<PAGE> 1
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SCHEDULE 14A
(RULE 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:
<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
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] 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:___________________________________________________________
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<PAGE> 2
Sherwin Williams Logo
THE SHERWIN-WILLIAMS COMPANY
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 28, 1999
------------------
The Annual Meeting of Shareholders of THE SHERWIN-WILLIAMS COMPANY will be
held in the Landmark Conference Center, 927 Midland Building, 101 Prospect
Avenue, N.W., Cleveland, Ohio on Wednesday, April 28, 1999 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
and until their successors are elected; and
2. To transact such other business, including the shareholder proposal on
page 18, as may properly come before the Annual Meeting.
Record holders of common stock at the close of business on March 1, 1999
are the only shareholders entitled to notice of and to vote at the Annual
Meeting.
L. E. STELLATO
Secretary
101 Prospect Avenue, N.W.
Cleveland, Ohio 44115-1075
March 10, 1999
YOU CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING A FOLLOW-UP LETTER
BY THE PROMPT COMPLETION AND RETURN OF THE ENCLOSED PROXY/VOTING INSTRUCTION
CARD 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
101 PROSPECT AVENUE, N.W.
CLEVELAND, OHIO 44115-1075
PROXY STATEMENT
March 10, 1999
PRELIMINARY
The enclosed proxy is requested by the Board of Directors in connection
with the Annual Meeting of Shareholders to be held April 28, 1999 for the
purpose of considering and acting upon the matters specified in the foregoing
Notice of Annual Meeting of Shareholders. The mailing date of this Proxy
Statement is on or about March 10, 1999.
The Board of Directors is not aware of matters other than those specified
in the foregoing Notice of Annual Meeting of Shareholders that will be brought
before the Annual Meeting for action. However, if any such matters should be
brought before the Annual Meeting, it is intended that the persons appointed as
proxies may vote or act thereon according to their judgment.
References contained in this Proxy Statement to certain numbers and values
of shares of common stock have been restated to reflect the effect of the
two-for-one stock split distributed to shareholders on March 28, 1997.
ANNUAL REPORT
The Company's Annual Report to Shareholders for the year ended December 31,
1998 is enclosed with this Proxy Statement. Additional financial and other
reports may be submitted at the Annual Meeting but it is not intended that any
action will be taken with respect thereto.
VOTING PROCEDURES
Record holders of common stock at the close of business on March 1, 1999,
the record date, are the only shareholders entitled to vote at the Annual
Meeting. At the close of business on the record date, 170,255,316 shares of
common stock were outstanding.
The enclosed proxy/voting instruction card includes the number of shares
which you are entitled to vote as a record holder. In addition, if you are a
participant in the Company's Stock Ownership and Automatic Dividend Reinvestment
Plan or the Company's Employee Stock Purchase and Savings Plan, the enclosed
proxy/voting instruction card also serves as voting instructions for the number
of shares which you are entitled to direct the vote under each Plan. If any of
your accounts are not registered in the same manner, you may have received
separate cards. Please sign, date and return all cards to ensure all your shares
are voted. You may have all accounts registered in the same manner by contacting
our transfer agent, The Bank of New York, at (800) 432-0140.
Record holders are entitled to cast one vote for each share of common stock
owned. The proposal to fix the number of Directors at ten requires the
affirmative vote of the holders of a majority of the shares represented at the
Annual Meeting and entitled to vote on such proposal, with the nominees
receiving the greatest number of votes being elected. The shareholder proposal
described in this Proxy Statement requires the affirmative vote of a majority of
the votes cast. All other proposals and other business as may properly come
before the Annual Meeting require the affirmative vote of a majority of
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<PAGE> 4
the votes cast, except as otherwise provided by statute or the Company's Amended
Articles of Incorporation or Regulations.
Proxy/voting instruction cards marked as withholding authority or
abstaining (including those containing broker non-votes) will be treated as
present for purposes of determining a quorum for the Annual Meeting.
Proxy/voting instruction cards marked as withholding authority will also be
treated as represented and entitled to vote on any applicable proposal. With
regard to the shareholder proposal described in this Proxy Statement,
proxy/voting instruction cards marked as abstaining (including those containing
broker non-votes) will not be counted as votes cast.
You are urged to specify your vote by marking the appropriate boxes on your
proxy/voting instruction card. If you properly specify your vote and sign, date
and return your card, your shares will be voted in accordance with your
directions. If you sign, date and return your card without specifying your vote,
your shares will be voted in favor of fixing the number of Directors at ten and
electing the ten nominees for Directors, against the shareholder proposal
described in this Proxy Statement, and in the proxy holder's discretion upon
such other business as may properly come before the Annual Meeting. If you do
not timely return a properly signed and dated card, the proxy holders cannot
vote your shares (or, in the case of the Employee Stock Purchase and Savings
Plan, your shares will be voted in the same proportion as the trustee votes
those shares for which it receives proper instructions). Any unallocated shares
held in the Employee Stock Purchase and Savings Plan also will be voted by the
trustee in the same proportion as the trustee votes those shares for which it
receives proper instructions.
You may revoke your proxy at any time before a vote is taken or the
authority granted is exercised. To revoke your proxy, you may file a written
revocation with the Company's Vice President, General Counsel and Secretary or
you may sign a proxy bearing a later date. You may also revoke your proxy by
voting in person at the Annual Meeting.
ELECTION OF DIRECTORS
At the Annual Meeting, the number of Directors is to be fixed at ten, and
ten Directors are to be elected to hold office until the next Annual Meeting of
Shareholders and until their successors are elected. The nominees are listed
below. Should any nominee decline or be unable to accept such nomination or be
unable to serve, an event which management does not now expect, the Board of
Directors reserves the right in its discretion to substitute another person as a
nominee or to reduce the number of nominees. In such event, the proxy holders
may vote in their discretion for any substitute nominee proposed by the Board of
Directors unless you indicate otherwise.
All of the nominees currently are Directors of the Company. All of the
nominees, except Mr. Boland who was appointed a Director by unanimous action of
the Board of Directors on October 21, 1998, were elected by the shareholders at
the 1998 Annual Meeting. The following is information regarding each nominee:
JAMES C. BOLAND has served as President and Chief Executive Officer of CAVS/Gund
Arena Company (the Cleveland Cavaliers and the Cleveland Rockers
professional basketball teams and Gund Arena) since January 1998. Prior to
his retirement from Ernst & Young in September 1998, Mr. Boland served for
22 years as a partner of Ernst & Young in various roles including Vice
Chairman and Regional Managing Partner as well as a member of the firm's
Management Committee from 1988 to 1996 and as Vice Chairman of National
Accounts from 1997 to his retirement. Mr. Boland is 59 years old and has
served as a Director of the Company since October 1998. Mr. Boland is also
a Director of Invacare Corporation and is a Trustee of Leadership
Cleveland, the Great Lakes Science Center, Bluecoats, Inc. and The 50 Club
of Cleveland.
JOHN G. BREEN has served as Chairman and Chief Executive Officer of the Company
since June 1986. Mr. Breen is 64 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,
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<PAGE> 5
the Cleveland Opera, John Carroll University, the Musical Arts Association
(The Cleveland Orchestra) and University Hospitals of Cleveland, and is a
Member of the Visiting Committee of Case Western Reserve University School
of Medicine.
DUANE E. COLLINS has served as President and Chief Executive Officer of
Parker-Hannifin Corporation (manufacturer of motion control products) since
July 1993 prior to which he served as Vice Chairman of the Board of
Directors of Parker-Hannifin commencing June 1992. Mr. Collins is 62 years
old and has served as a Director of the Company since January 1996. Mr.
Collins is also a Director of Parker-Hannifin, National City Bank and the
Greater Cleveland Growth Association, is a Trustee of the Cleveland YMCA
and University Hospitals Health System (Cleveland), and is a Member of the
Visiting Committee of Case Western Reserve University Weatherhead School of
Management.
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 62 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 and National City Corporation.
ROBERT W. MAHONEY has served as Chairman and Chief Executive Officer of Diebold,
Incorporated (manufacturer of financial self-service transaction systems
and security products) since April 1988. Mr. Mahoney also served as
President of Diebold from July 1993 to November 1996. Mr. Mahoney is 62
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 (Ohio) 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 68 years old and has served as
a Director of the Company since April 1979. Mr. Mitchell is also a Director
of The Northern Trust Company, Northern Trust Corporation and Peoples
Energy Corporation.
A. MALACHI MIXON, III has served as Chief Executive Officer of Invacare
Corporation (manufacturer and distributor of home health care products)
since January 1980 and has served as Chairman of Invacare since September
1983. Mr. Mixon also served as President of Invacare from January 1980 to
November 1996. Mr. Mixon is 58 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 NCS HealthCare, Inc., and is a Trustee of The
Cleveland Clinic Foundation, Cleveland Institute of Music and Case Western
Reserve University.
CURTIS E. MOLL has served as Chairman and Chief Executive Officer of MTD
Products, Inc. (manufacturer of outdoor power equipment and tools, dies and
stampings for the automotive industry) since October 1980. Mr. Moll is 59
years old and has served as a Director of the Company since January 1997.
Mr. Moll is also a Director of The Standard Products Company and Shiloh
Industries, Inc., and is a Trustee of Baldwin-Wallace College.
HELEN O. PETRAUSKAS has served as Vice President -- Environmental and Safety
Engineering of Ford Motor Company (automobile manufacturing) since March
1983. Mrs. Petrauskas is 54 years old and has served as a Director of the
Company since July 1993. Mrs. Petrauskas is also a Director of MCN Energy
Inc., and is a Member of the Board of Governors of Argonne National
Laboratory, a Member of the Advisory Board -- Center for Risk Analysis,
Harvard School of Public Health and a Member of the Board of Directors of
the Environmental Law Institute.
RICHARD K. SMUCKER has served as President of The J.M. Smucker Company (makers
of food products) since January 1987. Mr. Smucker is 50 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, International
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<PAGE> 6
Multifoods Corporation and Wm. Wrigley Jr. Company, and is a Trustee of the
Musical Arts Association (The Cleveland Orchestra).
COMPENSATION OF DIRECTORS
Currently, each Director who is not an employee of the Company receives an
annual retainer of $30,000, earned and payable monthly. In addition, each such
Director receives $1,750 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. Officers of the
Company who also serve as Directors do not receive any compensation specifically
for services as a member of the Board of Directors or any Committee. Directors
are permitted to defer all or a portion of their fees under The Sherwin-Williams
Company Director Deferred Fee Plan. Deferred fees may be invested in either a
common stock account, a shadow stock account or an interest bearing cash
account.
In addition, Directors who are not employees of the Company may receive
stock options and restricted stock under The Sherwin-Williams Company 1997 Stock
Plan for Nonemployee Directors. This plan was approved by the shareholders at
the 1997 Annual Meeting. During 1998, each nonemployee Director received a grant
of 2,000 options at an exercise price equal to the fair market value of common
stock on the date of grant. One third of the options become exercisable on each
of the first, second and third anniversary dates of the date of grant. No shares
of restricted stock were awarded to any nonemployee Director during 1998.
CORPORATE OFFICERS
The following is information regarding the Corporate Officers at February
28, 1999 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 64 Chairman and Chief Executive Officer, January 1979
Director
Thomas A. Commes 56 President and Chief Operating Officer, March 1979
Director
Larry J. Pitorak 52 Senior Vice President -- Finance, Treasurer June 1978
and Chief Financial Officer
John L. Ault 53 Vice President -- Corporate Controller January 1987
Cynthia D. Brogan 47 Vice President and Assistant Treasurer July 1996
Mark J. Dvoroznak 40 Vice President -- Corporate Audit and Loss September 1997
Prevention
Jane L. Haag 44 Vice President -- Information Services March 1996
Thomas E. Hopkins 41 Vice President -- Human Resources August 1997
Conway G. Ivy 57 Vice President -- Corporate Planning and March 1979
Development
James J. Sgambellone 41 Vice President -- Taxes and Assistant July 1991
Secretary
Louis E. Stellato 48 Vice President, General Counsel and December 1989
Secretary
Richard M. Weaver 44 Vice President -- Administration May 1996
</TABLE>
Mr. Breen has served as Chairman and Chief Executive Officer since June
1986 and has served as a Director since April 1979.
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Mr. Commes has served as President and Chief Operating Officer since June
1986 and has served as a Director since April 1980. Mr. Commes intends to retire
on March 16, 1999.
Mr. Pitorak has served as Senior Vice President -- Finance, Treasurer and
Chief Financial Officer since April 1992.
Mr. Ault has served as Vice President -- Corporate Controller since January
1987.
Ms. Brogan has served as Vice President and Assistant Treasurer since July
1996 prior to which she served as Director, Treasury Services commencing January
1990.
Mr. Dvoroznak has served as Vice President -- Corporate Audit and Loss
Prevention since September 1997 prior to which he served as Director of
Accounting, Paint Stores Group commencing December 1991.
Ms. Haag has served as Vice President -- Information Services since
September 1996 prior to which she served as Vice President -- Corporate Audit
and Loss Prevention commencing March 1996. From October 1994 to March 1996, Ms.
Haag served as Corporate Director -- Internal Audit and Loss Prevention prior to
which she served as Corporate Director -- Internal Audit commencing August 1988.
Mr. Hopkins has served as Vice President -- Human Resources since August
1997 prior to which he served as Vice President -- Human Resources, Paint Stores
Group commencing February 1996. From November 1989 to February 1996, Mr. Hopkins
served as Director of Human Resources, Paint Stores Group.
Mr. Ivy has served as Vice President -- Corporate Planning and Development
since April 1992.
Mr. Sgambellone has served as Vice President -- Taxes and Assistant
Secretary since April 1996 prior to which he served as Assistant Secretary and
Corporate Director of Taxes commencing July 1991.
Mr. Stellato has served as Vice President, General Counsel and Secretary
since July 1991.
Mr. Weaver has served as Vice President -- Administration since May 1996
prior to which he served as President & General Manager of the Landmark Office
Towers Division (Corporate Administration) commencing November 1989.
OPERATING MANAGERS
The following is information regarding the Operating Managers at February
28, 1999 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>
Christopher M. Connor 42 President, Paint Stores Group June 1986
Michael A. Galasso 51 President & General Manager, Automotive June 1997
Division
Blair P. LaCour 52 President & General Manager, Mid Western October 1989
Division, Paint Stores Group
John G. Morikis 35 President & General Manager, Eastern July 1998
Division, Paint Stores Group
Steven J. Oberfeld 46 President & General Manager, South Western September 1992
Division, Paint Stores Group
Salvatore V. Sanzone 63 President & General Manager, South- April 1994
eastern Division, Paint Stores Group
Joseph M. Scaminace 45 President, Consumer Group May 1985
</TABLE>
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<PAGE> 8
<TABLE>
<CAPTION>
DATE WHEN
FIRST
NAME AGE PRESENT POSITION APPOINTED
---- --- ---------------- ---------
<S> <C> <C> <C>
Richard M. Wilson 46 Executive Vice President -- Sales and June 1987
Marketing, Consumer Group
</TABLE>
Mr. Connor has served as President, Paint Stores Group since August 1997
prior to which he served as President & General Manager, Diversified Brands
Division commencing April 1994. From September 1992 to April 1994, Mr. Connor
served as Senior Vice President -- Marketing, Paint Stores Group.
Mr. Galasso has served as President & General Manager, Automotive Division
since June 1997 prior to which he served as Vice President &
Director -- Operations, Automotive Division commencing May 1992.
Mr. LaCour has served as President & General Manager, Mid Western Division,
Paint Stores Group since September 1992.
Mr. Morikis has served as President & General Manager, Eastern Division,
Paint Stores Group since July 1998 prior to which he served as Senior Vice
President & Director -- Marketing, Paint Stores Group commencing September 1997.
From April 1994 to September 1997, Mr. Morikis served as Division Vice
President -- Sales, Eastern Division, Paint Stores Group prior to which he
served as District Manager -- Sales, Milwaukee District, Mid Western Division,
Paint Stores Group commencing January 1992.
Mr. Oberfeld has served as President & General Manager, South Western
Division, Paint Stores Group since September 1992.
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.
Mr. Scaminace has served as President, Consumer Group since July 1998 prior
to which he served as President & General Manager, Coatings Division commencing
June 1997. From April 1994 to June 1997, Mr. Scaminace served as President &
General Manager, Automotive Division prior to which he served as President &
General Manager, Diversified Brands Division commencing September 1985.
Mr. Wilson has served as Executive Vice President -- Sales and Marketing,
Consumer Group since July 1998 prior to which he served as President & General
Manager, Diversified Brands Division commencing August 1997. From April 1994 to
August 1997, Mr. Wilson served as Senior Vice President -- Marketing, Paint
Stores Group prior to which he served as President & General Manager,
Southeastern Division, Paint Stores Group commencing June 1987.
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<PAGE> 9
COMPENSATION AND MANAGEMENT DEVELOPMENT
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Management Compensation Program. 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 reports to the Board of Directors on all
compensation matters regarding certain members of the Company's management,
including the Executive Officers. The Executive Officers are identified in the
Company's 1998 Annual Report to Shareholders. 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 base salary levels which reflect, in part,
individual performance, (b) additional annual incentive 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 compensation 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 group 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.
Base Salary. Annual cash compensation consists, in part, of a base salary.
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 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. With regard to performance, the Executive Officer's
performance for the prior year is reviewed based on performance criteria (both
quantitative and qualitative) which vary by Executive Officer and which usually
relate to the particular business unit or function for which such person has
responsibility. The base salary of each Executive Officer is reviewed and
approved annually.
Annual Incentive Compensation. Annual cash compensation also consists of
the opportunity to earn additional compensation under The Sherwin-Williams
Company Management Incentive Plan ("Incentive Plan"). All of the Executive
Officers participate in the Incentive Plan. In approving the amount of annual
incentive compensation to be paid to any of the Executive Officers under the
Incentive Plan, great emphasis is placed on establishing incentive opportunities
which are directly linked with Company performance and the maximization of
shareholder value. The Committee establishes a threshold goal of increased
Company earnings, and 75% of this earnings increase must be met before incentive
compensation is paid to the Executive Officers, subject to adjustments for
non-recurring or unusual items and awards for individual performance.
Accordingly, this earnings goal requires that the Company improve its earnings
performance before incentive compensation is paid (except as provided in the
foregoing sentence). The Company's earnings exceeded 75% of the earnings goal
established for 1998 after taking into account such adjustments.
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 Incentive Plan if 100% of all of the Company and
individual goals are attained. Under the Incentive Plan, annual bonus awards for
the
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<PAGE> 10
Executive Officers range from zero, if less than 75% of the stated goals are
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 attained. 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). Consequently, incentive compensation paid to an Executive
Officer in any year may exceed the median incentive compensation determined by
the compensation surveys. 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 Incentive
Plan year, and the accomplishment by the Executive Officer of individual
performance goals, which 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. Long-term incentive compensation may be
awarded to any one or all of the Executive Officers under The Sherwin-Williams
Company 1994 Stock Plan ("1994 Stock Plan"). All of the Executive Officers
participate in the 1994 Stock Plan. Under the 1994 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 have been 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 1994 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 is 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. With regard to outstanding shares of
restricted stock granted prior to December 31, 1996, the companies that comprise
this group of peer companies are the same companies that comprise the peer group
identified in the performance graphs (except for one company for which
sufficient financial data is not available to calculate cumulative total
return). For shares of restricted stock granted after December 31, 1996, the
restricted stock peer group also does not include four companies which have been
acquired by other companies and one company which has filed for bankruptcy.
Depending on the Company's performance at the end of the restriction period,
from 0% to 100% of the shares of restricted stock may vest. The restriction
period is typically four years from the date of grant of the restricted stock.
The amount of outstanding stock options and shares of restricted stock generally
is not considered by the Committee in making awards of stock options and
restricted stock.
Chief Executive Officer's Compensation. The Committee determined Mr.
Breen's compensation for 1998 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 1997 performance (which was measured, in
part, by the Company's 1997 performance) and his tenure with the Company. For
1998, the average salary increase given generally to salaried employees of the
Company was 4.0%, and the range of potential increases was 0% to 8.5%. Mr. Breen
received a base salary increase of 8.0% in January 1998, bringing his base
salary to $962,312. Mr. Breen's increase was based primarily upon the
Committee's evaluation of Mr. Breen's 1997 performance relating to the financial
and other performance measures set forth in the next paragraph and his tenure
with the Company.
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<PAGE> 11
In addition, in 1998 Mr. Breen earned a bonus of $740,000 as annual
incentive compensation under the Incentive Plan. The amount of this bonus was
based primarily upon the Company's results for 1998 financial performance goals
relating to 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 1998 goals relating to management succession
planning and acquisition strategies were also factors, but were weighted less
heavily.
In February 1998, Mr. Breen was awarded 130,000 stock options under the
1994 Stock Plan. No shares of restricted stock were awarded to Mr. Breen in
1998. In determining the number of stock options and shares of restricted stock
awarded to Mr. Breen, 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 generally is
not considered by the Committee in making awards of stock options and restricted
stock.
Policy on Deductibility of Compensation. 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 chief executive officer and any of its four
other highest paid executive officers is not deductible to a company 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. For 1998, the Committee does not expect that Section 162(m) will limit the
Company's deductibility of compensation paid to any of such Executive Officers.
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 goal, are
satisfied. The Committee believes that grants of options, stock appreciation
rights and restricted stock under the 1994 Stock Plan qualify for full
deductibility under Section 162(m). Compensation paid under the Incentive Plan
does not qualify for the exemption for performance-based compensation. At this
time, based upon the Company's current compensation structure, the Committee
believes it is in the best interests of the Company and its shareholders for the
Committee to retain flexibility in awarding incentive compensation under the
Incentive Plan which does not qualify for the exemption for performance-based
compensation. The Committee will continue to review and evaluate, as necessary,
the impact of Section 162(m) on the Company's compensation programs.
COMPENSATION AND MANAGEMENT
DEVELOPMENT COMMITTEE
W.G. Mitchell, Chairman
J.M. Biggar
D.E. Collins
R.W. Mahoney
A.M. Mixon, III
9
<PAGE> 12
PERFORMANCE GRAPHS
The following graphs compare 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 a peer group of companies selected
on a line-of-business basis. The "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 United, Inc.*, RPM, Inc., Standard Brands Paint Company*,
The Stanley Works, USG Corporation and The Valspar Corporation. An asterisk
indicates that the company is included in the performance graphs through the
last day it was publicly traded.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE SHERWIN-WILLIAMS COMPANY, S&P 500 INDEX AND
THE PEER GROUP
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
SHERWIN-WILLIAMS S&P 500 PEER GROUP
---------------- ------- ----------
<S> <C> <C> <C>
1993 $100 $100 $100
1994 95 101 103
1995 118 139 116
1996 165 171 143
1997 165 229 200
1998 178 294 280
</TABLE>
Assumes $100 invested on December 31, 1993 in the Company's common stock, the
S&P 500 Index and the Peer Group, including reinvestment of dividends, through
December 31, 1998.
10
<PAGE> 13
COMPARISON OF TEN YEAR CUMULATIVE TOTAL RETURN
AMONG THE SHERWIN-WILLIAMS COMPANY, S&P 500 INDEX AND
THE PEER GROUP
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
SHERWIN-WILLIAMS S&P 500 PEER GROUP
---------------- ------- ----------
<S> <C> <C> <C>
1988 $100 $100 $100
1989 139 132 113
1990 154 128 104
1991 225 166 155
1992 261 179 172
1993 309 197 206
1994 294 200 212
1995 365 275 239
1996 510 338 294
1997 512 451 412
1998 551 580 577
</TABLE>
Assumes $100 invested on December 31, 1988 in the Company's common stock, the
S&P 500 Index and the Peer Group, including reinvestment of dividends, through
December 31, 1998.
11
<PAGE> 14
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------- -----------------------
RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
NAME AND AWARD(S) OPTIONS/ COMPEN-
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(1,2) SARS (#) SATION($)(3)
------------------ ---- ---------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
J. G. Breen 1998 962,312 740,000 -0- 130,000 275,097
Chairman and Chief 1997 905,616 740,000 1,107,500 150,000 294,399
Executive Officer 1996 825,006 715,000 -0- 74,000 262,573
T. A. Commes 1998 604,075 475,000 -0- 77,000 182,895
President and Chief 1997 578,158 490,000 609,125 100,000 177,991
Operating Officer 1996 536,000 480,000 -0- 38,000 179,505
C. M. Connor 1998 364,141 325,000 -0- 39,000 92,725
President, Paint Stores 1997 274,085 250,000 276,875 50,000 66,566
Group 1996 236,100 205,000 -0- 14,000 68,218
J. M. Scaminace 1998 365,851 275,000 -0- 39,000 97,275
President, Consumer 1997 299,480 235,000 276,875 50,000 73,065
Group 1996 251,340 228,000 -0- 14,000 74,204
L. J. Pitorak 1998 351,832 275,000 -0- 39,000 101,874
Senior Vice President 1997 319,764 260,000 276,875 50,000 74,309
-- Finance, Treasurer 1996 287,852 255,000 -0- 20,000 70,750
and Chief Financial Officer
</TABLE>
- ---------------
(1) The value of restricted stock indicated in the table is equal to the number
of shares of restricted stock multiplied by the closing price of common
stock on the date of grant. At December 31, 1998, the number and value
(calculated by using the closing price of common stock on December 31, 1998)
of shares of restricted stock held by Messrs. Breen, Commes, Connor,
Scaminace and Pitorak were 80,000 shares with a value of $2,350,000, 44,000
shares with a value of $1,292,500, 20,000 shares with a value of $587,500,
20,000 shares with a value of $587,500 and 20,000 shares with a value of
$587,500, respectively. The number of shares and values indicated are not
necessarily indicative of the actual number of shares and values which may
be realized by the named Executive Officers.
(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 for 1998 include: (a) Company
contributions in the amount of $8,000 for each of Messrs. Commes, Connor,
Scaminace and Pitorak under the Company's Pension Investment Plan, a defined
contribution plan (Mr. Breen does not participate in such plan); (b) Company
contributions in the amounts of $44,908, $15,954, $18,374 and $20,738 for
Messrs. Commes, Connor, Scaminace and Pitorak, respectively, under the
Company's Pension Investment Plan Equalization Program, a defined
contribution plan (Mr. Breen does not participate in such plan); (c) Company
contributions in the amount of $7,168 for each of Messrs. Breen, Commes,
Connor, Scaminace and Pitorak under the Company's Employee Stock Purchase
and Savings Plan, a defined contribution plan; (d) Company contributions in
the amounts of $124,043, $77,871, $35,651, $37,286 and $39,687 for Messrs.
Breen, Commes, Connor, Scaminace 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 in
the amounts of $39,744, $41,754, $23,765, $24,107 and $23,611 for Messrs.
Breen, Commes, Connor, Scaminace and Pitorak, respectively, under the
Company's Executive Life Insurance Plan; (f) the dollar value of additional
compensatory split-dollar life insurance benefits in the amount of $100,490
for Mr. Breen (such policy was purchased by the Company in 1996 and replaces
Mr. Breen's benefits accruing under the Company's Retirement Equalization
Program after January 1, 1996; see "Pension Plan"); and (g) payments by the
Company in the amounts of $3,652, $3,194, $2,187, $2,340 and $2,670 for
Messrs. Breen, Commes, Connor, Scaminace and Pitorak, respectively, related
to premiums under the Company's Executive Disability Income Plan.
12
<PAGE> 15
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/ POTENTIAL REALIZABLE VALUE
UNDERLYING SARS AT ASSUMED ANNUAL RATES
OPTIONS/ GRANTED TO OF STOCK PRICE APPRECIATION
SARS EMPLOYEES EXERCISE OR FOR OPTION TERM(4)
GRANTED IN FISCAL BASE PRICE EXPIRATION ----------------------------
(#)(1,2) YEAR ($/SH)(3) DATE 5% ($) 10% ($)
NAME ---------- ---------- ----------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. G. Breen 130,000 7.0365 29.0313 2/03/08 2,373,492 6,014,894
T. A. Commes 77,000 4.1677 29.0313 2/03/08 1,405,837 3,562,668
C. M. Connor 39,000 2.1109 29.0313 2/03/08 712,048 1,804,468
J. M. Scaminace 39,000 2.1109 29.0313 2/03/08 712,048 1,804,468
L. J. Pitorak 39,000 2.1109 29.0313 2/03/08 712,048 1,804,468
Value realizable for all
shareholders(5) N/A N/A N/A N/A 3,157,555,785 8,001,866,315
Value realizable for the named
Executive Officers as a % of
value realizable for all
shareholders N/A N/A N/A N/A 0.187 0.187
</TABLE>
- ---------------
(1) Generally, one-third of the options granted are exercisable on each of the
first, second and third anniversary dates of the grant.
(2) All options granted become immediately exercisable, in full, upon (a) a
filing pursuant to any federal or state law in connection with any tender
offer for shares of common stock (other than a tender offer by the Company)
or (b) the signing of any agreement for the merger of the Company into, or
the Company's consolidation 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
provisions providing for accrual in installments, without prejudice to any
exercise of options that may have occurred prior to such nullification.
(3) The exercise price is equal to the fair market value of common stock on the
date of grant.
(4) The amounts disclosed in these columns, which reflect appreciation of the
price of common stock at 5% and 10% annual rates over the ten year terms of
the options as requested by the Securities and Exchange Commission, are not
intended to be a forecast of the price of common stock 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 price of common stock increasing from $29.0313 per
share to approximately $47.29 per share and $75.30 per share, respectively.
(5) The amounts disclosed reflect appreciation of the price of common stock at
5% and 10% annual rates over a ten year period for all shareholders of the
Company based on the total number of shares of common stock outstanding on
February 4, 1998 (the date on which the options set forth in this table were
granted) and assuming a per share price of $29.0313 (the exercise price of
such options).
13
<PAGE> 16
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
SHARES UNDERLYING UNEXERCISED MONEY OPTIONS/SARS AT FY-
ACQUIRED ON OPTIONS/SARS AT FY-END (#) END ($)(2)
EXERCISE VALUE --------------------------- -----------------------------
NAME (#) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- --------------- ----------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
J. G. Breen 29,334 501,427 74,666 254,668 297,101 428,683
T. A. Commes 40,000 358,712 61,334 156,334 365,547 249,347
C. M. Connor 15,842 285,646 40,156 77,002 288,906 100,096
J. M. Scaminace -0- -0- 77,398 77,002 798,568 81,679
L. J. Pitorak -0- -0- 30,666 79,002 181,315 127,764
</TABLE>
- ---------------
(1) The value realized on the exercise of options is based on the difference
between the exercise price and the fair market value of common stock on the
date of exercise.
(2) The value of unexercised in-the-money options is based on the difference
between the exercise price and the fair market value of common stock on
December 31, 1998.
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. The Pension Plan requires five years of service for a
participant to become fully vested if the participant 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 fully vested in the event the
participant's employment is terminated (in specified situations) after a change
in control of the Company. Normal monthly pensions equal one-twelfth of one
percent of the average annual earnings 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). At December 31,
1998, the maximum annual benefit under the provisions of the Pension Plan is
$130,000 due to limitations imposed by ERISA and the Internal Revenue Code. Mr.
Breen is the only Executive Officer named in the Summary Compensation Table who
participates in the Pension Plan and he is fully vested.
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 Retirement Equalization Program authorizes the Company, at its
discretion, to enter into appropriate agreements with employees who are, or may
become, eligible to participate. The benefits under the Retirement Equalization
Program will be paid either from one or more grantor trusts established by the
Company and funded from the Company's general funds or by the Company directly
from the Company's general funds. Mr. Breen also participates in the Retirement
Equalization Program.
The following table sets forth the estimated aggregate annual normal
benefits payable under the Pension Plan and the Retirement Equalization Program
commencing at age 65 in the form of a single life annuity.
14
<PAGE> 17
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------
REMUNERATION 15 20 25 30
- ------------ ------- ------- ------- -------
<S> <C> <C> <C> <C>
$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
1,700,000 254,490 339,490 424,490 509,490
1,800,000 269,490 359,490 449,490 539,490
1,900,000 284,490 379,490 474,940 569,490
</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 Mr. Breen this average amount equaled $1,529,975 at December 31,
1998. Mr. Breen was credited with twenty years of service under the Pension Plan
at December 31, 1998. Pensions 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.
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 the amount of
benefits 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 supplemental benefits payable to Mr. Breen, under this
provision of his employment contract, commencing at age 65 in the form of a
single life annuity. The total amount of benefits payable to Mr. Breen will be
equal to the amount determined in accordance with the Pension Plan Table set
forth above, plus the amount determined in accordance with the table set forth
below, minus $35,044 (which is the value of the benefits waived by Mr. Breen as
described below).
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------
REMUNERATION 15 20 25 30
- ------------ ------- ------- ------- -------
<S> <C> <C> <C> <C>
$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
1,700,000 488,987 403,987 318,987 233,987
1,800,000 518,987 428,987 338,987 248,987
1,900,000 548,987 453,987 358,987 263,987
</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
fifteen years of employment with the Company. For Mr. Breen, this average amount
equaled $1,529,975 at December 31, 1998. Mr. Breen was credited with twenty
years of service at December 31, 1998 for purposes of determining these
supplemental pension benefits. These benefits reflect the applicable deduction
for social security.
In connection with the Company's purchase of an additional split-dollar
life insurance policy for Mr. Breen in 1996 (as mentioned in Footnote 3 of the
Summary Compensation Table), Mr. Breen agreed to waive all future benefits
accruing under the Retirement Equalization Program after January 1, 1996. At
December 31, 1998, the value of such benefits (valued in the form of a single
life annuity) was $35,044.
15
<PAGE> 18
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 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 the
sum of his annual salary and any bonus paid or payable to him for the preceding
year. In the event 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, a cash amount equal to two times his annual assured
compensation, and Mr. Commes is entitled to receive a cash amount equal to his
annual assured compensation. Annual assured compensation is defined as 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 paid or payable 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). Assuming a termination date of February 28, 1999 as a result of a
change of control, the cash amounts payable under such contracts would have been
approximately $3,500,834 and $1,101,000 for Messrs. Breen and Commes,
respectively. Amounts received under the employment contracts due to a
termination of employment resulting from a change of control of the Company will
be offset against the amounts payable under the severance pay agreements
described below.
Mr. Commes' Retirement. Consistent with the Company's November 1998
announcement, Mr. Commes intends to retire on March 16, 1999. Pursuant to the
terms of his employment contract, the Board of Directors has approved the
following compensation and benefits for him in connection with his retirement.
Mr. Commes will receive, in addition to accrued salary and vacation pay, an
amount equal to one and one-half times the sum of his current annual base salary
and the bonus earned by him for 1998. Mr. Commes will receive an additional
payment equal to five percent of such amount in recognition of the fact that
such amount will not be included as earnings for purposes of the Company's five
percent contribution under the Pension Investment Plan. On February 3, 1999, Mr.
Commes received an additional grant of 33,334 stock options because some
unexercisable stock options previously granted to him will terminate on his
retirement. In addition to continued coverage under various Company benefit
plans, programs and arrangements available in general to retirees of the
Company, Mr. Commes also will receive coverage under the Executive Personal
Umbrella Liability Program for three years and continued coverage under the
Executive Life Insurance Plan. Mr. Commes also entered into a two year covenant
not to compete and a general release in consideration of his receipt of $34,000
and a fifty percent proration of those shares of restricted stock previously
granted to him which are scheduled to vest on January 28, 2001 (which reflects
the prorated portion of the restriction period completed as of his retirement
date). The number of shares of restricted stock which will actually vest at the
end of the restriction period will continue to be subject to the original
performance conditions.
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, including each of the Executive Officers
named in the Summary Compensation Table. In the event there is a change of
control of the Company and the employment of the executive terminates under
certain conditions described in the agreements at any time during the two year
period following a change of control, 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
will be offset against amounts payable under the severance pay agreement.
For Messrs. Breen and Commes, the severance pay agreements provide that
upon termination, whether voluntary or involuntary, unless the termination is
because of death or by the Company for
16
<PAGE> 19
cause, the executive 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 the executive's highest regular bi-weekly compensation 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 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 such executive's employment with the Company
continued during the four year period following termination. The executive will
also receive an additional payment equal to the amount of any excise tax imposed
on the executive by Section 4999 of the Internal Revenue Code and any taxes,
interest or penalties incurred with respect thereto. Assuming a termination date
of February 28, 1999, the lump sum cash amounts payable under the foregoing
provisions of the severance pay agreements (including any amount relating to the
excise tax described above) would have been approximately $11,111,726 and
$6,489,216 for Messrs. Breen and Commes, respectively.
For Messrs. Connor, Scaminace and Pitorak, the severance pay agreements
provide that upon termination for any reason (including the executive's 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)
other than death, disability, by the Company for cause or by the executive for
other than good reason, 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
compensation 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. The
executive will also receive an additional payment equal to the amount of any
excise tax imposed on the executive by Section 4999 of the Internal Revenue Code
and any taxes, interest or penalties incurred with respect thereto. Assuming a
termination date of February 28, 1999, the lump sum cash amounts payable under
the foregoing provisions of the severance pay agreements (including any amount
relating to the excise tax described above) would have been approximately
$3,633,105, $3,284,517 and $2,927,589 for Messrs. Connor, Scaminace and Pitorak,
respectively.
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.
Estate Protection Plan Trust. In connection with the Company's purchase of
the additional split-dollar life insurance policy for Mr. Breen in 1996, the
Company established a rabbi trust for the benefit of Mr. Breen. Upon a change in
control or a potential change in control of the Company, the Company is required
to fund the trust in an amount equal to the Company's entire interest in the
cash value of the life insurance policy, plus an amount sufficient to pay future
premiums for the policy.
17
<PAGE> 20
SHAREHOLDER PROPOSAL
The Trust for the International Brotherhood of Electrical Workers' Pension
Benefit Fund, 1125 Fifteenth St. N.W., Washington, D.C. 20005, beneficial owner
of 9,030 shares of common stock, has submitted the following proposal. THE BOARD
OF DIRECTORS OPPOSES THIS PROPOSAL.
"BE IT RESOLVED: That the Shareholders of The Sherwin-Williams Company
("Company") urge the Board of Directors to seek shareholder approval for
all present and future executive officer severance pay agreements.
SUPPORTING STATEMENT
"Senior executive severance or termination pay agreements, commonly
referred to as "golden parachutes", have contributed to the public and
shareholder perception that many senior executive officers of major
companies are more concerned with their own personal interests than their
broad responsibilities to the company they are empowered to lead. The
disdain expressed for those who benefit from these generous compensation
plans is particularly high when the compensation awards come in the context
of a corporate change of control that may also result in hundreds or
thousands of company employees losing their jobs.
"Our Company currently has very generous Severance Pay Agreements with
key executives that provide for payments and other benefits if there is a
"Change of Control" of the Company and the employment of a covered
executive terminates under certain conditions described in the agreement
within two years of the "Change of Control". Messrs. Breen's and Commes'
severance agreements provide the following benefits 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 the executive's highest regular bi-weekly compensation
in effect within the three-year period preceding the termination, plus
(ii) the greater of the highest bonus received by the executive within
the three-year period preceding termination;
"(B). Continued participation in the Company's employee welfare
benefit plans and other benefit arrangements for the period of four
years following termination; and
"(C). Special retirement benefits so that the total retirement
benefits received will be equal to the benefits which would have been
received had such an executive's employment with the Company continued
during the four-year period following termination. Additionally, the
executive will receive an amount to pay any excise tax incurred due to
benefits received under the plan.
"The Company's proxy statement for the 1998 annual meeting indicated
that present value of these severance benefits for Messrs. Breen and Commes
were $10,985,284 and $6,513,152, respectfully.
"We believe golden parachutes are not in the best interest of
shareholders because they can reduce shareholder value and financially
reward mismanagement. We believe a change in control of our Company will
most likely occur if our Company is not managed in a way that realizes the
full value of its assets. If this mismanagement should precipitate a
"Change of Control," the very executive officers that failed to maximize
long-term shareholder value could receive a lucrative financial reward. A
review of the company's stock poor performance over the past five years
relative to a peer group of companies and the Standard and Poor 500 Index
highlights the generosity of the "golden parachutes."
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<PAGE> 21
"We urge all shareholders to VOTE "FOR" this proposal urging the Board
to allow shareholders an opportunity to evaluate the merits of executive
officer severance agreements before such generous benefits are granted.
"WE URGE YOU TO VOTE FOR THIS PROPOSAL"
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST" THIS PROPOSAL FOR
THE FOLLOWING REASONS:
The Board of Directors believes that the Company's severance pay agreements
with its executive officers are in the best interests of the Company and are
necessary to maximize shareholder value. The agreements enable the Company to
attract and retain top management talent and encourage executive officers to
remain with the Company in the face of a potential change of control. Management
can remain focused and objective during a potential change of control, rather
than being distracted by the uncertainties of their future employment and
personal financial situation, thereby allowing them to act decisively to
maximize shareholder value for all shareholders.
The Board of Directors oversees the compensation arrangements for the
Company's executive officers and recognizes and appreciates its responsibility
with respect to executive compensation decisions. The Company's executive
compensation program is designed to enable the Company to attract, motivate and
retain key executive officers. Because many other major corporations with which
the Company competes for executive talent offer severance pay arrangements to
their executives, the Board of Directors believes that severance pay agreements
are a necessary part of the Company's executive compensation program.
Requiring shareholder approval of executive severance pay agreements would
hamper the Company's flexibility to act promptly and decisively in attracting
and retaining executives and would put the Company at a disadvantage to other
companies with which it competes for executive management. Under the proposal,
unless the Company were to incur the significant expense of a special meeting of
shareholders, the Company could only enter into such agreements once a year
following the Annual Meeting of Shareholders. In many cases, this would not
allow the Company to timely respond to unanticipated events such as the hiring
of a new executive officer to replace an executive officer who unexpectedly
departed.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL.
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, 1999. Representatives of Ernst & Young LLP are
expected to be present at the Annual Meeting 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 four meetings during 1998. Each Director
attended at least 75% of the meetings of the Board of Directors and committees
on which he or she served.
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 quality
and adequacy of the Company's accounting, financial and internal audit policies,
procedures and controls, and the quality and integrity of its financial reports.
The 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.
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<PAGE> 22
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. In
addition, the Committee has the responsibility of reviewing the Company's
standards and policies of proper business conduct, including the Company's
implementation of and compliance with such standards and policies.
The Audit Committee met twice during 1998 and is currently composed of six
outside Directors: J. C. Boland, D. E. Evans, W. G. Mitchell, C. E. Moll, H. O.
Petrauskas and R. K. Smucker.
Board Composition. The Board Composition Committee develops plans for the
composition of the Board of Directors. Matters considered by this Committee
include the size of the Board of Directors and 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 prospective members, interview 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 did not meet in 1998 and is currently
composed of three outside Directors: J. M. Biggar, D. E. Collins 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. The Committee
reviews and approves the compensation for the Chairman and Chief Executive
Officer, the other Executive Officers and other key salaried employees. The
Committee also 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 once during 1998
and is currently composed of five outside Directors: J. M. Biggar, D. E.
Collins, R. W. Mahoney, W. G. Mitchell and A. M. Mixon, III.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following outside Directors served on the Compensation and Management
Development Committee of the Board of Directors of the Company during 1998: J.
M. Biggar, D. E. Collins, R. W. Mahoney, W. G. Mitchell and A. M. Mixon, III.
Mr. Breen, Chairman and Chief Executive Officer of the Company, serves on the
Compensation and Management Development Committee of the Board of Directors of
Parker-Hannifin Corporation, of which Mr. Collins is President and Chief
Executive Officer.
20
<PAGE> 23
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 the amount and nature of
shares of common stock beneficially owned and the amount of shadow stock units
owned at December 31, 1998. All of the Directors and Executive Officers have
sole voting and investment power over the shares of common stock listed or share
voting and investment power with his or her spouse, except as otherwise provided
below.
<TABLE>
<CAPTION>
AMOUNT AND NATURE AMOUNT OF
OF COMMON STOCK PERCENT OF SHADOW STOCK
BENEFICIALLY COMMON STOCK UNITS
NAME OF BENEFICIAL OWNER OWNED(1,2,3) BENEFICIALLY OWNED OWNED(4)
------------------------ ----------------- ------------------ ------------
<S> <C> <C> <C>
J. M. Biggar 20,132 * 0
J. C. Boland 1,000 * 182
J. G. Breen 1,024,065 * 145,713
D. E. Collins 7,332 * 4,014
T. A. Commes 558,944 * 62,148
C. M. Connor 128,877 * 10,400
D. E. Evans 5,232 * 0
R. W. Mahoney 6,332 * 0
W. G. Mitchell 9,096 * 0
A. M. Mixon, III 11,332 * 9,677
C. E. Moll(5) 6,630 * 0
H. O. Petrauskas 4,590 * 1,188
L. J. Pitorak 112,397 * 15,530
J. M. Scaminace 150,877 * 13,884
R. K. Smucker 5,520 * 0
All Directors and Executive 2,656,705 1.55% 308,642
Officers as a Group
</TABLE>
- ---------------
*Represents beneficial ownership of less than 1% of the total number of shares
of common stock outstanding.
(1) The amounts listed include shares of common stock held under plans offered
by the Company for which the Directors and Executive Officers have the right
to direct the vote, including the following number of shares under the
Employee Stock Purchase and Savings Plan: Mr. Breen, 383,506; Mr. Commes,
187,374; Mr. Connor, 34,711; Mr. Scaminace, 23,897; Mr. Pitorak, 14,770; and
all Executive Officers as a group, 844,898.
(2) The amounts listed include the following number of shares of common stock
owned by immediate family members of the Directors and Executive Officers,
for which each such person disclaims beneficial ownership: Mr. Biggar,
1,600, Mr. Moll, 540, and all Directors and Executive Officers as a group,
19,178.
(3) The amounts listed include the following number of shares of common stock
for which the Directors and Executive Officers have the right to acquire
beneficial ownership, within sixty days from December 31, 1998, through the
exercise of stock options: Mr. Biggar, 1,332; Mr. Breen, 192,667; Mr.
Collins, 1,332; Mr. Commes, 133,002; Mr. Connor, 65,824; Mr. Evans, 666; Mr.
Mahoney, 1,332; Mr. Mitchell, 1,332; Mr. Mixon, 1,332; Mr. Moll, 1,332; Ms.
Petrauskas, 1,332; Mr. Pitorak, 67,000; Mr. Scaminace, 103,066; Mr. Smucker,
1,332; and all Directors and Executive Officers as a group, 868,808.
(4) Shadow stock units are owned by outside Directors under the Company's
Director Deferred Fee Plan, whereby outside Directors may defer payment of
all or a portion of their directors' fees into a shadow stock account.
Shadow stock units are owned by Executive Officers under the Company's
Deferred Compensation Savings Plan and Key Management Deferred Compensation
Savings Plan, whereby eligible employees may defer payment of a portion of
such employee's compensation into a shadow stock account. The value of
shadow stock units fluctuates according to the market value of common stock.
Directors and Executive Officers have no voting rights associated with
shadow stock units, and such ownership does not result in any beneficial
ownership of common stock.
(5) Includes 2,000 shares owned by the MTD Products, Inc. pension fund, of which
Mr. Moll is a trustee.
21
<PAGE> 24
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 owned by each at December 31, 1998.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
------------------------ -------------------- ----------
<S> <C> <C>
The Sherwin-Williams Company
Employee Stock Purchase
and Savings Plan 24,765,710(1) 14.48
101 Prospect Avenue, N.W.
Cleveland, Ohio 44115
FMR Corp. 14,447,997(2) 8.40
82 Devonshire Street
Boston, MA 02109
</TABLE>
- ---------------
(1) Shares owned pursuant to The Sherwin-Williams Company Employee Stock
Purchase and Savings Plan are voted by the trustee in accordance with
written instructions of plan participants. If no instructions are received
by the trustee, the trustee votes such shares (along with any unallocated
shares held in the plan) in the same proportion as it votes those shares for
which it receives proper instructions.
(2) Of the shares listed, Fidelity Management & Research Company ("Fidelity"), a
wholly-owned subsidiary of FMR Corp., beneficially owns 13,292,210 (7.73%)
shares as a result of acting as an investment adviser to various investment
companies. Of the total shares listed, FMR Corp. has sole voting power over
833,987 shares and sole dispositive power over all shares, but has no shared
voting or shared dispositive power. Edward C. Johnson, III (the Chairman of
FMR Corp.) and Fidelity also each have sole dispositive power over the
shares owned by Fidelity, but neither has sole voting power over such
shares; such power resides with the Boards of Trustees of the Fidelity
funds. Mr. Johnson, III, Abigail P. Johnson, certain members of the Johnson
Family, and trusts for their benefit may be deemed to be a controlling group
with respect to FMR Corp. This information is based upon FMR Corp.'s
Schedule 13G, dated February 1, 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the 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 of the Directors and Executive Officers complied with their
respective filing requirements, except that (a) Mr. Breen inadvertently failed
to file a Form 4 reporting a gift of 100 shares of common stock in June 1997 and
(b) Mr. Moll inadvertently failed to file a Form 4 reporting a purchase of 700
shares of common stock in November 1998. Upon discovery, Mr. Breen and Mr. Moll
promptly filed Forms 4 reporting the transactions.
RELATED TRANSACTIONS
During 1998, the Company and its subsidiaries purchased products and
services from, and sold products and services to, corporations of which certain
of the Company's nonemployee Directors are officers. These transactions were in
the ordinary course of the Company's business and were at
22
<PAGE> 25
competitive terms and prices. The Company does not consider these transactions
to be material to the Company's business or to such other corporations'
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 other employees of the
Company may solicit the return of proxies. Kissel-Blake, Inc. has also been
retained to aid in the solicitation of proxies, for which it will receive a fee
estimated at $14,000 plus reasonable expenses. Proxies will be solicited by
personal interview, mail, telephone and telegraph.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Shareholder proposals must be received at the Company's headquarters, 101
Prospect Avenue, N.W., Cleveland, Ohio 44115-1075, Attention: Vice President,
General Counsel and Secretary, on or before November 11, 1999 in order to be
included in the proxy material relating to the 2000 Annual Meeting of
Shareholders. In addition, if the Company is not provided with written notice of
a shareholder proposal on or before January 25, 2000, proxies solicited by the
Board of Directors for the 2000 Annual Meeting of Shareholders will confer
discretionary authority to vote on the shareholder proposal if presented at such
Annual Meeting. In order to remove any question as to the date on which a
proposal was received by the Company, 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 1999 ANNUAL MEETING OF SHAREHOLDERS, UPON THE WRITTEN REQUEST OF SUCH PERSON
AND WITHOUT CHARGE, A COPY OF THE COMPANY'S 1998 ANNUAL REPORT ON FORM 10-K.
PLEASE DIRECT REQUESTS TO THE COMPANY AT 101 PROSPECT AVENUE, N.W., CLEVELAND,
OHIO 44115-1075, ATTENTION: INVESTOR RELATIONS.
23
<PAGE> 26
ANNUAL MEETING OF SHAREHOLDERS
OF
THE SHERWIN-WILLIAMS COMPANY
Wednesday, April 28, 1999
Landmark Conference Center
927 Midland Building
101 Prospect Avenue, N.W.
Cleveland, Ohio
AGENDA
- Fix the number of Directors at ten and elect ten Directors to hold
office until the next Annual Meeting of Shareholders and until their
successors are elected.
- Transact such other business, including the shareholder proposal on
page 18 of the Proxy Statement, as may properly come before the Annual
Meeting.
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT!
Whether or not you plan to attend the Annual Meeting, please complete, sign and
return the attached proxy/voting instruction card in the enclosed envelope. Your
prompt return of the card will help avoid additional solicitation costs.
Returning your completed card will not prevent you from voting in person at the
Annual Meeting if you wish to do so.
- --------------------------------------------------------------------------------
(LOGO) THE SHERWIN-WILLIAMS COMPANY
PROXY/VOTING INSTRUCTION CARD
ANNUAL MEETING OF SHAREHOLDERS - APRIL 28, 1999
The undersigned authorizes J.G. BREEN and L.E. STELLATO, and each of them
individually, with power of substitution, to vote and otherwise represent all of
the shares of common stock of The Sherwin-Williams Company, which the
undersigned is entitled to vote as a recordholder, at the Annual Meeting of
Shareholders to be held on Wednesday, April 28, 1999, and any adjournment(s)
thereof, as indicated on the reverse side, and, in their discretion, on all
other matters as may properly come before the Annual Meeting. This card also
provides voting instructions for shares of common stock, if any, held for the
account of the undersigned by The Bank of New York, as agent of the Stock
Ownership and Automatic Dividend Reinvestment Plan, and by Fidelity Management
Trust Company, as trustee of the Employee Stock Purchase and Savings Plan.
THIS CARD IS SOLICITED JOINTLY BY THE BOARD OF DIRECTORS, THE BANK OF NEW
YORK (WITH RESPECT TO SHARES HELD UNDER THE DIVIDEND REINVESTMENT PLAN) AND
FIDELITY (WITH RESPECT TO SHARES HELD UNDER THE STOCK PURCHASE AND SAVINGS
PLAN). YOU ARE ENCOURAGED TO SPECIFY YOUR VOTE BY COMPLETING THE REVERSE SIDE OF
THIS CARD. WHEN PROPERLY COMPLETED AND SIGNED, YOUR SHARES WILL BE VOTED IN
ACCORDANCE WITH YOUR DIRECTIONS. TO VOTE IN ACCORDANCE WITH THE BOARD OF
DIRECTORS' RECOMMENDATIONS, SIMPLY SIGN, DATE AND RETURN THIS CARD; NO BOXES
NEED BE MARKED. IF YOU SIGN, DATE AND RETURN THIS CARD WITHOUT SPECIFYING YOUR
VOTE, YOUR SHARES WILL BE VOTED FOR PROPOSAL 1, AGAINST THE SHAREHOLDER PROPOSAL
DESCRIBED IN THE PROXY STATEMENT, AND IN THE PROXY HOLDERS DISCRETION UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING. IF YOU DO NOT
TIMELY RETURN THIS CARD, THE PROXY HOLDERS CAN NOT VOTE YOUR SHARES (OR, IN THE
CASE OF THE STOCK PURCHASE AND SAVINGS PLAN, IF YOU DO NOT RETURN THIS CARD BY
THE CLOSE OF BUSINESS ON APRIL 22, 1999, YOUR SHARES WILL BE VOTED IN THE SAME
PROPORTION AS FIDELITY VOTES THOSE SHARES FOR WHICH IT RECEIVES PROPER
INSTRUCTIONS). (Continued and to be dated and signed on reverse side.)
THE SHERWIN WILLIAMS COMPANY
P.O. BOX 11031
NEW YORK, N.Y. 10203-0031
<PAGE> 27
PLEASE DETACH CARD HERE
PLEASE DETACH HERE
YOU MUST DETACH THIS PORTION OF THE CARD
BEFORE RETURNING IT IN THE ENCLOSED ENVELOPE
A VOTE "FOR" PROPOSAL 1 IS RECOMMENDED BY THE BOARD OF DIRECTORS.
1.Election of 10 Directors: J.C. BOLAND, J.G. BREEN, D.E. COLLINS, D.E. EVANS,
R.W. MAHONEY, W.G. MITCHELL, A.M. MIXON, III, C.E. MOLL, H.O. PETRAUSKAS,
R.K. SMUCKER
FOR all WITHHOLD AUTHORITY EXCEPTIONS
nominees X to vote for all nominees X X
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEES NAME ON THE LINE BELOW).
______________________________________
A VOTE "AGAINST" THE SHAREHOLDER PROPOSAL IS RECOMMENDED BY THE BOARD OF
DIRECTORS.
2.SHAREHOLDER PROPOSAL
FOR X AGAINST X ABSTAIN X
In their discretion, the proxy holders are authorized to vote upon such other
business as may properly come before the Annual Meeting or any adjournment
thereof.
Change of Address and
or Comments Mark Here X
Please sign exactly as your name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee, guardian or in other
representative capacity, please give your full title.
Dated: , 1999
- ---------------------------------
- ---------------------------------
Signature
- ---------------------------------
Signature
SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
VOTES MUST BE INDICATED (X) IN BLACK OR BLUE INK. X
-
