<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE SHERWIN-WILLIAMS COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
STEPHEN J. PERISUTTI
THE SHERWIN-WILLIAMS COMPANY
101 PROSPECT AVENUE, N.W.
CLEVELAND, OHIO 44115
(216) 566-2543
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
/ / 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:
Not Applicable
(2) Form, schedule or registration statement no.:
Not Applicable
(3) Filing party:
Not Applicable
(4) Date filed:
Not Applicable
<PAGE> 2
THE SHERWIN-WILLIAMS COMPANY
------------------
NOTICE OF ANNUAL MEETING
The Annual Meeting of Shareholders of THE SHERWIN-WILLIAMS COMPANY will be
held in the LTV Auditorium, 927 Midland Building, 101 Prospect Avenue, N.W.,
Cleveland, Ohio on Wednesday, April 26, 1995 at 10:00 A.M., local time, for the
following purposes:
1. To fix the number of Directors of the Company at ten and to elect ten
Directors to hold office until the next Annual Meeting of Shareholders
or until their successors are elected; and
2. To transact such other business as may properly come before the Annual
Meeting of Shareholders.
Holders of Common Stock of record at the close of business on February 27,
1995 are the only shareholders entitled to notice of and to vote at the Annual
Meeting of Shareholders.
L. E. STELLATO
Secretary
Midland Building
Cleveland, Ohio 44115-1075
March 15, 1995
YOU CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING A FOLLOW-UP LETTER
BY THE PROMPT COMPLETION AND RETURN OF THE ENCLOSED PROXY WHETHER OR NOT YOU
EXPECT TO ATTEND THE ANNUAL MEETING OF SHAREHOLDERS. FOR YOUR CONVENIENCE, THERE
IS ENCLOSED A SELF-ADDRESSED ENVELOPE REQUIRING NO POSTAGE IF MAILED IN THE
UNITED STATES.
<PAGE> 3
THE SHERWIN-WILLIAMS COMPANY
MIDLAND BUILDING
CLEVELAND, OHIO 44115-1075
PROXY STATEMENT
March 15, 1995
PRELIMINARY
The enclosed proxy is requested by the Board of Directors in connection
with the Annual Meeting of Shareholders to be held April 26, 1995 for the
purpose of considering and acting upon the matters specified in the foregoing
Notice of Annual Meeting. The mailing date of this Proxy Statement is on or
about March 15, 1995.
The Board of Directors is not aware of matters other than those specified
in the foregoing Notice of Annual Meeting that will be brought before the Annual
Meeting of Shareholders for action. However, if any such matters should be
brought before the Annual Meeting of Shareholders, it is intended that the
persons appointed as proxies may vote or act thereon according to their
judgment.
ANNUAL REPORT
The Company's Annual Report to Shareholders for the year which ended
December 31, 1994 is enclosed with this Proxy Statement. In addition, financial
and other reports may be submitted at the Annual Meeting of Shareholders, but it
is not intended that any action will be taken with respect thereto.
ELECTION OF DIRECTORS
It is intended that proxies which contain no instructions to the contrary
will be voted in favor of fixing the number of Directors at ten and for the
election of the nominees listed on the proxy. The candidates receiving the most
votes will be elected.
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<PAGE> 4
Should any nominee decline or be unable to accept such nomination or be
unable to serve as a Director, an event which management does not now expect,
the Board of Directors reserves the right to substitute such other person as a
nominee, or to reduce the number of nominees to such extent, as they shall deem
advisable.
Each of the nominees, except for Mr. Mahoney who was appointed a Director
by unanimous action of the Board of Directors on January 23, 1995, has been
previously elected as a Director by the shareholders. The following, based upon
information received in part from the respective persons and in part from the
records of the Company, sets forth information regarding each nominee as of
December 31, 1994:
JAMES M. BIGGAR has served as Chairman and Chief Executive Officer of Glencairn
Corporation (real estate development) since July 1991 prior to which he
served as Chairman of Nestle USA, Inc. (food products, restaurants, hotels)
commencing January 1991. From January 1984 to January 1991, Mr. Biggar
served as Chairman and Chief Executive Officer of Nestle Enterprises, Inc.
Mr. Biggar is 66 years old and has served as a Director of the Company
since July 1987. Mr. Biggar is also a Director of National City Bank and
National City Corporation, and is Chairman of the New Cleveland Campaign.
JOHN G. BREEN has served as Chairman and Chief Executive Officer of the Company
since June 1986. Mr. Breen is 60 years old and has served as a Director of
the Company since April 1979. Mr. Breen is also a Director of National City
Corporation, Mead Corporation, Parker-Hannifin Corporation and The Goodyear
Tire and Rubber Company. Mr. Breen is a Trustee of Catholic Charities
Corporation, the Cleveland Opera, John Carroll University, the Musical Arts
Association (The Cleveland Orchestra) and University Hospitals of
Cleveland, and is a Member of The Case Western Reserve University Visiting
Committee for the School of Medicine.
LEIGH CARTER, prior to his retirement in September 1990, served as President and
Chief Operating Officer of B.F. Goodrich Company (diversified
manufacturing) since April 1986. Mr. Carter is 69 years old and has served
as a Director of the Company since October 1985. Mr. Carter is also a
Director of The Adams Express Co., Centerior Energy Corpora-
2
<PAGE> 5
tion, The Lamson and Sessions Co., NCC Funds and Petroleum and Resources
Corporation. Mr. Carter is a Trustee of The Cleveland Museum of Art, the
Great Lakes Theater Festival and University Circle Inc.
THOMAS A. COMMES has served as President and Chief Operating Officer of the
Company since June 1986. Mr. Commes is 52 years old and has served as a
Director of the Company since April 1980. Mr. Commes is also a Director of
Society National Bank, Centerior Energy Corporation and the Greater
Cleveland Growth Association, and is a Trustee of The Cleveland Clinic
Foundation and Vocational Guidance Services (VGS).
DANIEL E. EVANS has served as Chairman, Chief Executive Officer and Secretary of
Bob Evans Farms, Inc. (food products and restaurants) since 1971. Mr. Evans
is 58 years old and has served as a Director of the Company since April
1990. Mr. Evans is also a Director of Evans Enterprises, Inc., Motorists
Mutual Insurance Company, National City Bank and National City Corporation.
ROBERT W. MAHONEY has served as Chairman, Chief Executive Officer and President
of Diebold, Incorporated (manufacturer of financial self-service
transaction systems and security products) since July 1993 prior to which
he served as Chairman and Chief Executive Officer of Diebold, Incorporated
commencing April 1988. Mr. Mahoney is 58 years old and has served as a
Director of the Company since January 1995. Mr. Mahoney is also a Director
of The Timken Company, and is a Trustee of Mount Union College, Ohio
Foundation of Independent Colleges, the Professional Football Hall of Fame
and Canton (Ohio) Junior Achievement. Mr. Mahoney is a Member of the Stark
(County, Ohio) Development Board and the Chamber of Commerce Leadership
Canton Advisory Board.
WILLIAM G. MITCHELL, prior to his retirement in May 1987, served as Vice
Chairman of Centel Corporation (independent telephone and electric
properties) since May 1986. Mr. Mitchell is 64 years old and has served as
a Director of the Company since April 1979. Mr. Mitchell is also a Director
of Interlake Corporation, The Northern Trust Company, Northern Trust
Corporation and Peoples Energy Corporation.
3
<PAGE> 6
A. MALACHI MIXON, III has served as Chairman, Chief Executive Officer and
President of Invacare Corporation (manufacturer and distributor of home
health care products) since September 1983. Mr. Mixon is 54 years old and
has served as a Director of the Company since April 1993. Mr. Mixon is also
a Director of The Lamson and Sessions Co. and Primus Venture Capital, and
is a Trustee of The Cleveland Clinic Foundation, Cleveland Institute of
Music and Case Western Reserve University.
HELEN O. PETRAUSKAS has served as Vice President - Environmental and Safety
Engineering of Ford Motor Company (automobile manufacturing) since March
1983. Mrs. Petrauskas is 50 years old and has served as a Director of the
Company since July 1993. Mrs. Petrauskas is also a Director of MCN
Corporation, is a Trustee of the Henry Ford Health System, and is a Member
of the Advisory Board - Center for Risk Analysis, Harvard School of Public
Health and a Member of the Board of Visitors of North Carolina A&T State
University.
RICHARD K. SMUCKER has served as President of The J.M. Smucker Company (makers
of food products) since January 1987. Mr. Smucker is 46 years old and has
served as a Director of the Company since September 1991. Mr. Smucker is
also a Director of The J.M. Smucker Company and the Wm. Wrigley Jr.
Company, and is a Trustee of the Musical Arts Association (The Cleveland
Orchestra).
DIRECTORS' FEES
Each Director who is not an employee of the Company receives a retainer of
$25,000 per annum, earned and payable monthly. In addition, each such Director
receives $1,500 for each meeting of the Board of Directors or Committee of the
Board of Directors that he or she attends, or $2,000 for each meeting of a
Committee of the Board of Directors that he or she chairs. No fees or other
remuneration, as such, are paid to employees of the Company for services as a
member of the Board of Directors or any Committee thereof. Directors who are not
employees of the Company are permitted to defer all or a portion of their fees
pursuant to the Company's Director Deferred Fee Plan. The plan provides for
deferred fees to be invested in either a Deferred Cash Account (which bears
interest at the
4
<PAGE> 7
current base lending rate) or a Shadow Stock Account (the value of which
fluctuates according to the value of the Company's Common Stock).
CORPORATE OFFICERS OF THE COMPANY
The following table sets forth the names and ages of the current Corporate
Officers, the positions and offices with the Company held by them as of February
28, 1995 and the date when each was first elected or appointed a Corporate
Officer:
<TABLE>
<CAPTION>
DATE WHEN
FIRST ELECTED
NAME AGE PRESENT POSITION OR APPOINTED
- ---------------------- --- ------------------------------------- --------------
<S> <C> <C> <C>
John G. Breen 60 Chairman and Chief Executive January 1979
Officer, Director
Thomas A. Commes 52 President and Chief Operating March 1979
Officer, Director
Larry J. Pitorak 48 Senior Vice President -- Finance, June 1978
Treasurer and Chief Financial Officer
John L. Ault 49 Vice President -- Corporate January 1987
Controller
Conway G. Ivy 53 Vice President -- Corporate Planning March 1979
and Development
Robert E. Kinney 59 Vice President -- Administration February 1994
Thomas Kroeger 46 Vice President -- Human Resources October 1987
Louis E. Stellato 44 Vice President, General Counsel and December 1989
Secretary
James J. Sgambellone 37 Assistant Secretary and Corporate July 1991
Director of Taxes
</TABLE>
Following is a brief account of each Corporate Officer's business
experience with the Company during the last five year period:
Mr. Breen has served as Chairman and Chief Executive Officer since June
1986 and has served as a Director since April 1979.
Mr. Commes has served as President and Chief Operating Officer since June
1986 and has served as a Director since April 1980.
5
<PAGE> 8
Mr. Pitorak has served as Senior Vice President -- Finance, Treasurer and
Chief Financial Officer since April 1992 prior to which he served as Senior Vice
President -- Finance and Chief Financial Officer commencing July 1991. From
February 1988 to July 1991, Mr. Pitorak served as Vice President, General
Counsel and Secretary.
Mr. Ault has served as Vice President -- Corporate Controller since January
1987.
Mr. Ivy has served as Vice President -- Corporate Planning and Development
since April 1992 prior to which he served as Vice President and Treasurer
commencing January 1989.
Mr. Kinney has served as Vice President -- Administration since February
1994 prior to which he served as President & General Manager, Transportation
Services Division commencing July 1987.
Mr. Kroeger has served as Vice President -- Human Resources since October
1987.
Mr. Stellato has served as Vice President, General Counsel and Secretary
since July 1991 prior to which he served as Assistant Secretary and Corporate
Director of Taxes commencing December 1989.
Mr. Sgambellone has served as Assistant Secretary and Corporate Director of
Taxes since July 1991 prior to which he served as Senior Corporate Counsel
commencing December 1989.
There are no family relationships between any of the persons named.
6
<PAGE> 9
OPERATING MANAGERS OF THE COMPANY
The following table sets forth the names and ages of the current Operating
Managers, the positions and offices with the Company held by them as of February
28, 1995 and the date when each was first appointed an Operating Manager.
<TABLE>
<CAPTION>
DATE WHEN
FIRST
NAME AGE PRESENT POSITION APPOINTED
- ------------------------- --- ------------------------------------- ---------------
<S> <C> <C> <C>
Frank E. Butler 59 President & General Manager, November 1981
Coatings Division
Christopher M. Connor 38 President & General Manager, June 1986
Specialty Division
Thomas Coy 36 President & General Manager, February 1994
Transportation Services Division
T. Scott King 42 President & General Manager, February 1992
Consumer Brands Division
Blair P. LaCour 48 President & General Manager, Mid October 1989
Western Division, Paint Stores Group
John C. Macatee 43 President, Paint Stores Group June 1986
Steven J. Oberfeld 42 President & General Manager, South September 1992
Western Division, Paint Stores Group
James E. Renshaw 47 President & General Manager, Eastern June 1986
Division, Paint Stores Group
Salvatore V. Sanzone 59 President & General Manager, South- April 1994
eastern Division, Paint Stores Group
Joseph M. Scaminace 41 President & General Manager, May 1985
Automotive Division
</TABLE>
Following is a brief account of each Operating Manager's business
experience during the last five year period:
Mr. Butler has served as President & General Manager, Coatings Division
since February 1992 prior to which he served as President & General Manager,
Consumer Division commencing May 1984.
Mr. Connor has served as President & General Manager, Specialty Division
since April 1994 prior to which he served as Senior Vice President -- Marketing,
Paint Stores Group commencing September 1992. From June 1986 to September 1992,
Mr. Connor served as President & General Manager, Western Division, Paint Stores
Group.
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<PAGE> 10
Mr. Coy has served as President & General Manager, Transportation Services
Division since February 1994 prior to which he served as Vice President &
Director -- Sales and Operations, Transportation Services Division commencing
August 1992. From May 1989 to August 1992, Mr. Coy served as Controller,
Transportation Services Division.
Mr. King has served as President & General Manager, Consumer Brands
Division since February 1992 prior to which he served as Vice President,
Director of Sales and Marketing, Consumer Division commencing June 1987.
Mr. LaCour has served as President & General Manager, Mid Western Division,
Paint Stores Group since September 1992 prior to which he served as President &
General Manager, Mid Central Division, Paint Stores Group commencing October
1989.
Mr. Macatee has served as President, Paint Stores Group since September
1992 prior to which he served as President & General Manager, South Central
Division, Paint Stores Group commencing June 1986.
Mr. Oberfeld has served as President & General Manager, South Western
Division, Paint Stores Group since September 1992 prior to which he served as
Vice President of Sales, South Central Division, Paint Stores Group commencing
August 1990. From January 1987 to August 1990, Mr. Oberfeld served as Director
of Sales, South Central Division, Paint Stores Group.
Mr. Renshaw has served as President & General Manager, Eastern Division,
Paint Stores Group since June 1986.
Mr. Sanzone has served as President & General Manager, Southeastern
Division, Paint Stores Group since April 1994 prior to which he served as Vice
President of Sales, Eastern Division, Paint Stores Group commencing August 1990.
From March 1988 to August 1990, Mr. Sanzone served as Director of Sales, Eastern
Division, Paint Stores Group.
Mr. Scaminace has served as President & General Manager, Automotive
Division since April 1994 prior to which he served as President & General
Manager, Specialty Division commencing September 1985.
There are no family relationships between any of the persons named.
8
<PAGE> 11
COMPENSATION AND MANAGEMENT DEVELOPMENT
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Management Compensation Program ("Program") is administered
by the Compensation and Management Development Committee ("Committee") of the
Board of Directors. The Committee is composed of five outside Directors and is
accountable to the Board of Directors on all compensation matters regarding the
Executive Officers. The Program is designed to enable the Company to attract,
motivate and retain key executives and to establish and maintain a performance
and achievement-oriented environment. The Program provides for: (a) competitive
salary levels which reflect, in part, individual performance, (b) additional
compensation based on the achievement of financial and other performance goals,
and (c) long-term stock-based incentive opportunities. The Program consists of
both cash and equity-based compensation.
The annual base salary, annual incentive opportunities and long-term
incentive opportunities are intended to be competitive with market base salary
and incentive compensation opportunities. The Committee utilizes data from
various commercially available executive compensation surveys in order to
identify, on an annual basis, the base salary and incentive opportunities
available at manufacturing companies with comparable sales. The Committee
believes that these companies are likely competitors of the Company for
executive talent. These companies may include some of the companies comprising
the peer groups identified in the performance graphs if such companies
participated in one or more of the compensation surveys. For the various
components of compensation, the Committee uses the median compensation paid to
executive officers holding equivalent positions or having similar
responsibilities in manufacturing companies with comparable sales. The amount of
compensation paid to the Executive Officers is not based upon the cumulative
total return on the Company's Common Stock as reflected in either of the
performance graphs.
Annual cash compensation consists of a base salary and the opportunity to
earn additional compensation under the Company's Management Incentive Plan
("Plan"). All of the Executive Officers participate in the Plan. With regard to
base salary, a salary range for each Executive Officer is approved on the basis
of such person's position and level of responsibility by using the compensation
surveys, with the median market base salary
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<PAGE> 12
approximating the midpoint of the range. Once a range is formulated, salary
levels are based upon the Executive Officer's performance and, to a lesser
extent, tenure in the particular position. The base salary of each Executive
Officer is reviewed and approved annually.
In approving the amount of compensation to be paid to any of the Executive
Officers, great emphasis is placed on establishing incentive opportunities for
the Executive Officers which are directly linked with Company performance and
the maximization of shareholder value. The Committee establishes a threshold
Company earnings goal, and 75% of this goal must be met before incentive
compensation is paid to the Executive Officers, subject to the Committee's
discretion to award special incentive compensation under exceptional
circumstances. This earnings goal is established at a level which exceeds the
Company's prior year's earnings and requires that the Company improve its
earnings performance before incentive compensation is paid (except as provided
in the foregoing sentence). During the fiscal year ended December 31, 1994, the
Company's earnings exceeded that goal. In addition, compensation decisions for
individual Executive Officers are based, in part, on financial performance goals
for the Company, as described below, and other individual goals related to each
Executive Officer's area of responsibility.
Annual incentive compensation awarded to an Executive Officer is also
determined by using the median incentive compensation (identified from the
compensation surveys), which is generally equivalent to the amount an Executive
Officer could receive under the Plan if 100% of all of the Company and
individual goals are obtained. Under the Plan, annual bonus awards for the
Executive Officers range from zero, if the stated goals are not reached, to
between 35% and 60% of the Executive Officer's base salary (depending upon the
Executive Officer's position) if 100% of the stated goals are obtained. In the
event the Company and an Executive Officer exceed 100% of the stated goals,
incentive compensation can be awarded up to an aggregate maximum amount of 60%
to 95% of the Executive Officer's base salary (depending upon position).
Decisions on annual incentive compensation awarded to an Executive Officer are
based upon financial performance goals, such as after-tax net income and the
return on stockholders' equity, for each Plan year, and the accomplishment by
the Executive Officer of individual performance goals (both quantitative and
qualitative), which
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<PAGE> 13
vary by Executive Officer and which usually relate to the particular business
unit or function for which such person has responsibility. The financial
performance goals are generally weighted more heavily.
Long-term incentive compensation may be awarded to any one or all of the
Executive Officers under the Company's 1994 Stock Plan. All of the Executive
Officers participate in the Stock Plan. Under the Stock Plan, the Committee may
grant stock options to the Executive Officers based on competitive market
practices. Competitive market practices are determined by the various
compensation surveys mentioned above, and the Committee grants stock options
based upon the median market value of the underlying stock relating to stock
options that comparable companies are granting to their executive officers. The
specific number of stock options granted to an Executive Officer is based upon
the Executive Officer's position and level of responsibility. The option
exercise price is equal to the fair market value of the Company's Common Stock
on the date options are granted. Stock options granted typically vest at the
rate of one-third per year for three years (beginning one year from the date of
grant) and expire ten years from the date of grant.
Awards of restricted stock under the Stock Plan, which are subject to a
"substantial risk of forfeiture", may be granted to the Executive Officers. The
granting of restricted stock is determined in the same manner that the granting
of stock options is determined. If granted, restricted stock may be issued with
certain performance and time restrictions. The number of shares of restricted
stock which may actually vest at the end of the restriction period is dependent
upon the Company's relative return on average shareholder equity versus a group
of peer companies. The companies that comprise this group of peer companies are
the same companies that comprise the New Peer Group identified in the
performance graphs (except for one company for which sufficient financial data
is not available to calculate cumulative total return). Depending on the
Company's performance at the end of the restriction period, from 0% to 100% of
the restricted stock may vest. The restriction period is typically four years
from the date of grant of the restricted stock.
Section 162(m) of the Internal Revenue Code generally provides that certain
compensation in excess of $1 million per year paid to a company's
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<PAGE> 14
chief executive officer and any of its four other highest paid executive
officers is no longer deductible to a company beginning in the 1994 tax year
unless the compensation qualifies for an exception. This deduction limit
generally applies only to compensation that could otherwise be deducted by a
company in a taxable year, which excludes compensation deferred by an executive
officer. For 1994, Mr. Breen was the only Executive Officer who was paid
compensation exceeding $1 million. However, because of Mr. Breen's use of
deferrals, the Committee does not expect that Section 162(m) will limit the
Company's deductibility of his compensation.
Section 162(m) provides an exception to the deductibility limit for
performance-based compensation if certain procedural requirements, including
shareholder approval of the material terms of the performance goals, are
satisfied. Accordingly, as part of last year's Proxy Statement, the Company
proposed and the shareholders approved certain amendments to the 1994 Stock Plan
which are intended to qualify grants of options, stock appreciation rights and
restricted stock for this exception for performance-based compensation. The
Committee will continue to review the Company's other compensation programs in
light of Section 162(m).
CHIEF EXECUTIVE OFFICER'S COMPENSATION
The Committee determined Mr. Breen's compensation for the fiscal year ended
December 31, 1994 based on a number of factors and criteria. Mr. Breen's base
salary range was determined using the median base salary of chief executive
officers for manufacturing companies having comparable sales as the Company. Mr.
Breen's base salary within his range was established based upon a review by the
Committee of Mr. Breen's 1993 performance (which was measured, in part, by the
Company's 1993 performance) and his tenure with the Company. For 1994, the
average salary increase given generally to salaried employees of the Company was
4.5%, and the range of potential increases was 0% to 10%. Mr. Breen received a
base salary increase of 5% in January 1994. Mr. Breen's increase was based
primarily upon the Committee's evaluation of Mr. Breen's 1993 performance
relating to the financial and other performance measures set forth below and his
tenure with the Company. In addition, incentive compensation paid to Mr. Breen
under the Plan was based primarily upon the Company's achievement of 1994
financial performance goals relating to
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<PAGE> 15
after-tax net income, return on stockholders' equity, return on sales, cash flow
and working capital as a percent of sales. Mr. Breen's achievement of certain
other 1994 goals relating to management succession planning, acquisition
strategies and 1994 budget considerations were also factors, but were weighted
less heavily.
In determining the number of stock options and shares of restricted stock
awarded to Mr. Breen under the Stock Plan, the Committee also identified the
median market value of the underlying shares relating to stock options and of
shares of restricted stock which comparable companies granted to their chief
executive officers. The amount of outstanding stock options and shares of
restricted stock is not considered by the Committee in making awards of stock
options and restricted stock. No restricted stock was awarded to Mr. Breen in
1994.
COMPENSATION AND MANAGEMENT
DEVELOPMENT COMMITTEE
W.G. Mitchell, Chairman
J.M. Biggar
L. Carter
A.M. Mixon, III
R.E. Schey
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<PAGE> 16
PERFORMANCE GRAPHS
The line graphs on the following pages set forth a comparison of the
cumulative total shareholder return on the Company's Common Stock with the
cumulative total return of the companies listed on the Standard & Poor's 500
Stock Index and two peer groups of companies selected on a line-of-business
basis. The "Current Peer Group" is comprised of the following companies: Akzo
Nobel nv, Armstrong World Industries, Inc., BASF Corporation, Ferro Corporation,
H.B. Fuller Company, Genuine Parts Company, Grow Group, Inc., Guardsman
Products, Inc., Hechinger Company, The Home Depot, Inc., Imperial Chemicals
Industries PLC, Lilly Industries, Inc., Lowe's Companies, Inc., Masco
Corporation, Morton International, Inc., Newell Co., PPG Industries, Inc., Pratt
& Lambert, Inc., RPM, Inc., Standard Brands Paint Company, The Stanley Works,
USG Corporation and The Valspar Corporation. The "Prior Peer Group" is the peer
group that the Company used last year for its performance graphs and is composed
of the following companies: Detrex Corporation, Ferro Corporation, Grow Group,
Inc., Guardsman Products, Inc., H.B. Fuller Company, Lawter International, Inc.,
Lilly Industries, Inc., NL Industries, Inc., PPG Industries, Inc., Pratt &
Lambert, Inc., RPM, Inc., Rohm and Haas Company, Standard Brands Paint Company
and The Valspar Corporation.
The Company decided to change to the Current Peer Group because it is
comprised of the same companies that comprise the peer group currently used in
connection with the Company's 1994 Stock Plan for the purpose of determining the
number of shares of restricted stock which vest at the end of the restriction
period (except for one company for which sufficient financial data is not
available to calculate cumulative total return). For the purpose of making the
transition from the Prior Peer Group to the Current Peer Group, both groups are
included in this year's performance graphs.
14
<PAGE> 17
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE SHERWIN-WILLIAMS COMPANY, S&P 500 INDEX,
THE CURRENT PEER GROUP AND THE PRIOR PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD CURRENT PEER
(FISCAL YEAR COVERED) SHERWIN-WILLIAMS S&P 500 GROUP PRIOR PEER GROUP
<S> <C> <C> <C> <C>
1989 $100 $100 $100 $100
1990 $111 $97 $92 $101
1991 $162 $126 $137 $127
1992 $188 $136 $153 $156
1993 $223 $150 $183 $179
1994 $212 $152 $188 $181
</TABLE>
Assumes $100 invested on December 31, 1989 in the Common Stock of The
Sherwin-Williams Company, S&P 500 Index, the Current Peer Group and the Prior
Peer Group, including reinvestment of dividends, through the fiscal year ended
December 31, 1994.
15
<PAGE> 18
COMPARISON OF TEN YEAR CUMULATIVE TOTAL RETURN
AMONG THE SHERWIN-WILLIAMS COMPANY, S&P 500 INDEX,
THE CURRENT PEER GROUP AND THE PRIOR PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD CURRENT PEER
(FISCAL YEAR COVERED) SHERWIN-WILLIAMS S&P 500 GROUP PRIOR PEER GROUP
<S> <C> <C> <C> <C>
1984 $100 $100 $100 $100
1985 $162 $132 $140 $139
1986 $206 $156 $185 $198
1987 $185 $164 $199 $192
1988 $197 $192 $220 $222
1989 $273 $252 $248 $242
1990 $304 $244 $228 $244
1991 $443 $319 $341 $307
1992 $515 $343 $379 $377
1993 $611 $378 $454 $434
1994 $580 $383 $467 $439
</TABLE>
Assumes $100 invested on December 31, 1984 in the Common Stock of The
Sherwin-Williams Company, S&P 500 Index, the Current Peer Group and the Prior
Peer Group, including reinvestment of dividends, through the fiscal year ended
December 31, 1994.
16
<PAGE> 19
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- -------------------------
RESTRICTED SECURITIES
STOCK UNDERLYING
NAME AND PRINCIPAL AWARD(S) OPTIONS/ ALL OTHER
POSITION YEAR SALARY ($) BONUS ($) ($)1,2 SARS (#) COMPENSATION($)3
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J. G. Breen 1994 758,888 625,000 --0-- 32,000 152,574
Chairman and Chief 1993 722,800 560,000 615,000 32,000 143,026
Executive Officer 1992 675,506 525,000 --0-- 37,000 146,443
T. A. Commes 1994 492,038 420,000 --0-- 18,000 137,021
President and Chief 1993 467,308 325,000 338,250 18,000 108,471
Operating Officer 1992 444,236 305,000 --0-- 21,000 100,376
J. C. Macatee 1994 247,845 230,000 --0-- 9,000 59,136
President, Paint Stores 1993 -- -- -- -- --
Group4 1992 -- -- -- -- --
F. E. Butler 1994 251,340 210,000 --0-- 6,000 64,347
President & General 1993 -- -- -- -- --
Manager, Coatings 1992 -- -- -- -- --
Division4
L. J. Pitorak 1994 255,024 175,000 --0-- 9,000 65,718
Senior Vice President 1993 238,360 145,000 153,750 9,000 52,252
-- Finance, Treasurer 1992 225,268 133,000 --0-- 10,000 45,169
and Chief Financial
Officer
</TABLE>
- ---------------
1 The number of shares of restricted stock held on December 31, 1994 and the
aggregate value of such holdings on such date for Messrs. Breen, Commes,
Macatee, Butler and Pitorak are 58,000 shares with a value of $1,935,750,
31,000 shares with a value of $1,034,625, 12,000 shares with a value of
$400,500, 11,000 shares with a value of $367,125 and 13,000 shares with a
value of $433,875, respectively. The value of restricted stock is equal to the
number of shares of restricted stock indicated multiplied by the closing price
of the Company's Common Stock on December 31, 1994. The values indicated are
not necessarily indicative of the actual values which may be realized by the
named Executive Officers.
17
<PAGE> 20
2 Dividends are paid on all restricted stock at the same rate as paid on the
Company's Common Stock.
3 The amounts disclosed in this column include: (a) Company contributions in the
amount of $11,792 for each of Messrs. Commes, Macatee and Pitorak under the
Company's Pension Investment Plan, a defined contribution plan. Messrs. Breen
and Butler do not participate in such plan; (b) Company contributions in the
amounts of $26,823, $4,176 and $6,776 for Messrs. Commes, Macatee and Pitorak,
respectively, under the Company's Pension Investment Plan Equalization
Program, a defined contribution plan. Messrs. Breen and Butler do not
participate in such program; (c) Company contributions in the amount of $7,677
for each of Messrs. Breen, Commes, Macatee, Butler and Pitorak under the
Company's Employee Stock Purchase and Savings Plan, a defined contribution
plan; (d) Company contributions in the amounts of $83,904, $49,032, $17,453,
$19,068 and $19,793 for Messrs. Breen, Commes, Macatee, Butler and Pitorak,
respectively, under the Company's Deferred Compensation Savings Plan, a
defined contribution plan; (e) the dollar value of compensatory split-dollar
life insurance benefits, under the Company's Executive Life Insurance Plan, in
the amounts of $56,523, $37,685, $15,582, $34,338 and $16,992 for Messrs.
Breen, Commes, Macatee, Butler and Pitorak, respectively; and (f) payments, by
the Company, related to premiums under the Company's Executive Disability
Income Plan in the amounts of $4,470, $4,012, $2,456, $3,264 and $2,688 for
Messrs. Breen, Commes, Macatee, Butler and Pitorak, respectively.
4 Messrs. Macatee and Butler first became "Executive Officers" (as such term is
defined under the Securities Exchange Act of 1934) during the fiscal year
ended December 31, 1994. In accordance with the rules of the Securities and
Exchange Commission, only 1994 compensation is required to be disclosed for
Messrs. Macatee and Butler.
18
<PAGE> 21
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM4
--------------------------------------------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SARS
OPTIONS/ GRANTED TO EXERCISE
SARS EMPLOYEES OR BASE EXPIRA-
GRANTED IN FISCAL PRICE TION
NAME (#)1,2 YEAR ($/SH)3 DATE 5% ($) 10% ($)
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J. G. Breen 32,000 9.5694 33.25 1/26/04 669,144 1,695,742
T. A. Commes 18,000 5.3828 33.25 1/26/04 376,393 953,855
J. C. Macatee 9,000 2.6914 33.25 1/26/04 188,197 476,927
F. E. Butler 6,000 1.7943 33.25 1/26/04 125,464 317,952
L. J. Pitorak 9,000 2.6914 33.25 1/26/04 188,197 476,927
Value realizable
for all
shareholders5 N/A N/A N/A N/A 1,851,323,078 4,691,616,165
Value realizable
for the named
Executive
Officers as a %
of value
realizable for
all shareholders N/A N/A N/A N/A 0.084% 0.084%
<FN>
- ---------------
1Generally, one-third of the options granted are exercisable on each of the
first, second and third anniversary dates of the grant.
2All options granted become immediately exercisable, in full, upon a filing
pursuant to any federal or state law in connection with any tender offer for
shares of the Company's Common Stock (other than a tender offer by the Company)
or upon the signing of any agreement for the merger or consolidation of the
Company with another corporation or for the sale of substantially all of the
assets of the Company to another corporation, which tender offer, merger,
consolidation or sale, if consummated, would, in the opinion of the Board of
Directors of the Company, likely result in a change in control of the Company.
In the event any such tender offer, merger, consolidation or sale is abandoned
or, in the opinion of the Board of Directors, is not likely to be consummated,
the Board of Directors may nullify the effect of the immediately preceding
sentence and reinstate the
19
<PAGE> 22
provisions providing for accrual in installments, without prejudice to any
exercise of options that may have occurred prior to such nullification.
3The exercise price is equal to the fair market value of the Company's Common
Stock on the date of grant.
4The amounts disclosed in these columns, which reflect appreciation of the
Company's Common Stock price at the 5% and 10% rates dictated by the Securities
and Exchange Commission, are not intended to be a forecast of the Company's
Common Stock price and are not necessarily indicative of the actual values
which may be realized by the named Executive Officers or the shareholders.
These assumed rates of 5% and 10% would result in the Company's Common Stock
price increasing from $33.25 per share to approximately $54.16 per share and
$86.24 per share, respectively.
5The amounts disclosed reflect appreciation of the Company's Common Stock price
at the 5% and 10% rates dictated by the Securities and Exchange Commission and
are based upon the closing price of the Company's Common Stock on January 26,
1994 (the date on which the options set forth in this table were granted)
multiplied by the total number of shares of such stock outstanding on such
date.
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS
OPTIONS/SARS AT FY-END
SHARES AT FY-END (#) ($)2
ACQUIRED ON VALUE ------------- -------------
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($)1 UNEXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
J. G. Breen --0-- --0-- 41,666/ 334,835/
65,668 100,838
T. A. Commes --0-- --0-- 50,001/ 513,181/
37,000 57,000
J. C. Macatee --0-- --0-- 51,399/ 685,863/
20,301 34,638
F. E. Butler --0-- --0-- 8,667/ 60,771/
11,900 17,050
L. J. Pitorak --0-- --0-- 20,200/ 132,015/
18,334 27,753
</TABLE>
20
<PAGE> 23
- ---------------
1The value realized on the exercise of options is based on the difference
between the exercise price and the fair market value of the Company's Common
Stock on the date of exercise.
2The value of unexercised in-the-money options is based on the difference
between the exercise price and the fair market value of the Company's Common
Stock on December 31, 1994.
PENSION PLAN
The Sherwin-Williams Company Salaried Employees' Retirement Plan ("Pension
Plan") provides pension benefits for certain salaried employees hired on or
before December 31, 1983. Messrs. Breen and Butler are the only Executive
Officers named in the Summary Compensation Table who participate in the Pension
Plan. The Pension Plan requires five years of service for a participant to
become fully vested with respect to a participant who has at least one hour of
service on or after January 1, 1989 and ten years of service for all other
participants. A participant may also become one hundred percent vested in the
event the participant's employment is terminated (in specified situations) after
a Change in Control (as defined in the Pension Plan) of the Company. As of
December 31, 1994, the maximum annual benefit under the provisions of the
Pension Plan is $118,800 due to limitations imposed by ERISA and the Internal
Revenue Code.
The Company has established a Retirement Equalization Program to provide
eligible employees with the benefits they would have received under the Pension
Plan but for the maximum limitations imposed by ERISA and the Internal Revenue
Code. The program authorizes the Company, at its discretion, to enter into
appropriate agreements with employees who are, or may become, eligible to
participate in the program. The benefits under this program will be paid from an
irrevocable grantor trust funded from the Company's general funds or by the
Company from the Company's general funds in the event of a deficiency in the
trust.
The following table sets forth the estimated aggregate annual normal
benefits payable under the Pension Plan and the Company's Retirement
Equalization Program commencing at age 65 in the form of a single life annuity:
21
<PAGE> 24
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------
REMUNERATION 15 20 25 30
- ------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 300,000 44,490 59,490 74,490 89,490
400,000 59,490 79,490 99,490 119,490
500,000 74,490 99,490 124,490 149,490
600,000 89,490 119,490 149,490 179,490
700,000 104,490 139,490 174,490 209,490
800,000 119,490 159,490 199,490 239,490
900,000 134,490 179,490 224,490 269,490
1,000,000 149,490 199,490 249,490 299,490
1,100,000 164,490 219,490 274,490 329,490
1,200,000 179,490 239,490 299,490 359,490
1,300,000 194,490 259,490 324,490 389,490
1,400,000 209,490 279,490 349,490 419,490
1,500,000 224,490 299,490 374,490 449,490
1,600,000 239,490 319,490 399,490 479,490
</TABLE>
Pensions are based upon average annual earnings (salary and bonus) for the
highest five consecutive years out of the last ten years of employment with the
Company. For Messrs. Breen and Butler, this average amount equaled $1,204,578
and $360,418, respectively, as of December 31, 1994. Normal monthly pensions
equal one-twelfth of one percent of the Average Annual Earnings (as defined in
the Pension Plan) times the number of years of credited service up to a maximum
of forty years, less an offset of $42.50 (or such lesser amount as may be
required under the Internal Revenue Code). The pension may be adjusted for a
surviving spouse's pension or other options under the Pension Plan. Pensions are
not subject to any other deduction for social security or any other offset
amounts. Messrs. Breen and Butler were credited with sixteen and twenty-eight
years of service, respectively, under the Pension Plan as of December 31, 1994
and participate in the Company's Retirement Equalization Program.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
Employment Contracts. Messrs. Breen and Commes have employment contracts
with the Company. In addition to their basic compensation, incentive
compensation, and participation in the employee benefit plans and the 1994 Stock
Plan, each is entitled to receive, in the event the Company
22
<PAGE> 25
terminates his employment for any reason, except in the event termination is the
result of a change of control of the Company, an amount equal to one and
one-half times his "total compensation" for the last preceding year. In the
event the termination of employment is the result of a change of control of the
Company, Mr. Breen is entitled to receive, at the time of his termination of
employment, an amount equal to two times his "annual assured compensation", and
Mr. Commes is entitled to receive an amount equal to his "annual assured
compensation". The terms "total compensation" and "annual assured compensation"
are not defined in the employment contracts and may be subject to various
interpretations. Compensation received due to a termination of employment
resulting from a change of control of the Company shall be an offset against the
amounts payable under the severance pay agreements as described herein.
In addition, pursuant to a provision of Mr. Breen's employment contract,
the Company will pay to Mr. Breen, upon retirement, supplemental pension
benefits so that his total pension benefits will not be less than those he would
have received under the Gould Inc. Salaried Retirement Plan if Mr. Breen had
continued to be employed by Gould Inc. (Mr. Breen's previous employer) until his
retirement and had received compensation in the amount and form paid to him by
the Company. The following table sets forth the estimated aggregate annual
normal benefits payable to Mr. Breen, under this provision of his employment
contract, commencing at age 65 in the form of a single life annuity:
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------
REMUNERATION 15 20 25 30
- ------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 800,000 218,987 178,987 138,987 98,987
900,000 248,987 203,987 158,987 113,987
1,000,000 278,987 228,987 178,987 128,987
1,100,000 308,987 253,987 198,987 143,987
1,200,000 338,987 278,987 218,987 158,987
1,300,000 368,987 303,987 238,987 173,987
1,400,000 398,987 328,987 258,987 188,987
1,500,000 428,987 353,987 278,987 203,987
1,600,000 458,987 378,987 298,987 218,987
</TABLE>
These supplemental pension benefits are based upon the average annual
salary and bonus paid to Mr. Breen for the highest five years out of the last
23
<PAGE> 26
fifteen years of employment with the Company. For Mr. Breen, this average amount
equaled $1,204,578 as of December 31, 1994. These benefits are not subject to
any deduction for social security or other offset amounts. Mr. Breen was
credited with sixteen years of service under this provision of his employment
contract as of December 31, 1994.
Severance Pay Agreements. To ensure continuity and the continued
dedication of key executives during any period of uncertainty caused by the
possible threat of a takeover, the Company has entered into severance pay
agreements with certain key executives. In the event there is a Change of
Control (as that term is defined in the agreements) of the Company and the
employment of the contracting executive terminates under certain conditions
described in the agreements at any time during the two year period following a
Change of Control of the Company, the executive will receive an agreed upon
amount of severance pay. In the event the executive has an employment contract
with the Company providing for the payment of severance pay at the time of
termination of employment, the amounts payable under such employment contract
shall be offset against amounts payable under the severance pay agreement. The
Company has entered into severance pay agreements with each of the Executive
Officers named in the Summary Compensation Table.
For Messrs. Breen and Commes, the severance pay agreements provide that
upon termination, whether voluntary or involuntary, unless the termination is
because of death, Disability or by the Company for Cause (as such terms are
defined in the agreements), they will receive, in addition to accrued salary,
bonus and vacation pay: (a) a lump sum cash amount equal to four times the sum
of (i) twenty-six times their highest regular bi-weekly salary in effect within
the three year period preceding termination, plus (ii) the greater of the
highest bonus received within the three year period preceding termination or the
bonus such executive would have received for the year of termination had the
executive reached 100% of any stated goals (as explained in the Compensation and
Management Development Committee Report on Executive Compensation); (b)
continued participation in the Company's employee welfare benefit plans and
other benefit arrangements for a period of four years following termination; and
(c) special retirement benefits so that the total retirement benefits received
will be equal to the retirement benefits which would have been received had
24
<PAGE> 27
their employment with the Company continued during the four year period
following termination.
For all other Executive Officers named in the Summary Compensation Table,
the severance pay agreements provide that upon termination for any reason other
than death, Disability, by the Company for Cause or by the executive for other
than Good Reason (as such terms are defined in the agreements), the executive
will receive, in addition to accrued salary, bonus and vacation pay: (a) a lump
sum cash amount equal to three times the sum of (i) twenty-six times the
executive's highest regular bi-weekly salary in effect within the three year
period preceding termination, plus (ii) the greater of the highest bonus
received by the executive within the three year period preceding termination or
the bonus such executive would have received for the year of termination had the
executive reached 100% of any stated goals (as explained in the Compensation and
Management Development Committee Report on Executive Compensation); (b)
continued participation in the Company's employee welfare benefit plans and
other benefit arrangements for a period of three years following termination;
and (c) special retirement benefits so that the total retirement benefits
received will be equal to the retirement benefits which would have been received
had such executive's employment with the Company continued during the three year
period following termination. Each such executive has the right to terminate his
employment with the Company for any reason during the thirty day period
immediately following the first anniversary date of a Change of Control of the
Company, in which event such executive shall receive, in lieu of the amount set
forth in clause (a) above, a lump sum cash amount equal to two times the sum of
clauses (a)(i) and (a)(ii) above.
The salary and other benefits provided by the severance pay agreements will
be payable either from an escrow fund established by the Company with a national
banking institution or from the Company's general funds. The Company has agreed
to indemnify such executives for any legal expense incurred in the enforcement
of their rights under the severance pay agreements.
25
<PAGE> 28
INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Ernst & Young LLP to examine the
consolidated financial statements and other records of the Company for the
fiscal year ending December 31, 1995. Representatives of Ernst & Young LLP are
expected to be present at the Annual Meeting of Shareholders and will have an
opportunity to make a statement if they wish and to respond to appropriate
shareholders' questions.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held five regular meetings during the fiscal year
ended December 31, 1994.
The Board of Directors has established, among other committees, an Audit
Committee, a Board Composition Committee and a Compensation and Management
Development Committee. The functions and members of these Committees are as
follows:
Audit. The Audit Committee has the responsibility of reviewing the adequacy
of the Company's financial controls and the quality and integrity of its
financial reports. In addition, the Audit Committee recommends to the Board of
Directors independent public accountants to audit the books, records and
accounts of the Company for the ensuing fiscal year. The Committee reviews all
reports and recommendations of the independent public accountants with respect
to matters within their area of responsibility and reports to the Board of
Directors on the scope and depth of the audit. The Committee also makes
inquiries into the Company's internal audit functions and procedures.
The Audit Committee met twice during 1994 and is currently composed of five
outside Directors: L. Carter, D. E. Evans, W. G. Mitchell, H.O. Petrauskas and
R. K. Smucker.
Board Composition. The Board Composition Committee develops plans for the
composition and size of the Board of Directors. Matters considered by this
Committee include the ratio of inside to outside Directors, as well as the
skills and disciplines desired as represented by individual Directors. The
Committee also is charged with the responsibility to conduct searches for
26
<PAGE> 29
individual members, interview prospective candidates and make selections and
recommendations to the Board of Directors. The Committee has not undertaken to
consider nominees recommended by shareholders but has and will continue to
employ professional search firms to assist it in identifying potential members
of the Board of Directors with the desired skills and disciplines.
The Board Composition Committee met once in 1994 and is currently composed
of three outside Directors: J. M. Biggar, L. Carter and W. G. Mitchell.
Compensation and Management Development. The Compensation and Management
Development Committee establishes general policies on an annual basis for
changes in compensation for all key employees of the Company. In addition, the
Committee sets the compensation for certain elected officers and key employees.
The Committee administers the Company's Management Incentive Plan,
Executive Life Insurance Plan, Executive Disability Income Plan, Deferred
Compensation Savings Plan, Key Management Deferred Compensation Plan, Retirement
Equalization Program, Pension Investment Plan Equalization Program and 1994
Stock Plan and recommends to the Board of Directors for approval other types of
incentive compensation and similar plans.
The Compensation and Management Development Committee met twice during 1994
and is currently composed of five outside Directors: J. M. Biggar, L. Carter, W.
G. Mitchell, A.M. Mixon, III and R. E. Schey.
STOCK OUTSTANDING
At the close of business on the record date, February 27, 1995, there were
outstanding 85,066,500 shares of Common Stock.
VOTING OF SHARES
Each share is entitled to one vote upon all matters presented at the Annual
Meeting. All proposals and other business as may properly come before the Annual
Meeting require the affirmative vote of the holders of a majority of the shares
of Common Stock present, in person or by proxy, and
27
<PAGE> 30
entitled to vote thereat. Shares represented by properly executed proxies will
be voted at the meeting in accordance with the instructions thereon, and, unless
authority to do so is withheld or the shareholder abstains from voting, the
shares represented by proxies will be voted in favor of the proposals referred
to in the Notice of Annual Meeting. Such shares will be voted in the Proxies'
discretion upon such other business as may properly come before the Annual
Meeting. Proxies marked as withholding authority or abstaining will be treated
as present for purposes of determining a quorum for the Annual Meeting, but will
not be counted as a vote for any proposal as to which authority is withheld or
abstention is indicated. Proxies returned by brokers as "non-votes" will not be
treated as present for purposes of determining a quorum for the Annual Meeting
and will not be counted as a vote for any proposal as to which a non-vote is
indicated, unless properly voted by the broker.
REVOCABILITY OF PROXY
A proxy may be revoked at any time before a vote is taken or the authority
granted is otherwise exercised. Revocation may be accomplished by the execution
of a later proxy with regard to the same shares or by giving notice to the
Company in writing or in open meeting.
28
<PAGE> 31
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as to each Director and nominee, each
Executive Officer named in the Summary Compensation Table and all Directors and
Executive Officers as a group, information regarding shares of Common Stock held
by each as of December 31, 1994.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP1,2,3 CLASS
- -------------------------------- ------------------------ ---------------
<S> <C> <C> <C>
J. M. Biggar 7,100 direct *
800 indirect
J. G. Breen 392,659 direct *
181,902 indirect
F. E. Butler 28,825 direct *
29,498 indirect
L. Carter 2,640 indirect4 *
T. A. Commes 161,868 direct *
88,319 indirect
D. E. Evans 200 direct *
J. C. Macatee 70,766 direct *
18,078 indirect
R. W. Mahoney 500 direct *
W. G. Mitchell 3,882 direct *
A. M. Mixon, III 5,000 direct *
H. O. Petrauskas 1,005 direct *
L. J. Pitorak 47,390 direct *
20,197 indirect
R. E. Schey 4,800 direct *
R. K. Smucker 1,000 direct *
All Directors and Executive 981,958 direct
Officers as a Group 488,659 indirect 1.7337
<FN>
- ---------------
*Represents beneficial ownership of less than 1% of the total number of shares
of Common Stock outstanding.
1 Common Stock.
2 The figures indicated include the following number of shares of Common Stock
for which the Executive Officers named in the Summary Compensa-
29
<PAGE> 32
tion Table and all Executive Officers as a group have the right to acquire
beneficial ownership, within sixty days from December 31, 1994, through the
exercise of stock options: Mr. Breen, 75,333; Mr. Commes, 69,001; Mr. Macatee,
58,766; Mr. Butler, 14,567; Mr. Pitorak, 29,534; and all Executive Officers as
a group, 427,356.
3 Unless otherwise indicated, voting and investment power relating to the shares
of Common Stock indicated above is exercised solely by the beneficial owner or
shared by such owner and such owner's spouse or children.
4 All shares are held in trust for the benefit of Mr. Carter.
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as to each beneficial owner of more than
five percent of the Company's Common Stock, information regarding shares of
Common Stock held by each as of December 31, 1994.
<TABLE>
<CAPTION> AMOUNT AND
NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP1 CLASS
- ------------------------- ------------------------- --------------
<S> <C> <C> <C>
Mellon Bank Corporation2
Mellon Bank Center
Pittsburgh, PA 15258 15,384,911 direct 17.98
<FN>
- ---------------
1 Common Stock.
2 All of the shares are beneficially owned by Mellon Bank Corporation and its
related affiliates in their various fiduciary capacities. Of the shares
indicated, Mellon Bank Corporation and its affiliates have sole voting power
over 1,867,000 shares, shared voting power over 12,952,911 shares, sole
dispositive power over 2,015,000 shares, and shared dispositive power over
521,000 shares. Of the shares indicated, 12,848,911 (15.01%) are beneficially
owned by Mellon Bank, N.A. as Trustee of the Company's Employee Stock Purchase
and Savings Plan. Mellon Bank, N.A. has shared voting power over all shares
held pursuant to such plan, but has no dispositive power or sole voting power
over any such shares. Information set forth in this table is based upon Mellon
Bank Corporation's Schedule 13G, dated February 10, 1995.
</TABLE>
30
<PAGE> 33
SECTION 16(A) REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons owning more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of such equity securities with the Securities
and Exchange Commission and the New York Stock Exchange. To the Company's
knowledge, based solely on the information furnished to the Company and written
representations by such persons, all filing requirements under Section 16(a)
have been complied with, except that one transaction was inadvertently reported
one month late by L.J. Pitorak.
RELATED TRANSACTIONS
During 1994, the Company and its subsidiaries purchased products and
services from, and sold products and services to, corporations of which certain
of the Company's non-employee directors and/or nominees for director are
officers. These transactions were in the ordinary course of the Company's
business and were at competitive terms and prices. The Company does not consider
these transactions to be material to the Company's business or to such other
companies' businesses.
EXPENSE AND METHOD OF PROXY SOLICITATION
The enclosed proxy is solicited by the Board of Directors and the entire
cost of solicitation will be paid by the Company. In addition to the
solicitation of proxies by use of the mails, officers and regular employees of
the Company may solicit the return of proxies, and Kissel-Blake, Inc., New York,
N.Y., has been retained to aid in the solicitation of proxies, for which
services it will receive a fee estimated at $13,500. Proxies will be solicited
by personal interview, mail, telephone and telegraph.
REPORT OF BALLOTING AT 1994 SHAREHOLDERS' MEETING
There were outstanding and entitled to vote at the April 27, 1994 Annual
Meeting of Shareholders of the Company 88,510,509 shares of Common Stock. There
were present in person or by proxy and voting or
31
<PAGE> 34
withholding the authority to vote in the election of Directors, holders of a
total of 80,117,641 shares, representing 90.5177% of the voting power of the
Company.
The Resolution to establish the number of Directors at ten and to elect ten
Directors was passed with each of the ten nominees receiving a favorable vote of
at least 99.5221% but not greater than 99.5754% of the shares present in person
or by proxy.
The proposed amendments to the 1994 Stock Plan received a 91.3349%
favorable vote of the shares voting on the amendment.
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Shareholder proposals must be received at the Company's headquarters, 101
Prospect Avenue, N.W., Cleveland, Ohio 44115-1075, Attention: Investor
Relations, on or before November 15, 1995 in order to be included in the proxy
material relating to the 1996 Annual Meeting of Shareholders of the Company. In
order to remove any question as to the date on which a proposal was received by
the Board of Directors, it is suggested that proposals be submitted by Certified
Mail-Return Receipt Requested.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE TO EACH SHAREHOLDER WHO IS SOLICITED TO VOTE AT
THE 1995 ANNUAL MEETING OF SHAREHOLDERS, UPON THE WRITTEN REQUEST OF SUCH PERSON
AND WITHOUT CHARGE, A COPY OF THE COMPANY'S 1994 ANNUAL REPORT ON FORM 10-K.
PLEASE DIRECT REQUESTS TO THE COMPANY'S HEADQUARTERS, 101 PROSPECT AVENUE, N.W.,
CLEVELAND, OHIO 44115-1075, ATTENTION: INVESTOR RELATIONS.
32
<PAGE> 35
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints J. G. Breen and T.
A. Commes as Proxies, each with the power to appoint
THE SHERWIN-WILLIAMS his substitute, and hereby authorizes them to represent
COMPANY and to vote, as designated below, all the shares of
Common Stock of The Sherwin-Williams Company held of
record by the undersigned on February 27, 1995, at the
Annual Meeting of Shareholders to be held on
April 26, 1995 or any adjournment thereof.
[Logo Here]
<S> <C>
COMMON
STOCK
PROXY
1. For election of 10 Directors to hold office until
the next Annual Meeting of Shareholders or until
their successors are elected; the Nominees are:
J. M. Biggar, J. G. Breen, L. Carter, T. A. Commes,
D. E. Evans, R. W. Mahoney, W. G. Mitchell,
A. M. Mixon, III, H. O. Petrauskas and R. K. Smucker.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE
BOX ON THE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOX IF YOU WISH
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATION. THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSAL 1. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
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<PAGE> 36
<TABLE>
<S> <C> <C>
/ X / PLEASE MARK YOUR SHARES IN YOUR NAME REINVESTMENT SHARES
VOTES AS IN THIS
EXAMPLE.
</TABLE>
<TABLE>
<S> <C>
WITHHELD
FOR ALL AS TO ALL
NOMINEES NOMINEES
1. Election of / / / / THE BOARD OF 2. In their discretion, the Proxies are authorized
Directors DIRECTORS to vote upon such other business as may properly
(see reverse side) RECOMMENDS A come before the meeting.
VOTE FOR PROPOSAL 1.
--------------------------------------------------
FOR, except vote withheld | PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY |
as to the following Nominee(s): | CARD PROMPTLY USING THE ENCLOSED ENVELOPE. |
--------------------------------------------------
- ------------------------------
Change (If your address has changed, please mark the box at
of / / left and indicate your new address below)
Address
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NOTE: Please sign exactly as name appears hereon.
Joint owners should each sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full title
as such. If a corporation, please sign in
full corporate name by President or other
SIGNATURE(S)____________________________________________ ________, 1995 authorized officer. If a partnership,
(Date) please sign in partnership name by
SIGNATURE(S)____________________________________________ ________, 1995 authorized person.
(Date)
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