1998, which will vest in April 1999 if the
director is still serving on the Board. In April 1999, each outside director
will have the option to take his retainer in cash or shares of restricted stock
equivalent in amount to $30,000. Vesting of director restricted stock would be
accelerated in the event of certain change-in-control transactions, including
but not limited to the acquisition of 15% or more of the Company's outstanding
shares of Common Stock by a previously unaffiliated person, or a merger in which
the Company is not the surviving entity.
In late 1997 and early 1998, Mr. Aurand worked as a consultant for the
Company, providing management assistance during the transition to a new
President and Chief Executive Officer and assisting in the analysis and
implementation of certain recommendations of an outside management consulting
firm. The Company paid Mr. Aurand $106,000 for these services during 1998.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following tables set forth information relating to (a) compensation
paid or accrued by the Company and its subsidiaries to the Chief Executive
Officer ("CEO"), each of the four most highly compensated executive officers of
the Company (other than the CEO) serving at December 31, 1998, and the Company's
former CEO (each, a "named executive officer"), for services rendered to the
Company and its subsidiaries in all capacities during fiscal years 1998, 1997
and 1996, (b) stock option grants made to named executive officers in 1998 and
(c) options held by named executive officers at December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
AWARDS PAYOUTS
----------------------- -------
ANNUAL COMPENSATION RESTRICTED SECURITIES
------------------------------------- STOCK UNDERLYING
OTHER ANNUAL AWARDS OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (A) SARS (#) PAYOUTS COMPENSATION
- --------------------------- ---- -------- -------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul W. Jones(b)............... 1998 $384,900 $618,800(c) $ 5,500 none 450,000 none $ 68,100(d)
President and Chief Executive
Officer
David R. Ford(b)(e)............ 1998 $365,100 $143,100(c) none none 28,000 none $116,600(f)
Senior Vice President, 1997 $ 37,445 none none $255,000 none none none
International and President,
European Operations
Frank J. Galvin................ 1998 $331,500 $118,300(c) $ 10,400 none 14,000 none $ 67,400(d)
Executive Vice President and 1997 $315,000 none $ 9,800 none none none $ 52,300
General Manager, Aerosol 1996 $310,800 $ 80,300(g) $ 10,400 none none none $ 38,700
Products and Assistant
Secretary
John L. Workman(b)............. 1998 $119,600 $165,000(c) $ 2,900 none 117,750 none $ 2,200(d)
Executive Vice President and
Chief Financial Officer
Lawrence T. Messina............ 1998 $200,300 $ 67,000(c) $ 6,700 none 14,000 none $ 23,000(d)
Senior Vice President and 1997 $176,500 none $ 7,600 $ 73,750 none none $ 16,500
General Manager, Paint, 1996 $156,200 $ 40,000(g) $ 3,600 $ 81,250 none none $ 14,500
Plastic & General Line
William J. Smith(b)............ 1998 $498,500 none $328,900(h) none none none $376,100(i)
Former President and 1997 $800,000 none $405,500(h) none none none $350,000
Chief Executive Officer 1996 $800,000 none $316,000(h) none none none $350,000
</TABLE>
- -------------------------
(a) On December 31, 1998, Messrs. Galvin and Messina held 30,000 and 15,000
shares, respectively, of restricted Common Stock having a market value,
based on the closing price of the Common Stock on the last trading date in
1998, of $534,375 and $267,188, respectively. Messrs. Ford and Messina would
be entitled to receive dividends, if any, on the shares of Common Stock
underlying the restricted stock awards shown in this column.
(b) Messrs. Jones and Workman joined the Company in April and August 1998,
respectively. Mr. Ford joined the Company in November 1997. Mr. Smith
retired as President and CEO of the Company in March 1998.
(c) The respective amounts for Messrs. Jones and Workman consist of a signing or
make-whole bonus (based on foregone bonus from their previous employers) and
a guaranteed partial-year 1998 incentive payout. For 1998, the amounts shown
for all of these officers also include the dollar value of the additional
deferred stock units provided by the Company to the named executive officers
in connection with their deferral of a portion of their 1998 bonus into
deferred stock units under the Company's Executive Deferred Compensation
Plan. Under this Plan, eligible executives may defer up to 25% of their
annual incentive compensation into deferred Company stock units, to be
settled in cash or stock upon separation
7
<PAGE> 10
from service. The Company contributes one additional deferred stock unit for
each five deferred stock units elected by the executive.
(d) The amount shown for Mr. Jones consists of the cost of life insurance in
excess of the Company's standard benefit ($5,800), reimbursement of legal
expenses incurred by Mr. Jones in connection with his employment by the
Company ($11,100) and contributions or payments for the benefit of Mr. Jones
to the Salaried Employees Savings and Retirement Accumulation Plan ("SRAP")
and pursuant to two nonqualified retirement plans ($51,200). The amounts
shown for Messrs. Galvin, Workman and Messina are contributions or payments
for the benefit of each executive to the SRAP and pursuant to the
nonqualified retirement plans.
(e) Mr. Ford is compensated in British Pounds. All amounts shown for Mr. Ford
have been converted to U.S. Dollars at the exchange rate in effect as of
December 31, 1998.
(f) The amount shown consists of contributions to an executive retirement plan
and an overseas employee benefit trust, of which Mr. Ford is the
beneficiary, designed to provide the contractual retirement benefits
($116,100) and the cost of life insurance ($500).
(g) The 1996 bonuses for Messrs. Galvin and Messina include 2,000 and 1,500
shares of restricted stock, respectively, awarded in February 1997, valued
at $15 1/8 per share, the closing price of the Common Stock on the award
date.
(h) These amounts include $163,700 for reimbursement of medical expenses
incurred by one of Mr. Smith's adult children and $107,900 reimbursed for
the payment of taxes in respect of perquisites and personal benefits for
1998; $250,300 for reimbursement of medical expenses incurred by one of Mr.
Smith's adult children and $62,300 reimbursed for the payment of taxes in
respect of perquisites and personal benefits for 1997; and $185,900 for
reimbursement of medical expenses incurred by one of Mr. Smith's adult
children and $51,000 reimbursed for the payment of taxes in respect of
perquisites and personal benefits for 1996. Amounts paid for reimbursement
of medical expenses incurred by one of Mr. Smith's adult children for 1997
and 1996 were originally classified as having been made under the Company's
medical plans. The Company subsequently determined such amounts were not
covered under its medical plans and has, therefore, reclassified such
amounts as other annual compensation.
(i) The amount shown represents the premium paid by U.S. Can pursuant to the
Nonqualified Supplemental Benefit Plan for William J. Smith (the
"Supplemental Benefit Plan"), plus the amount of post-retirement benefits
paid to Mr. Smith under the Supplemental Benefit Plan in 1998. Under the
Supplemental Benefit Plan, Mr. Smith is entitled to an annual supplemental
retirement benefit of $338,000. The retirement benefits will be payable,
upon Mr. Smith's death, to Mr. Smith's spouse during her lifetime. U.S. Can
may use an insurance policy on Mr. Smith's life, in the face amount of $4
million, as a source for paying the supplemental retirement obligation to
Mr. Smith and his surviving spouse, and Mr. Smith was required to transfer
ownership of the policy to U.S. Can at the time of his retirement.
8
<PAGE> 11
OPTION/SAR GRANTS IN 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------
NUMBER OF POTENTIAL REALIZABLE VALUE AT
SECURITIES % OF TOTAL ASSUMED ANNUAL RATES OF
UNDERLYING OPTIONS/SARS EXERCISE STOCK PRICE APPRECIATION FOR
OPTIONS/SARS GRANTED TO OR BASE OPTION TERM
GRANTED EMPLOYEES IN PRICE EXPIRATION -----------------------------
NAME (#) FISCAL YEAR ($/SH)(1) DATE 5% ($) 10% ($)
- ---- ------------ ------------ --------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul W. Jones........ 300,000(2)(3) 34.77% $18.25 4/1/08 $3,444,000 $8,727,000
20,667(4) 2.40% $17.00 8/1/08 $ 220,930 $ 559,869
31,667(4) 3.67% $17.13 8/1/08 $ 341,054 $ 864,509
23,333(4) 2.70% $17.19 8/1/08 $ 252,230 $ 639,324
22,666(4) 2.63% $17.25 8/1/08 $ 245,926 $ 623,088
1,667(4) 0.19% $17.56 8/1/08 $ 18,404 $ 46,659
50,000(2) 5.79% $16.13 10/29/08 $ 507,000 $1,285,500
David R. Ford........ 28,000(2) 3.25% $16.13 10/29/08 $ 283,920 $ 719,880
Frank J. Galvin...... 14,000(2) 1.62% $16.13 10/29/08 $ 141,960 $ 359,940
John L. Workman...... 75,000(2)(3) 8.69% $16.00 8/10/08 $ 754,500 $1,912,500
1,650(4) 0.19% $16.50 8/10/08 $ 17,127 $ 43,395
17,100(4) 1.98% $16.88 8/10/08 $ 181,602 $ 459,990
24,000(2) 2.78% $16.13 10/29/08 $ 243,360 $ 617,040
Lawrence T.
Messina............ 14,000(2) 1.62% $16.13 10/29/08 $ 141,960 $ 359,940
</TABLE>
- -------------------------
(1) Payment of the exercise price for all of the options listed may be made in
cash or stock, or through a cashless, broker-assisted exercise.
(2) These option grants vest over a three-year employment period, one-third on
the first anniversary of the grant date, one-third on the second anniversary
of the grant date and one-third on the third anniversary of the grant date,
unless vesting is accelerated by reason of termination without cause or
certain defined change-in-control events.
(3) These options were granted as incentive stock options to the maximum extent
permitted by the Internal Revenue Code. At the time Mr. Jones exercises the
portion of his options which are not incentive stock options (283,563), the
Company has agreed to make an additional payment to him in an amount
sufficient, on a net, after-tax basis, to compensate him for the difference
between the actual tax treatment to him of the exercise of these options and
the tax treatment that would have occurred had he received incentive stock
options.
(4) These options, which were granted to match the named executive's personal
purchases of Common Stock on a three and one-half-to-one ratio, in the case
of Mr. Jones, and a three-to-one ratio, in the case of Mr. Workman, were
fully vested upon grant.
9
<PAGE> 12
AGGREGATED OPTION/SAR EXERCISES IN 1998 AND 1998 FY-END OPTION/SAR VALUES
No shares were acquired, nor value realized, as a result of option
exercises by the named executive officers during 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS/SARS IN-THE-MONEY
AT FY-END(#) OPTIONS/SARS AT FY-END($)(A)
-------------------- ----------------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ---- -------------------- ----------------------------
<S> <C> <C>
Paul W. Jones................................... 100,000/350,000 $72,562/$87,500
David R. Ford................................... none/28,000 -0-/$49,000
Frank J. Galvin................................. 80,000/14,000 $570,000/$24,500
John L. Workman................................. 18,750/99,000 $19,369/$182,625
Lawrence T. Messina............................. 20,000/14,000 $117,500/24,500
William J. Smith................................ 75,000/none $440,625/-0-
</TABLE>
- -------------------------
(a) This amount is the aggregate of the number of in-the-money options
multiplied by the difference between the closing price of the Common Stock
on the New York Stock Exchange on December 31, 1998 (the last trading
session in 1998) and the exercise price for that option. See Note (3) to the
prior table regarding tax gross-up provisions relating to some of Mr. Jones'
options.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Paul W. Jones
The Company entered into a three-year employment agreement with Mr. Jones,
beginning in April 1998. Under the terms of Mr. Jones' employment agreement, Mr.
Jones will be paid an annual base salary of at least $500,000 per annum. His
base salary and other compensation will be reviewed annually by the Compensation
and Management Development Committee of the Board of Directors. The Company has
also agreed to provide Mr. Jones with group term life insurance in the amount of
$2,000,000, an automobile allowance and employee benefits comparable to those
provided to other senior executives of the Company.
In the event of Mr. Jones' death or permanent disability or a change of
control of the Company, or if the Board of Directors terminates his employment
as Chief Executive Officer of the Company for any reason other than cause, the
initial 300,000 options granted to him will vest automatically. In the event of
the termination of Mr. Jones' employment with the Company due to his death or
permanent disability, the Company has agreed to pay him or his estate an amount
equal to one year's base salary. In the event Mr. Jones' employment is
terminated by the Company without cause, he shall receive his base salary and
benefits for the remainder of the term of his employment agreement or 18 months,
whichever is longer, and he will receive a bonus prorated to reflect any partial
year of employment if, at the end of that year, it is determined that the
minimum bonus target has been met or exceeded. If Mr. Jones' employment
agreement is terminated for cause, he will receive no further compensation. In
the event that there is a change of control of the Company and within two years
of that change of control Mr. Jones resigns because he suffers a material
diminution in salary, benefits or responsibilities or is required to relocate
more than 50 miles from Oak Brook, Illinois ("Resignation for Cause"), he will
be entitled to the same compensation as if his employment were terminated
without cause. If the total value of his compensation treated as contingent on
any change of control exceeds the threshold specified under Section 280G(b) of
the Code beyond which a portion of such benefits are considered an excess
parachute payment, he will be reimbursed in an amount such that the total value
of such compensation, net of all applicable taxes, would be the same as if no
excise tax under 4999(a) of the Code were payable in respect to such excess
parachute payment.
10
<PAGE> 13
David R. Ford
U.S. Can, through its wholly owned subsidiary, USC Holding UK Limited (as
employer), has entered into a service agreement with Mr. Ford. The service
agreement will continue in effect until terminated by the employer or Mr. Ford,
but not beyond Mr. Ford's attainment of the employer's retirement age (currently
65). The employer has agreed to pay Mr. Ford a base salary of L220,000 per year
during the term of his agreement and to provide him retirement benefits no less
beneficial than those provided by his previous employer. He also receives an
employer-provided automobile. The employer has agreed to provide a target bonus
for Mr. Ford of 50% of base salary with the actual amount determined based upon
the attainment of pre-established performance goals. Mr. Ford's employment under
the agreement may be terminated by him, with 12 months advance notice to the
employer, and by the employer, with 24 months notice to Mr. Ford (except the
employer may terminate Mr. Ford's employment for cause without prior notice).
After termination notice is given and prior to expiration of the notice period,
the employer is required to continue to pay Mr. Ford's salary and provide other
contractual benefits, and Mr. Ford continues to be bound by the agreement. If
Mr. Ford's employment is terminated by reason of redundancy, the employer is
required to make an additional payment to Mr. Ford equal to two times Mr. Ford's
entitlement to statutory redundancy pay (to include the statutory entitlement).
The service agreement requires Mr. Ford to refrain from disclosing confidential
information acquired in connection with his employment with the employer, and
also requires Mr. Ford to refrain from working for any other firm during the
term of the agreement.
Frank J. Galvin
U.S. Can has entered into an employment agreement with Mr. Galvin. The
employment agreement will continue in effect until terminated by U.S. Can or Mr.
Galvin. U.S. Can has agreed to pay Mr. Galvin at his current base salary of
$320,000 per year during the term of his agreement and to provide the same
benefits provided to other officers of U.S. Can. Mr. Galvin may voluntarily
terminate his employment at any time, upon 30 days' written notice to U.S. Can.
U.S. Can may also terminate the employment agreement upon 30 days' written
notice, but if U.S. Can terminates Mr. Galvin's employment without cause, U.S.
Can must pay a severance allowance to Mr. Galvin equal to 24 months of his base
salary and insurance benefits. These provisions would also apply if Mr. Galvin's
employment would be terminated following a change of control. Mr. Galvin or his
designated beneficiary will also be entitled to receive up to two years of base
salary upon permanent disability or death. In addition, the agreement requires
Mr. Galvin to refrain from disclosing confidential information acquired in
connection with his employment at U.S. Can and to abstain from competing with
U.S. Can during the term of employment and for a period of two years thereafter
upon termination.
John L. Workman
In connection with its hiring of Mr. Workman, U.S. Can agreed to pay Mr.
Workman at a base salary of $300,000 per year, to be reviewed annually, and to
provide him an automobile allowance and other benefits customary for U.S. Can
executive officers. U.S. Can also agreed to provide Mr. Workman a bonus
opportunity under its revised management incentive plan, with a target of 50% of
base salary. U.S. Can also agreed to provide Mr. Workman 18 months' salary
continuation in the event of termination without cause or a change in control
and termination or constructive termination of Mr. Workman's employment.
Lawrence T. Messina
U.S. Can has entered into an employment agreement with Mr. Messina which
continues until terminated in accordance with the agreement. U.S. Can has agreed
to pay Mr. Messina at a current base salary of $195,000 per year during the term
of his agreement. He also receives an automobile allowance and benefits
comparable to those provided to other officers of U.S. Can. Mr. Messina's
employment under the agreement may be terminated by him with 30 days' notice, or
by U.S. Can immediately for cause, or with 30 days' notice for reasons other
than cause. If Mr. Messina voluntarily resigns or is terminated for cause, he
will receive no further compensation. If U.S. Can terminates Mr. Messina's
employment without cause, it is required to provide his salary and insurance
benefits for 18 months thereafter. In addition, the agreement requires
11
<PAGE> 14
Mr. Messina to refrain from disclosing confidential information acquired in
connection with his employment at U.S. Can and to abstain from competing with
U.S. Can during the employment term and for a period of 18 months thereafter.
Other Change-in-Control Arrangements
AGREEMENTS
The Company and U.S. Can have entered into change-in-control agreements
with Messrs. Galvin, Messina and Ford which provide certain benefits to any of
them who is terminated or constructively terminated within two years following a
change in control. A change in control is defined as the acquisition by any
person or group of 15% or more of the Common Stock, a merger or consolidation in
which the Company does not survive as an independent company, a sale of all or
substantially all of the assets of the Company or the liquidation or dissolution
of the Company. Under these agreements, any one or more of them is deemed to
have been constructively terminated if he is assigned any duties inconsistent in
any material respect with his duties before a change in control, or the Company
takes any other action which results in a diminution in any material respect of
his position, authority, duties or responsibilities that were in effect before a
change in control. The change-in-control agreement with Mr. Galvin provides
that, if Mr. Galvin is terminated or constructively terminated within two years
following a change in control, the vesting of all his restricted stock awards
will be accelerated to the effective date of such termination and Mr. Galvin
will have a right to receive a pro-rated bonus for the year in which terminated
or constructively terminated based upon the actual number of days worked. The
change-in-control agreements with Messrs. Ford and Messina provide that, if the
executive is terminated or constructively terminated within two years following
a change in control, the vesting of all his restricted stock awards will be
accelerated to the effective date of such termination; he will receive severance
pay equal to two times, in the case of Mr. Ford, and one time, in the case of
Mr. Messina, the greater of his base salary then in effect or his base salary in
effect before the change in control; he will receive a pro-rated bonus for the
year in which terminated or constructively terminated based upon the actual
number of days he worked; and he will continue to receive the same health and
welfare benefits he received at any time within 120 days of the change in
control for two years, in the case of Mr. Ford, and one year, in the case of Mr.
Messina, following the date of such termination.
1998 OPTION GRANTS
The unvested portion of the options granted to the named executive officers
in 1998 would vest upon (i) a change of control of the Company or upon
termination or constructive termination of the named executive officer within
two years following a change of control, and (ii) upon termination of the named
executive officer's employment for reasons other than cause.
EXECUTIVE DEFERRED COMPENSATION PLAN
The Company adopted an Executive Deferred Compensation Plan in 1998. Under
this Plan, eligible executives may defer up to 25% of their annual incentive
compensation into deferred Company stock units, to be settled in cash or stock
upon separation from service. The Company contributes one additional deferred
stock unit for each five deferred stock units elected by the executive. These
additional units vest after five years service or, if earlier, upon a change of
control of the Company or the end of the executive's employment for reasons
other than termination for cause.
William J. Smith
In connection with his resignation as a Director of the Company in July
1998, Mr. Smith, the Company's former President and Chief Executive Officer,
agreed to terminate his rights under the Stockholders Agreement and relinquished
his rights to receive restricted stock under a contingent stock award made to
him in July 1997, other than a right to receive 33,333 shares of restricted
stock, which was subsequently forfeited when the conditions to issuance were not
satisfied. The Company agreed (i) to pay certain medical expenses for Mr. Smith
in accordance with the Company's health plan, (ii) to lease the Company's
condominium
12
<PAGE> 15
apartment to Mr. Smith for three months at a rate of $3,000 per month, which the
Company believes is the fair market rental rate for the apartment, and (iii) not
to object to Mr. Smith providing consulting advice to an Asian can company. The
Company and Mr. Smith also agreed not to assert certain claims against each
other.
REPORT OF THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
The Compensation and Management Development Committee of the Board of
Directors (the "Committee") is composed entirely of directors who have never
served as officers of the Company. Among other things, the Committee develops
and administers the compensation programs for the Company's executive officers
and other managers. Generally, the Committee approves the salary and bonus of
executives, other than the CEO, and recommends to the Board the salary and bonus
of the CEO and option grants to executives.
Compensation Philosophy. The goals of the Company's compensation programs
are to relate total compensation for key management to the achievement of short-
and long-term corporate goals and objectives; to align executive officers'
financial interests with those of shareholders to a significant degree; and to
attract and retain key managers and to provide fair compensation for the
responsibilities undertaken. These goals are met through a combination of
salary, annual incentive compensation, stock options and other benefits. In
evaluating the Company's compensation and benefit programs, the Committee has
from time to time employed the services of an outside compensation consultant.
1998 Programs. During 1998 the Committee focused on two measures of the
Company's performance -- operating income and Shareholder Value Added
("SVA") -- in determining incentive payouts to senior management, other than
executives hired in 1998 (who received contractual bonus payments as an
inducement to join the Company). SVA is a decision-making and compensation model
that measures changes in the relationship between net operating profit after-tax
and capital employed in the business. Bonuses for executive officers are a
function of the Company's performance relative to targeted operating income and
improvement in SVA. In addition, all executive officers are eligible for stock
option grants under the Company's equity incentive plans.
During 1998, the Committee approved salary adjustments for certain of the
executive officers, established targets and funding levels for the 1999
Management Incentive Plan and approved 1998 bonus awards to executive officers
and other senior managers. In the fourth quarter of each year preceding a new
plan year, the Committee establishes certain targets for operating income and
improvement in SVA. Bonus awards are dependent upon the degree to which targets
are achieved and performance appraisals. Bonuses were awarded to all executive
officers for 1998 based upon contractual commitments, in the case of executives
hired in 1998, and based upon the achievement of substantially all of the
targeted objectives, in the case of other executive officers.
During 1998, the Board of Directors engaged a compensation consulting firm
to assist in a comprehensive review of the Company's executive compensation
programs and to make recommendations for changes designed to modernize and
improve these programs. As a result of this project, the Committee decided in
1998 to discontinue the use of periodic, service-based restricted stock awards
to officers.
The Committee also approved and the Company implemented an Executive
Deferred Compensation Plan. Under this Plan, eligible executives may defer up to
25% of their annual incentive compensation into deferred Company stock units, to
be settled in cash or stock upon separation from service. The Company
contributes one additional deferred stock unit for each five deferred stock
units elected by the executive. These additional units vest after five years
service or, if earlier, upon a change of control of the Company or the end of
the executive's employment for reasons other than cause. In 1998, all eligible
executives participated in this Plan, most to the maximum extent possible.
In October 1998, the Committee approved the grant of stock options to the
Company's key managers, including the Chief Executive Officer and other named
executive officers. These options were granted under the Company's existing
option plans and vest over three years, in equal annual installments. Vesting
may be
13
<PAGE> 16
accelerated upon a change of control of the Company and termination or
constructive termination of the executive's employment, or termination of the
executive's employment for reasons other than cause. A substantial number of
options were also granted to executives hired in 1998 to induce them to join the
Company. These grants consisted primarily of options which vest in equal annual
installments over three years, with a smaller portion being matching grants
(which are immediately exercisable) based upon the hired executives' personal
purchases of Common Stock. In determining the size of option grants, the
Company's directors consider the dilutive effect on shareholders, the alignment
of executives' interests with those of shareholders and the value of the options
as part of the recipient's total compensation.
As a result of the compensation review undertaken in 1998, the Committee
also recommended to the Board of Directors that the 1999 Equity Incentive Plan
be submitted to shareholders for approval as part of this proxy statement. If
approved, this plan would include a reserve of 1.25 million shares of authorized
but unissued shares or treasury shares. The primary purpose of the plan is to
allow the grant of stock options to management of the Company, including
executives, which would vest upon the achievement of certain Common Stock price
hurdles. Under this vesting schedule, 30% of the options granted would vest
following any ten-consecutive day period in which each closing price of the
Common Stock equals or exceeds 110% of the market price on the grant date, an
additional 30% of the options would vest following any ten-consecutive day
period in which each closing price of the Common Stock equals or exceeds 125% of
the market price on the grant date and the remaining 40% would vest following
any ten-consecutive day period in which each closing price of the Common Stock
equals or exceeds 150% of the market price on the grant date. Any unvested
portion of the options would also vest after seven years' service. It is the
Committee's intention to grant these stock price-based options in roughly equal
amounts over a five-year period. The amount of options awarded to each
participant would be based on a multiple of then current salary or the
Black-Scholes model.
Chief Executive Officer Compensation. Utilizing the services of an outside
compensation consultant, the Board approved and the Company entered into a
three-year contract with Mr. Jones, effective April 1, 1998. Mr. Jones' base
annual compensation was determined based upon the responsibilities of his
position, restructuring and performance-related work to be accomplished and the
salary provided to chief executives of comparable companies (although no
percentile range of comparable pay was targeted). Mr. Jones' 1998 incentive
bonus was guaranteed to be 100% of his prorated 1998 salary and was paid in this
amount. The Company has established a bonus plan for Mr. Jones in 1999 that will
pay a bonus equal to 100% of his base pay upon the achievement of the annual
operating income and SVA targets set by the Compensation and Management
Development Committee, with greater amounts for exceeding those targets and
appropriate reductions for results comprising a substantial amount of, but lower
than, target. In connection with his hiring, Mr. Jones received options to
purchase 300,000 shares of Common Stock, subject to vesting ratably in annual
installments of 100,000 in each year during the term of his contract, and
matching options to purchase 100,000 shares, based upon his purchase of 30,000
shares, which are currently exercisable. For a more detailed description of Mr.
Jones' employment agreement, see "Employment Contracts, Termination of
Employment and Change-in-Control Arrangements -- Paul W. Jones" included
elsewhere in this statement.
14
<PAGE> 17
Tax Considerations. To the extent readily determinable and as one of the
factors in its consideration of compensation matters, the Committee considers
the anticipated tax treatment to the Company and to the executive officers of
various payments and benefits. Some types of compensation and their
deductibility (e.g., the spread on exercise of non-qualified options) depend
upon the timing of an executive officer's vesting or exercise of previously
granted rights. Interpretations of and changes in the tax laws and other factors
also affect the deductibility of compensation. For these and other reasons, the
Committee will not necessarily and in all circumstances limit executive
compensation to the amount deductible under Section 162(m) of the Internal
Revenue Code. In connection with Mr. Jones' employment agreement, the Company
has agreed to gross-up certain payments following a change of control which
could be treated as excess parachute payments under the Code, so that Mr. Jones'
after-tax payment is equivalent to the amount otherwise payable if no excess
parachute payment-related excise tax applied. The Company's ability to deduct
all or a portion of any payments to Mr. Jones which are treated as excess
parachute payments under the Code would be adversely affected under these
circumstances.
Compensation and Management Development Committee
Carl Ferenbach, Chairman
Benjamin F. Bailar
Francisco A. Soler
Louis B. Susman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Susman is a member of the Compensation and Management Development
Committee of the Board and an executive of Salomon Smith Barney. Salomon Smith
Barney, which, together with other Citigroup Inc. affiliates, owns beneficially
approximately 11.2% of the Common Stock, is the Company's primary investment
bank and financial advisory firm. In 1998, the Company paid Salomon Smith Barney
a fee of $700,000 upon completion of the sale of the Company's commercial metal
services business.
15
<PAGE> 18
PERFORMANCE GRAPH
The following graph shows the changes in the value of $100 invested since
December 31, 1993, in (i) the Common Stock, (ii) the Center for Research in
Security Prices ("CRSP") at the University of Chicago Graduate School of
Business' Total Return Index for the NYSE Stock Market (U.S. Companies), (iii)
the Company's old self-determined peer group and (iv) the Company's new
self-determined peer group, assuming that all dividends were reinvested.
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
NYSE U.S.
U.S. CAN CORPORATION COMPANIES(1) NEW PEER GROUP(2) OLD PEER GROUP(2)
-------------------- ------------ ----------------- -----------------
<S> <C> <C> <C> <C>
'12/31/93' 100.000 100.000 100.000 100.000
'12/30/94' 122.581 99.967 93.914 93.455
'12/29/95' 87.097 135.503 99.526 99.069
'12/31/96' 108.871 164.328 126.246 126.020
'12/31/97' 108.871 218.303 130.999 126.227
'12/31/98' 115.323 261.948 98.953 92.371
</TABLE>
(1) The Total Return Index for the NYSE Stock Market (U.S. Companies) is an
index compiled by CRSP.
(2) The peer group is comprised of Crown Cork & Seal Company, Inc., Ball
Corporation, Silgan Holdings Inc., CLARCOR Inc. and BWAY Corp. This year's
peer group is different than last year's in that Continental Can Co., Inc.
(which was acquired by Suiza Foods Corporation in May 1998) has been
deleted and Silgan Holdings (a metal and plastic container manufacturer)
and CLARCOR (a diversified manufacturer with metal packaging operations)
have been added. Management has made these changes because it believes this
year's peer group is a better composite representation of the Company's
peers in the metal container industry.
16
<PAGE> 19
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of March 15, 1999 (unless otherwise
indicated), the number and percentage of shares of Common Stock beneficially
owned by (i) each person known by the Company to own beneficially more than 5%
of the outstanding shares of Common Stock, (ii) each director or director
nominee of the Company, (iii) each named executive officer and (iv) all
directors and executive officers of the Company as a group, with sole voting and
investment power (unless otherwise indicated).
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY OWNED
----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------------------ --------- -------
<S> <C> <C>
President and Fellows of Harvard College,................... 1,555,800(1) 11.74%
John Stevens Trust, Nancy Stevens Trust, and
Harvard College Trust
c/o Harvard Management Company, Inc.
600 Atlantic Avenue
Boston, MA 02210
and
The Harvard University Master Trust Fund
1350 Massachusetts Avenue
Holyoke Center, Room 340
Cambridge, MA 02138
Citigroup Inc., Salomon Smith Barney........................ 1,478,874(2) 11.16%
Holdings Inc., Salomon Brothers Holding
Company Inc and Salomon Smith Barney Inc.
153 East 53rd Street
New York, New York 10043
Ricardo Poma................................................ 920,133(3) 6.94%
Lomas de San Francisco
San Salvador, El Salvador
The Prudential Insurance Company of America................. 744,900(4) 5.62%
751 Broad Street
Newark, New Jersey 07102-3777
Woodland Partners LLC....................................... 703,000(5) 5.30%
60 South Sixth Street, Suite 3750
Minneapolis, Minnesota 55402
Mellon Bank Corporation..................................... 673,806(6) 5.08%
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
William J. Smith............................................ 479,000(7) 3.59%
Francisco A. Soler.......................................... 449,233(8) 3.39%
Carl Ferenbach.............................................. 85,125 *
Benjamin F. Bailar.......................................... 37,133(9) *
Calvin W. Aurand, Jr........................................ 3,633 *
Charles W. Gaillard......................................... 1,000 *
Louis B. Susman............................................. 3,000 *
Paul W. Jones............................................... 133,000(10) 1.00%
Frank J. Galvin............................................. 154,163(11) 1.16%
David R. Ford............................................... 15,000(12) *
Lawrence T. Messina......................................... 42,206(13) *
John L. Workman............................................. 28,250(14) *
All directors and executive officers as a group............. 2,004,475(15) 14.77%
</TABLE>
- -------------------------
17
<PAGE> 20
* The percentage of shares beneficially owned does not exceed 1% of the
Common Stock.
(1) President and Fellows of Harvard College owns beneficially 1,506,000 of
these shares, The Harvard University Master Trust Fund owns beneficially
47,400 of these shares, the John Stevens Trust owns beneficially 300 of
these shares, the Nancy Stevens Trust owns beneficially 700 of these shares
and the Harvard College Trust owns beneficially 1,400 of these shares,
according to a group filing reporting ownership believed to be as of
December 31, 1998.
(2) Citigroup Inc. and certain of its subsidiaries have jointly reported shared
voting and dispositive power for these shares. Citigroup Inc. and Salomon
Smith Barney Holdings Inc. disclaim beneficial ownership of these shares.
(3) Salcorp Ltd. ("Salcorp") is the record holder of 340,000 of these shares
and Katsura, S.A. ("Katsura") is the record holder of 60,000 of these
shares. Mr. Poma is the sole stockholder of both Salcorp and Katsura, and
is therefore deemed the beneficial owner of these shares. 2,133 of these
shares are owned by Scarsdale Company N.V., Inc. ("Scarsdale"), a company
associated or affiliated with Mr. Poma. The remaining 518,000 shares are
owned by Barcel Corporation ("Barcel"). Mr. Poma is the Trustee for United
Capital Trust, a family trust which owns all of the stock of Barcel.
(4) The Prudential Insurance Company of America ("Prudential") has sole voting
and dispositive power over 452,400 of these shares and shared voting and
dispositive power over 292,500 of these shares as of December 31, 1998.
These shares are held for the benefit of Prudential's clients by its
separate accounts, externally managed accounts, registered investment
companies, subsidiaries and/or other affiliates.
(5) Woodland Partners LLC manages accounts for the benefit of its clients and
reports sole voting power with respect to 606,800 shares, shared voting
power with respect to 96,200 shares and sole dispositive power with respect
to all shares.
(6) The shares reported are beneficially owned by the direct or indirect
subsidiaries of Mellon Bank Corporation, which report shared voting and
dispositive power with respect to 109,000 shares, sole voting power with
respect to 564,806 shares and sole dispositive power with respect to
538,606 shares.
(7) Includes 75,000 shares subject to currently exercisable options. The number
of shares owned beneficially is based upon information Mr. Smith supplied
to the Company in a written questionnaire submitted by the Company to Mr.
Smith during the preparation of this statement.
(8) Windsor International Corporation, Atlas World Carriers S.A., The World
Financial Corporation S.A. and Scarsdale, corporations affiliated or
associated with Mr. Soler or certain of Mr. Soler's relatives, hold
206,100, 123,000, 118,000 and 2,133 of these shares of Common Stock,
respectively.
(9) Dean Bailar has sole investment power with respect to a trust in which
35,000 of these shares are held. The other 2,133 shares are held by
Franklin Financial Corporation, a corporation affiliated or associated with
Dean Bailar.
(10) Includes 1,000 shares owned beneficially by Mr. Jones' spouse (of which Mr.
Jones disclaims beneficial ownership) and 100,000 shares subject to
currently exercisable options. Mr. Jones also owns 7,059 units of deferred
Common Stock under the Company's Executive Deferred Compensation Plan.
(11) Includes 80,000 shares subject to currently exercisable options. Mr. Galvin
also owns 2,121 units of deferred Common Stock under the Company's
Executive Deferred Compensation Plan.
(12) Consists entirely of unissued shares underlying a vested stock award.
(13) Includes 20,000 shares subject to currently exercisable options and 5,000
unissued shares underlying a restricted stock award. Mr. Messina also owns
1,201 units of deferred Common Stock under the Company's Executive Deferred
Compensation Plan.
(14) Includes 18,750 shares subject to currently exercisable options. Mr.
Workman also owns 1,882 units of deferred Common Stock under the Company's
Executive Deferred Compensation Plan.
(15) Includes 313,250 shares subject to currently exercisable options and
awarded but unissued restricted stock. The executive officers also own
19,250 units of deferred Common Stock under the Company's Executive
Deferred Compensation Plan.
18
<PAGE> 21
PROPOSAL 2
APPROVAL OF 1999 EQUITY INCENTIVE PLAN
A proposal will be presented at the Annual Stockholders Meeting to approve
the U.S. Can Corporation 1999 Equity Incentive Plan (the "1999 Plan") which was
adopted by the Board of Directors subject to stockholder approval. A summary of
the material provisions of the 1999 Plan is set forth below and is qualified in
its entirety by reference to the 1999 Plan as set forth in Exhibit A hereto. If
the 1999 Plan is not so approved, it will be cancelled.
PURPOSE
The 1999 Plan has been established by U.S. Can to (i) attract and retain
persons eligible to participate in the 1999 Plan; (ii) motivate Participants, by
means of appropriate incentives, to achieve long-range goals; (iii) provide
incentive compensation opportunities that are competitive with those of other
similar companies; and (iv) further identify Participants' interests with those
of U.S. Can's other stockholders through compensation that is based on Common
Stock; and thereby promote the long-term financial interest of U.S. Can and its
subsidiaries, including the growth in value of U.S. Can's equity and enhancement
of long-term stockholder return.
U.S. Can has proposed the 1999 Plan at this time because it believes
strongly in the merits of linking executives' overall compensation opportunities
to the enhancement of long-term stockholder return. U.S. Can uses equity based
compensation, such as options and other Common Stock related awards, as key
elements of its executives' compensation packages. Because U.S. Can believes it
is important for its employees to have an equity interest in U.S. Can, the Board
of Directors has approved the 1999 Plan, and is recommending it to stockholders
for approval. U.S. Can has previously established a set of compensation
objectives aimed at increasing officer Common Stock ownership. Adoption of the
1999 Plan will help achieve this goal and is necessary in order for U.S. Can to
continue making equity awards to its employees at competitive levels.
To achieve the foregoing objectives, the 1999 Plan provides for the
issuance of no more than 1,250,000 shares of Common Stock through the grant of
"Awards" of non-qualified and incentive stock options, stock appreciation rights
("SARs"), stock units, performance shares, restricted performance stock,
restricted performance stock units, and performance stock unit awards. There are
also limits on the number of shares underlying options or other awards to any
one individual during any one-calendar-year period. See "Limits on Awards" which
appears later in this section.
The Board of Directors intends that these shares will be used over a period
of approximately five years and Awards will be comprised primarily of
non-qualified stock options which vest upon achievement of certain Common Stock
price hurdles, as follows: (i) 30% of the options granted would vest following
any ten-consecutive day period in which each closing price of the Common Stock
equals or exceeds 110% of the market price on the grant date; (ii) an additional
30% of the options would vest following any ten-consecutive day period in which
each closing price of the Common Stock equals or exceeds 125% of the market
price on the grant date; and (iii) the remaining 40% would vest following any
ten-consecutive day period in which each closing price of the Common Stock
equals or exceeds 150% of the market price on the grant date. The options would
also vest after seven years of service. The Board of Directors believes this
type of option is linked more closely to stockholder interests than traditional
time-based options. The Board of Directors also believes it must offer such
options to attract and retain quality management personnel.
EXISTING OPTION PLANS
The Company has adopted various other option or equity incentive plans
since 1984. As of December 31, 1998, there were 1,601,302 options outstanding
under such plans, 820,280 of which were then exercisable. If the 1999 Plan is
approved, no further awards will be made under these existing plans.
19
<PAGE> 22
ELIGIBILITY
Under the 1999 Plan, the Committee (defined below) may grant one or more
Awards to any employee or director of U.S. Can or its subsidiaries, and an Award
may be granted to an employee or director, in connection with hiring, retention
or otherwise, prior to the date the employee or director first performs services
for the Company or its subsidiaries. As of February 28, 1999, U.S. Can and its
subsidiaries had approximately 4,000 employees. The specific employees who
initially will be granted Awards under the 1999 Plan and the type and amount of
any such Awards will be determined by the Committee.
OPTIONS
The Committee may grant options to purchase the Common Stock which may be
either incentive stock options or non-qualified stock options. The purchase
price of a share of Common Stock under each option shall not be less that the
fair market value of a share of Common Stock on the date the option is granted.
The option shall be exercisable in accordance with the terms established by the
Committee. The full purchase price of each share of Common Stock purchased upon
the exercise of any option shall be paid at the time of exercise or through a
cashless, broker-assisted exercise. Except as otherwise determined by the
Committee, the purchase price shall be payable in cash or in Common Stock
(valued at fair market value as of the day of exercise), or in any combination
thereof. The Committee may impose such conditions, restrictions, and
contingencies on Common Stock acquired pursuant to the exercise of an option as
the Committee determines to be desirable.
STOCK APPRECIATION RIGHTS
The Committee may grant a stock appreciation right ("SAR") in connection
with all or any portion of a previously or contemporaneously granted option or
independent of any option grant. An SAR entitles the Participant to receive the
amount by which the fair market value of a specified number of shares on the
exercise date exceeds an exercise price established by the Committee, which
shall not be less than 100% of the fair market value of the Common Stock at the
time the SAR is granted. Such excess amount shall be payable in Common Stock, in
cash, or in a combination thereof, as determined by the Committee. The Committee
may impose such conditions, restrictions, and contingencies on Common Stock
acquired pursuant to the exercise of an SAR as the Committee determines to be
desirable.
OTHER STOCK AWARDS
The Committee may grant stock units (a right to receive Common Stock in the
future), performance shares (a right to receive Common Stock or stock units
contingent upon achievement of performance or other objectives), restricted
performance stock and restricted performance stock units (a grant of Common
Stock and a grant of the right to receive Common Stock in the future,
respectively, with such shares or rights subject to a risk of forfeiture or
other restrictions that lapse upon the achievement of one or more goals relating
to completion of service by the Participant or the achievement of performance or
other objectives, as determined by the Committee). No restricted performance
stock or restricted performance stock unit award shall be granted that provides
for vesting solely on completion of service by the Participant. Any such Awards
shall be subject to such conditions, restrictions and contingencies as the
Committee determines.
A federal income tax deduction will generally be unavailable for annual
compensation in excess of $1 million paid to any of the five most highly
compensated officers of a public corporation. However, amounts that constitute
"performance-based compensation" are not counted toward the $1 million limit.
The Committee may designate any Award described in the preceding paragraph as
intended to be "performance-based compensation." Any Awards so designated shall
be conditioned on the achievement of one or more performance goals, as required
by Code section 162(m). The performance goals that may be used by the Committee
for such Awards shall be based on any one or more of the following, as selected
by the Committee: cash generation targets, profits, SVA, revenue and/or market
share targets, profitability targets as measured by return ratios, and
shareholder returns. The measurement may be based on absolute Company or
business unit performance and/or on performance as compared with that of other
publicly-traded companies.
20
<PAGE> 23
For Awards intended to be "performance-based compensation," the grant of the
Awards and the establishment of the performance measures shall be made during
the period required under Code section 162(m). To satisfy the requirements that
apply to performance-based compensation, these goals must be approved by the
stockholders of U.S. Can, and approval of the 1999 Plan will also constitute
approval of the foregoing goals.
ADMINISTRATION
The 1999 Plan is administered by a committee (the "Committee") selected by
the Board of Directors. If the Committee has not been selected, or for any other
reason determined by the Board of Directors, the Board of Directors may take any
action under the 1999 Plan that would otherwise be the responsibility of the
Committee. The Committee will have the authority and discretion to select from
among the eligible individuals those persons who shall receive Awards, to
determine the time or times of receipt, to determine the types of Awards and the
number of shares covered by the Awards, to establish the terms, conditions,
performance criteria, restrictions, and other provisions of such Awards, and
(subject to certain restrictions) to cancel or suspend Awards. To the extent
that the Committee determines that the restrictions imposed by the 1999 Plan
preclude the achievement of the material purposes of the Awards in jurisdictions
outside of the United States, the Committee will have the authority and
discretion to modify those restrictions as the Committee determines to be
necessary or appropriate to conform to applicable requirements or practices of
jurisdictions outside of the United States. The Committee will have the
authority and discretion to interpret the 1999 Plan, to establish, amend, and
rescind any rules and regulations relating to the 1999 Plan, to determine the
terms and provisions of any Award agreement made pursuant to the 1999 Plan, and
to make all other determinations that may be necessary or advisable for the
administration of the 1999 Plan. Any interpretation of the 1999 Plan by the
Committee and any decision made by it under the 1999 Plan is final and binding
on all persons. Except to the extent prohibited by applicable law or the
applicable rules of a stock exchange, the Committee may allocate all or any
portion of its responsibilities and powers to any one or more of its members and
may delegate all or any part of its responsibilities and powers to any person or
persons selected by it.
LIMITS ON AWARDS
The maximum number of shares of Common Stock subject to Awards under the
1999 Plan that may be delivered to Participants and their beneficiaries under
the 1999 Plan shall be equal to 1,250,000 shares. To the extent any shares of
Common Stock covered by an Award are not delivered to a Participant or
beneficiary because the Award is forfeited or canceled, or because the Award is
settled in cash, such shares shall not be deemed to have been delivered for
purposes of determining the maximum number of shares of Common Stock available
for delivery under the 1999 Plan. If the exercise price of any stock option
granted under the 1999 Plan is satisfied by tendering shares of Common Stock to
the Company, only the number of shares of Common Stock issued net of the shares
of Common Stock tendered shall be deemed delivered for purposes of determining
the maximum number of shares of Common Stock available for delivery under the
1999 Plan. The closing price with respect to the Common Stock on March 15, 1999
was $15 3/8 per share.
The following additional limits shall apply to Awards under the 1999 Plan:
(i) no more than 150,000 shares of Common Stock may be issued for stock unit
awards, performance share awards, restricted performance stock awards and
restricted performance stock unit awards; (ii) no more than 300,000 shares of
Common Stock may be issued for options and SARs granted to any one individual in
any one-calendar-year period; and (iii) no more than 50,000 shares of Common
Stock may be issued for stock unit awards, performance share awards, restricted
performance stock awards and restricted performance stock unit awards that are
intended to be "performance-based compensation" (as described below) granted to
any one individual during any one-calendar-year period. The Common Stock with
respect to which Awards may be made under the 1999 Plan shall be shares
currently authorized but unissued, or currently held or subsequently acquired by
U.S. Can as treasury shares, including shares purchased in the open market or in
private transactions. At the discretion of the Committee, an Award under the
1999 Plan may be settled in cash rather than Common Stock.
21
<PAGE> 24
The Committee may use shares of Common Stock available under the 1999 Plan
as the form of payment for compensation, grants or rights earned or due under
any other compensation plans or arrangements of U.S. Can or a subsidiary,
including the plans and arrangements of U.S. Can or a subsidiary assumed in
business combinations.
In the event of a corporate transaction involving U.S. Can (including,
without limitation, any stock dividend, stock split, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination or exchange of shares), the Committee may adjust Awards to
preserve the benefits or potential benefits of the Awards. Action by the
Committee may include: (i) adjustment of the number and kind of shares which may
be delivered under the 1999 Plan; (ii) adjustment of the number and kind of
shares subject to outstanding Awards; (iii) adjustment of the exercise price of
outstanding options and SARs; and (iv) any other adjustments that the Committee
determines to be equitable.
Except as otherwise provided by the Committee, Awards under the 1999 Plan
are not transferable except as designated by the Participant by will or by laws
of descent and distribution.
AMENDMENT AND TERMINATION
The Board of Directors may, at any time, amend or terminate the 1999 Plan;
provided that no amendment or termination may, in the absence of written consent
to the change by the affected Participant, adversely affect the rights of any
Participant under any Award granted under the 1999 Plan prior to the date such
amendment is adopted by the Board of Directors.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a brief description of the federal income tax treatment
that will generally apply to Awards under the 1999 Plan based on current federal
income tax rules. This description is based on federal tax laws and regulations
presently in effect, which are subject to change, and does not purport to be a
complete description of the federal income tax aspects of the 1999 Plan. A
Participant may also be subject to state and local taxes in connection with the
grant of Awards under the 1999 Plan.
Non-Qualified Options
The grant of a non-qualified option will not result in taxable income to
the Participant. Except as described below, the Participant will realize
ordinary income at the time of exercise in an amount equal to the excess of the
fair market value of the Common Stock acquired over the exercise price for those
shares and U.S. Can will be entitled to a corresponding deduction. Gains or
losses realized by the Participant upon disposition of such shares will be
treated as capital gains and losses, with the basis in such Common Stock equal
to the fair market value of the shares at the time of exercise.
Incentive Stock Options
The grant of an incentive stock option will not result in taxable income to
the Participant. The exercise of an incentive stock option will not result in
taxable income to the Participant provided that the Participant was, without a
break in service, an employee of U.S. Can or a subsidiary during the period
beginning on the date of the grant of the option and ending on the date three
months prior to the date of exercise (one year prior to the date of exercise if
the Participant is disabled, as that term is defined in the Code).
The excess of the fair market value of the Common Stock at the time of the
exercise of an incentive stock option over the exercise price is an adjustment
that is included in the calculation of the Participant's alternative minimum
taxable income for the tax year in which the incentive stock option is
exercised.
If the Participant does not sell or otherwise dispose of the Common Stock
within two years from the date of the grant of the incentive stock option or
within one year after the transfer of such Common Stock to the Participant,
then, upon disposition of such Common Stock, any amount realized in excess of
the exercise price will be taxed to the Participant as capital gain, and U.S.
Can will not be entitled to a corresponding deduction
22
<PAGE> 25
for Federal income tax purposes. A capital loss will be recognized to the extent
that the amount realized is less than the exercise price.
If the foregoing holding period requirements are not met, the Participant
will generally realize ordinary income at the time of the disposition of the
shares, in an amount equal to the lesser of (i) the excess of the fair market
value of the Common Stock on the date of exercise over the exercise price, or
(ii) the excess, if any, of the amount realized upon disposition of the shares
over the exercise price and U.S. Can will be entitled to a corresponding
deduction. If the amount realized exceeds the value of the shares on the date of
exercise, any additional amount will be capital gain. If the amount realized is
less than the exercise price, the Participant will recognize no income, and a
capital loss will be recognized equal to the excess of the exercise price over
the amount realized upon the disposition of the shares.
Stock Appreciation Rights
The grant of an SAR will not result in taxable income to the Participant.
Upon exercise of an SAR, the amount of cash or the fair market value of Common
Stock received will be taxable to the Participant as ordinary income, and U.S.
Can will be entitled to a corresponding deduction. Gains and losses realized by
the Participant upon disposition of any such shares will be treated as capital
gains and losses, with the basis in such shares equal to the fair market value
of the shares at the time of exercise.
Stock Units and Performance Shares
A Participant who has been granted a stock unit award, a performance share
award or a restricted performance stock unit award will not realize taxable
income at the time of grant, and U.S. Can will not be entitled to a
corresponding deduction at that time. The Participant will have compensation
income at the time of distribution equal to the amount of cash received and the
then fair market value of the distributed shares and U.S. Can will be entitled
to a corresponding deduction.
Restricted Performance Stock
A Participant who has been granted a restricted performance stock award
will not realize taxable income at the time of grant, and U.S. Can will not be
entitled to a corresponding deduction at that time, assuming that the
restrictions constitute a "substantial risk of forfeiture" for federal income
tax purposes. Upon the vesting of Common Stock subject to an Award, the holder
will realize ordinary income in an amount equal to the then fair market value of
those shares and U.S. Can will be entitled to a corresponding deduction. Gains
or losses realized by the Participant upon disposition of such shares will be
treated as capital gains and losses, with the basis in such shares equal to the
fair market value of the shares at the time of vesting. Dividends paid to the
holder during the restriction period, if so provided, will also be compensation
income to the Participant and U.S. Can will be entitled to a corresponding
deduction. A Participant may elect pursuant to section 83(b) of the Code to have
income recognized at the date of grant of a restricted performance stock award
and to have the applicable capital gain holding period commence as of that date,
and U.S. Can will be entitled to a corresponding deduction.
Withholding of Taxes
U.S. Can may withhold amounts from Participants to satisfy withholding tax
requirements. Subject to guidelines established by the Committee, Participants
may have shares of Common Stock withheld from Awards or may tender shares of
Common Stock to U.S. Can to satisfy tax withholding requirements.
$1 Million Limit
Section 162(m) of the Code disallows a federal income tax deduction for
certain compensation in excess of $1 million per year paid to each of the
Corporation's chief executive officer and its four other most highly compensated
executive officers. Compensation that qualifies as "performance-based
compensation" is not subject to the $1,000,000 limit. The 1999 Plan has been
structured to permit Awards and payments that will satisfy the requirements
applicable to performance-based compensation.
23
<PAGE> 26
Change In Control
Any acceleration of the vesting or payment of Awards under the 1999 Plan in
the event of a change in control in U.S. Can may cause part or all of the
consideration involved to be treated as an "excess parachute payment" under the
Code, which may subject the Participant to a 20% excise tax and preclude
deduction by U.S. Can.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR APPROVAL OF THE
1999 EQUITY INCENTIVE PLAN, INCLUDING THE PERFORMANCE GOALS FOR THE PLAN.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
officers to file reports of their ownership of stock and of changes in such
ownership with the SEC. The Company believes that, during 1998, its directors
and reporting officers complied with all applicable filing requirements, except
that Larry Morrison's initial report of beneficial ownership of Common Stock and
employee stock options was filed approximately one month late during 1998.
SOLICITATION AND EXPENSES OF SOLICITATION
The Company will bear the cost of this solicitation. The Company and its
proxy solicitor, MacKenzie Partners, Inc., may solicit proxies by mail, in
person, via the Internet and by phone. MacKenzie Partners has agreed to assist
the Company in obtaining proxies for the 1999 Annual Meeting for a cost of
approximately $7,000. The Company will reimburse banks, brokerage houses, other
nominees and custodians for the reasonable costs of distributing proxy material
and annual reports to the beneficial owners of the shares they hold of record.
SUBMISSION OF STOCKHOLDER PROPOSALS
Under the Federal securities laws and regulations, stockholder proposals
intended for inclusion in the proxy statement to be issued in connection with
the 2000 Annual Meeting of Stockholders must be received by the Company on or
before November 25, 1999, and must otherwise comply with applicable regulations.
Under the Company's By-Laws, in order to be timely, notices of other
stockholder proposals for nominations or other business at an annual meeting
must generally be delivered to the Corporate Secretary of the Company, at the
Company's headquarters, not later than the close of business on the 60th day nor
earlier than the close of business on the 90th day prior to the first
anniversary of the preceding year's annual meeting (February 21, 2000 and
January 22, 2000, respectively, with respect to the 2000 Annual Meeting).
Stockholders proposals for nominations at a special meeting called for the
purpose of electing directors must generally be delivered to the Corporate
Secretary of the Company, at the Company's headquarters, not earlier than the
close of business on the 90th day prior to such meeting and not later than the
close of business on the later of the 60th day prior to such meeting or the 10th
day following the day on which public announcement (as defined) is first made of
the date of such meeting and the nominees proposed by the Board.
INDEPENDENT AUDITORS
The Company's independent audit firm for 1998 was Arthur Andersen LLP. The
Company is in the process of selecting the independent audit firm for 1999 and,
therefore, no independent audit firm for 1999 has been selected or recommended
at this time. A representative of Arthur Andersen is expected to be present at
the 1999 Annual Meeting and will have an opportunity to make a statement, if so
desired. The Arthur Andersen representative will also be available to respond to
appropriate questions.
24
<PAGE> 27
ANNUAL REPORT AND FORM 10-K
Copies of the Company's 1998 Annual Report to Shareholders are being mailed
with this Proxy Statement to each stockholder entitled to vote at the Annual
Meeting. The Company is also filing with the SEC its Annual Report on Form 10-K
for the Fiscal Year Ended December 31, 1998. STOCKHOLDERS DESIRING TO RECEIVE A
COPY OF THE FORM 10-K MAY OBTAIN ONE BY WRITING OR CALLING STEVEN K. SIMS,
CORPORATE SECRETARY, U.S. CAN CORPORATION, 900 COMMERCE DRIVE, OAK BROOK,
ILLINOIS, 60523, TELEPHONE: (630) 571-2500.
By Order of the Board of Directors
Steven K. Sims
Steven K. Sims
Vice President,
General Counsel and Secretary
25
<PAGE> 28
EXHIBIT A
U.S. CAN CORPORATION
1999 EQUITY INCENTIVE PLAN
SECTION 1
GENERAL
1.1. Purpose. The U.S. Can Corporation 1999 Equity Incentive Plan (the
"Plan") has been established by U.S. Can Corporation (the "Company") to (i)
attract and retain persons eligible to participate in the Plan; (ii) motivate
Participants, by means of appropriate incentives, to achieve long-range goals;
(iii) provide incentive compensation opportunities that are competitive with
those of other similar companies; and (iv) further identify Participants'
interests with those of the Company's other shareholders through compensation
that is based on the Company's common stock; and thereby promote the long-term
financial interest of the Company and the Subsidiaries, including the growth in
value of the Company's equity and enhancement of long-term shareholder return.
1.2. Participation. Subject to the terms and conditions of the Plan, the
Committee shall determine and designate, from time to time, from among the
Eligible Individuals (including transferees of Eligible Individuals to the
extent the transfer is permitted by the Plan and the applicable Award
Agreement), those persons who will be granted one or more Awards under the Plan,
and thereby become "Participants" in the Plan. In the discretion of the
Committee, a Participant may be granted any Award permitted under the provisions
of the Plan, and more than one Award may be granted to a Participant. Awards may
be granted as alternatives to or replacement of awards granted or outstanding
under the Plan, or any other plan or arrangement of the Company or a Subsidiary
(including a plan or arrangement of a business or entity, all or a portion of
which is acquired by the Company or a Subsidiary).
1.3. Operation, Administration, and Definitions. The operation and
administration of the Plan, including the Awards made under the Plan, shall be
subject to the provisions of Section 4 (relating to operation and
administration). Capitalized terms in the Plan shall be defined as set forth in
the Plan (including the definition provisions of Section 7 of the Plan).
SECTION 2
OPTIONS AND SARS
2.1. Definitions.
(a) The grant of an "Option" entitles the Participant to purchase shares
of Stock at an Exercise Price established by the Committee. Options
granted under this Section 2 may be either Incentive Stock Options
("ISOs") or Non-Qualified Options ("NQOs"), as determined in the
discretion of the Committee. An "ISO" is an Option that is intended to
satisfy the requirements applicable to an "incentive stock option"
described in section 422(b) of the Code. An "NQO" is an Option that is
not intended to be an "incentive stock option" as that term is
described in section 422(b) of the Code.
(b) A stock appreciation right (an "SAR") entitles the Participant to
receive, in cash or Stock (as determined in accordance with subsection
2.5), value equal to (or otherwise based on) the excess of: (a) the
Fair Market Value of a specified number of shares of Stock at the time
of exercise; over (b) an Exercise Price established by the Committee.
2.2. Exercise Price. The "Exercise Price" of each Option and SAR granted
under this Section 2 shall be established by the Committee or shall be
determined by a method established by the Committee at the time
<PAGE> 29
the Option or SAR is granted; except that the Exercise Price shall not be less
than 100% of the Fair Market Value of a share of Stock on the date of grant (or,
if greater, the par value of a share of Stock).
2.3. Exercise. An Option and an SAR shall be exercisable in accordance with
such terms and conditions and during such periods as may be established by the
Committee.
2.4. Payment of Option Exercise Price. The payment of the Exercise Price of
an Option granted under this Section 2 shall be subject to the following:
(a) Subject to the following provisions of this subsection 2.4, the full
Exercise Price for shares of Stock purchased upon the exercise of any
Option shall be paid at the time of such exercise (except that, in the
case of an exercise arrangement approved by the Committee and
described in paragraph 2.4(c), payment may be made as soon as
practicable after the exercise).
(b) The Exercise Price shall be payable in cash or by tendering, by either
actual delivery of shares or by attestation, shares of Stock
acceptable to the Committee, and valued at Fair Market Value as of the
day of exercise, or in any combination thereof, as determined by the
Committee.
(c) The Committee may permit a Participant to elect to pay the Exercise
Price upon the exercise of an Option by irrevocably authorizing a
third party to sell shares of Stock (or a sufficient portion of the
shares) acquired upon exercise of the Option and remit to the Company
a sufficient portion of the sale proceeds to pay the entire Exercise
Price and any tax withholding resulting from such exercise.
2.5. Settlement of Award. Shares of Stock delivered pursuant to the
exercise of an option or SAR shall be subject to such conditions, restrictions
and contingencies as the Committee may establish in the applicable Award
Agreement. Settlement of SARs may be made in shares of Stock (valued at their
Fair Market Value at the time of exercise), in cash, or in a combination
thereof, as determined in the discretion of the Committee. The Committee, in its
discretion, may impose such conditions, restrictions and contingencies with
respect to shares of Stock acquired pursuant to the exercise of an Option or an
SAR as the Committee determines to be desirable.
SECTION 3
OTHER STOCK AWARDS
3.1. Definitions.
(a) A "Stock Unit" Award is the grant of a right to receive shares of
Stock in the future.
(b) A "Performance Share" Award is a grant of a right to receive shares of
Stock or Stock Units which is contingent on the achievement of
performance or other objectives during a specified period.
(c) A "Restricted Performance Stock" Award is a grant of shares of Stock,
and a "Restricted Performance Stock Unit" Award is the grant of a
right to receive shares of Stock in the future, with such shares of
Stock or right to future delivery of such shares of Stock subject to a
risk of forfeiture or other restrictions that will lapse upon the
achievement of one or more goals relating to achievement of
performance or other objectives, as determined by the Committee;
provided, however, that no Restricted Performance Stock or Restricted
Performance Stock Unit Awards shall be granted under the Plan that
provides for vesting based solely on completion of service by the
Participant.
3.2. Restrictions on Stock Awards. Each Stock Unit Award, Restricted
Performance Stock Award, Restricted Performance Stock Unit Award and Performance
Share Award shall be subject to the following:
(a) Any such Award shall be subject to such conditions, restrictions and
contingencies as the Committee shall determine.
(b) The Committee may designate whether any such Award being granted to
any Participant is intended to be "performance-based compensation" as
that term is used in section 162(m) of the
2
<PAGE> 30
Code. Any such Awards designated as intended to be "performance-based
compensation" shall be conditioned on the achievement of one or
more Performance Measures, to the extent required by Code section
162(m). The Performance Measures that may be used by the Committee
for such Awards shall be based on any one or more of the following,
as selected by the Committee: cash generation targets, profits,
net operating profit after tax minus a capital charge, revenue
and/or market share targets, profitability targets as measured by
return ratios and shareholder returns. The measurement may be based on
absolute Company or business unit performance and/or on performance as
compared with that of other publicly-traded companies. For Awards under
this Section 3 intended to be "performance-based compensation," the
grant of the Awards and the establishment of the Performance Measures
shall be made during the period required under Code section 162(m).
SECTION 4
OPERATION AND ADMINISTRATION
4.1. Effective Date. Subject to the approval of the shareholders of the
Company at the Company's 1999 annual meeting of its shareholders, the Plan shall
be effective as of January 1, 1999 (the "Effective Date"); provided, however,
that to the extent that Awards are granted under the Plan prior to its approval
by shareholders, the Awards shall be contingent on approval of the Plan by the
shareholders of the Company at such annual meeting. The Plan shall be unlimited
in duration and, in the event of Plan termination, shall remain in effect as
long as any Awards under it are outstanding; provided, however, that no Awards
may be granted under the Plan after the ten-year anniversary of the Effective
Date (except for Awards granted pursuant to commitments entered into prior to
such ten-year anniversary).
4.2. Shares Subject to Plan. The shares of Stock for which Awards may be
granted under the Plan shall be subject to the following:
(a) The shares of Stock with respect to which Awards may be made under the
Plan shall be shares currently authorized but unissued or currently
held or subsequently acquired by the Company as treasury shares,
including shares purchased in the open market or in private
transactions.
(b) Subject to the following provisions of this subsection 4.2, the
maximum number of shares of Stock that may be delivered to
Participants and their beneficiaries under the Plan shall be equal to
1,250,000 shares of Stock.
(c) To the extent any shares of Stock covered by an Award are not
delivered to a Participant or beneficiary because the Award is
forfeited or canceled, or the shares of Stock are not delivered
because the Award is settled in cash, such shares shall not be deemed
to have been delivered for purposes of determining the maximum number
of shares of Stock available for delivery under the Plan.
(d) If the exercise price of any stock option granted under the Plan is
satisfied by tendering shares of Stock to the Company (by either
actual delivery or by attestation), only the number of shares of Stock
issued net of the shares of Stock tendered shall be deemed delivered
for purposes of determining the maximum number of shares of Stock
available for delivery under the Plan.
(e) Subject to paragraph 4.2(f), the following additional maximums are
imposed under the Plan.
(i) The maximum number of shares of Stock that may be issued in
conjunction with Awards granted pursuant to Section 3 (relating to
Stock Awards) shall be 150,000 shares.
(ii) The maximum number of shares that may be covered by Awards granted
to any one individual pursuant to Section 2 (relating to Options
and SARs) shall be 300,000 shares during any one-calendar-year
period.
3
<PAGE> 31
(iii) No more than 50,000 shares of Stock may be subject to Stock Unit
Awards, Restricted Performance Stock Awards, Restricted
Performance Stock Unit Awards and Performance Share Awards that
are intended to be "performance-based compensation" (as that term
is used for purposes of Code section 162(m)) granted to any one
individual during any one-calendar-year period (regardless of when
such shares are deliverable).
(f) In the event of a corporate transaction involving the Company
(including, without limitation, any stock dividend, stock split,
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination or exchange of shares),
the Committee may adjust Awards to preserve the benefits or potential
benefits of the Awards. Action by the Committee may include: (i)
adjustment of the number and kind of shares which may be delivered
under the Plan; (ii) adjustment of the number and kind of shares
subject to outstanding Awards; (iii) adjustment of the Exercise Price
of outstanding Options and SARs; and (iv) any other adjustments that
the Committee determines to be equitable.
4.3. General Restrictions. Delivery of shares of Stock or other amounts
under the Plan shall be subject to the following:
(a) Notwithstanding any other provision of the Plan, the Company shall
have no liability to deliver any shares of Stock under the Plan or
make any other distribution of benefits under the Plan unless such
delivery or distribution would comply with all applicable laws
(including, without limitation, the requirements of the Securities Act
of 1933), and the applicable requirements of any securities exchange
or similar entity.
(b) To the extent that the Plan provides for issuance of stock
certificates to reflect the issuance of shares of Stock, the issuance
may be effected on a non-certificated basis, to the extent not
prohibited by applicable law or the applicable rules of any stock
exchange.
4.4. Tax Withholding. All distributions under the Plan are subject to
withholding of all applicable taxes, and the Committee may condition the
delivery of any shares or other benefits under the Plan on satisfaction of the
applicable withholding obligations. The Committee, in its discretion, and
subject to such requirements as the Committee may impose prior to the occurrence
of such withholding, may permit such withholding obligations to be satisfied
through cash payment by the Participant, through the surrender of shares of
Stock which the Participant already owns, or through the surrender of shares of
Stock to which the Participant is otherwise entitled under the Plan.
4.5. Use of Shares. Subject to the overall limitation on the number of
shares of Stock that may be delivered under the Plan, the Committee may use
available shares of Stock as the form of payment for compensation, grants or
rights earned or due under any other compensation plans or arrangements of the
Company or a Subsidiary, including the plans and arrangements of the Company or
a Subsidiary assumed in business combinations.
4.6. Dividends and Dividend Equivalents. An Award (including without
limitation an Option or SAR Award) may provide the Participant with the right to
receive dividend payments or dividend equivalent payments with respect to Stock
subject to the Award (both before and after the Stock subject to the Award is
earned, vested, or acquired), which payments may be either made currently or
credited to an account for the Participant, and may be settled in cash or Stock
as determined by the Committee. Any such settlements, and any such crediting of
dividends or dividend equivalents or reinvestment in shares of Stock, may be
subject to such conditions, restrictions and contingencies as the Committee
shall establish, including the reinvestment of such credited amounts in Stock
equivalents.
4.7. Payments. Awards may be settled through cash payments, the delivery of
shares of Stock, the granting of replacement Awards, or any combination thereof
as the Committee shall determine. Any Award settlement, including payment
deferrals, may be subject to such conditions, restrictions and contingencies as
the Committee shall determine. The Committee may permit or require the deferral
of any Award payment, subject to such rules and procedures as it may establish,
which may include provisions for the payment or crediting of interest, or
dividend equivalents, including converting such credits into deferred Stock
equivalents.
4
<PAGE> 32
Each Subsidiary shall be liable for payment of cash due under the Plan with
respect to any Participant to the extent that such benefits are attributable to
the services rendered for that Subsidiary by the Participant. Any disputes
relating to liability of a Subsidiary for cash payments shall be resolved by the
Committee.
4.8. Transferability. Except as otherwise provided by the Committee, Awards
under the Plan are not transferable except as designated by the Participant by
will or by the laws of descent and distribution.
4.9. Form and Time of Elections. Unless otherwise specified herein, each
election required or permitted to be made by any Participant or other person
entitled to benefits under the Plan, and any permitted modification, or
revocation thereof, shall be in writing filed with the Company at such times, in
such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.
4.10. Agreement With Company. An Award under the Plan shall be subject to
such terms and conditions, not inconsistent with the Plan, as the Committee
shall, in its sole discretion, prescribe. The terms and conditions of any Award
to any Participant shall be reflected in such form of written document as is
determined by the Committee. A copy of such document shall be provided to the
Participant, and the Committee may, but need not require that the Participant
sign a copy of such document. Such document is referred to in the Plan as an
"Award Agreement" regardless of whether any Participant signature is required.
4.11. Action by Company or Subsidiary. Any action required or permitted to
be taken by the Company or any Subsidiary shall be by resolution of its board of
directors, or by action of one or more members of the board (including a
committee of the board) who are duly authorized to act for the board, or (except
to the extent prohibited by applicable law or applicable rules of any stock
exchange) by a duly authorized officer of such company.
4.12. Gender and Number. Where the context admits, words in any gender
shall include any other gender, words in the singular shall include the plural
and the plural shall include the singular.
4.13. Limitation of Implied Rights.
(a) Neither a Participant nor any other person shall, by reason of
participation in the Plan, acquire any right in or title to any
assets, funds or property of the Company or any Subsidiary whatsoever,
including, without limitation, any specific funds, assets, or other
property which the Company or any Subsidiary, in their sole
discretion, may set aside in anticipation of a liability under the
Plan. A Participant shall have only a contractual right to the Stock
or amounts, if any, payable under the Plan, unsecured by any assets of
the Company or any Subsidiary, and nothing contained in the Plan shall
constitute a guarantee that the assets of the Company or any
Subsidiary shall be sufficient to pay any benefits to any person.
(b) The Plan does not constitute a contract of employment, and selection
as a Participant will not give any participating employee or director
the right to be retained in the employ of the Company or any
Subsidiary, or the right to remain a member of the board of directors,
nor any right or claim to any benefit under the Plan, unless such
right or claim has specifically accrued under the terms of the Plan.
Except as otherwise provided in the Plan, no Award under the Plan
shall confer upon the holder thereof any rights as a shareholder of
the Company prior to the date on which the individual fulfills all
conditions for receipt of such rights.
4.14. Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.
5
<PAGE> 33
SECTION 5
COMMITTEE
5.1. Administration. The authority to control and manage the operation and
administration of the Plan shall be vested in a committee (the "Committee") in
accordance with this Section 5. The Committee shall be selected by the Board. If
the Committee does not exist, or for any other reason determined by the Board,
the Board may take any action under the Plan that would otherwise be the
responsibility of the Committee.
5.2. Powers of Committee. The Committee's administration of the Plan shall
be subject to the following:
(a) Subject to the provisions of the Plan, the Committee will have the
authority and discretion to select from among the Eligible Individuals
those persons who shall receive Awards, to determine the time or times
of receipt, to determine the types of Awards and the number of shares
covered by the Awards, to establish the terms, conditions, performance
criteria, restrictions, and other provisions of such Awards, and
(subject to the restrictions imposed by Section 6) to cancel or
suspend Awards.
(b) To the extent that the Committee determines that the restrictions
imposed by the Plan preclude the achievement of the material purposes
of the Awards in jurisdictions outside of the United States, the
Committee will have the authority and discretion to modify those
restrictions as the Committee determines to be necessary or
appropriate to conform to applicable requirements or practices of
jurisdictions outside of the United States.
(c) The Committee will have the authority and discretion to interpret the
Plan, to establish, amend, and rescind any rules and regulations
relating to the Plan, to determine the terms and provisions of any
Award Agreement made pursuant to the Plan, and to make all other
determinations that may be necessary or advisable for the
administration of the Plan.
(d) Any interpretation of the Plan by the Committee and any decision made
by it under the Plan is final and binding on all persons.
(e) In controlling and managing the operation and administration of the
Plan, the Committee shall take action in a manner that conforms to the
articles and by-laws of the Company, and applicable state corporate
law.
5.3. Delegation by Committee. Except to the extent prohibited by applicable
law or the applicable rules of a stock exchange, the Committee may allocate all
or any portion of its responsibilities and powers to any one or more of its
members and may delegate all or any part of its responsibilities and powers to
any one or more of its members and any person or persons selected by it. Any
such allocation or delegation may be revoked by the Committee at any time.
5.4. Information to be Furnished to Committee. The Company and Subsidiaries
shall furnish the Committee with such data and information as it determines may
be required for it to discharge its duties. The records of the Company and
Subsidiaries as to an employee's or Participant's employment (or other period of
service), termination of employment (or cessation of services), leave of
absence, reemployment and compensation shall be conclusive on all persons unless
determined to be incorrect. Participants and other persons entitled to benefits
under the Plan must furnish the Committee such evidence, data or information as
the Committee considers desirable to carry out the terms of the Plan.
SECTION 6
AMENDMENT AND TERMINATION
The Board may, at any time, amend or terminate the Plan; provided that no
amendment or termination may, in the absence of written consent to the change by
the affected Participant (or, if the Participant is not then living, the
affected beneficiary), adversely affect the rights of any Participant or
beneficiary under any Award granted under the Plan prior to the date such
amendment is adopted by the Board, except that
6
<PAGE> 34
adjustments pursuant to paragraph 4.2(f) shall not be subject to the foregoing
limitations of this Section 6; and further provided that no amendment of the
Plan may increase the limit set forth in paragraph 4.2(b) (relating to the
maximum number of shares that may be delivered under the Plan) absent
shareholder approval.
SECTION 7
DEFINED TERMS
In addition to the other definitions contained herein, the following
definitions shall apply:
(a) Award. The term "Award" shall mean any award or benefit granted under
the Plan, including, without limitation, the grant of Options, SARs,
Stock Unit Awards, Restricted Performance Stock Awards, Restricted
Performance Stock Unit Awards and Performance Share Awards.
(b) Board. The term "Board" shall mean the Board of Directors of the
Company.
(c) Code. The term "Code" means the Internal Revenue Code of 1986, as
amended. A reference to any provision of the Code shall include
reference to any successor provision of the Code.
(d) Eligible Individual. The term "Eligible Individual" shall mean any
employee of the Company or a Subsidiary, and any member of the board
of directors of the Company or a Subsidiary. An Award may be granted
to an employee or director, in connection with hiring, retention or
otherwise, prior to the date the employee or director first performs
services for the Company or the Subsidiaries, provided that such
Awards shall not become vested prior to the date the employee or
director first performs such services.
(e) Fair Market Value. For purposes of determining the "Fair Market Value"
of a share of Stock as of any date, the following rules shall apply:
(A) If the principal market for the Stock is an exchange or the Nasdaq
stock market, then the "Fair Market Value" as of that date shall be
the closing price as reported on such exchange or as quoted in the
automated quotation system of Nasdaq, respectively, for the Stock on
that date.
(B) If the day is not a business day, and as a result, paragraph (A)
above is inapplicable, the Fair Market Value of the Stock shall be
determined as the last closing price most recently reported on such
exchange or in such system, as applicable, for the last preceding
business day.
(C) If the Stock is not traded on an exchange or regularly quoted in the
automated quotation system of Nasdaq, then the Fair Market Value of
the Stock shall be determined in such manner as is specified in good
faith by the Committee.
(f) Subsidiary. The term "Subsidiary" means any company during any period
in which it is a "subsidiary corporation" (as that term is defined in
Code section 424(f)) with respect to the Company.
(g) Stock. The term "Stock" shall mean shares of common stock of the
Company.
7
<PAGE> 35
PROXY
U.S. CAN CORPORATION
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 22, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder hereby constitutes Paul W. Jones and Steven K.
Sims, with full authority, which may be exercised by either one or both of
them, with power of substitution, to vote and act for the undersigned at the
Annual Meeting of Stockholders of U.S. Can Corporation to be held at The
Chicago Club, 81 East Van Buren Street, Chicago, Illinois, at 10:00 a.m. (local
time) on April 22, 1999, and at any adjournment thereof, as designated herein
and the proxies are authorized to vote in their discretion upon such other
business as may properly come before the meeting.
New Address:
---------------------------------------
---------------------------------------
---------------------------------------
PLEASE COMPLETE REVERSE SIDE
<PAGE> 36
<TABLE>
<CAPTION>
U.S. CAN CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ]
[ ]
<S> <C> <C> <C> <C> <C> <C> <C>
For Withhold For All
1. To elect the following nominees All All Except* 2. To approve the 1999 For Against Abstain
for Director, to serve a term [ ] [ ] [ ] Equity Incentive Plan. [ ] [ ] [ ]
expiring in 2002.
Charles W. Gaillard, Ricardo Poma, 3. Check here if you plan [ ]
Louis B. Susman. to attend the Meeting.
- -------------------------------------- Check here if [ ]
*Nominee Exception address has changed.
(make corrections on
- ------------------------------------------------------------------------ reverse side)
THIS AREA RESERVED FOR ADDRESSING Dated:
key lines do not print --------------------------
------------------------------------------------------
- ------------------------------------------------------------------------ Signature(s)
------------------------------------------------------
This proxy when properly executed will be voted in the manner Please sign exactly as name appears hereon. Joint
directed herein by the undersigned stockholder. If no direction owners should each sign personally. Executors,
is made, this proxy will be voted FOR Proposals 1 and 2. trustees, officers, etc. should indicate their titles
when signing.
- -----------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
PLEASE VOTE, SIGN, DATE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE.
</TABLE>
