<PAGE>
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO
SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NABISCO HOLDINGS CORP.
(Name of Registrant as Specified in Its Charter)
NABISCO HOLDINGS CORP.
(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:
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
(5) Total fee paid:
- - --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
- - --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- - --------------------------------------------------------------------------------
(3) Filing Party:
- - --------------------------------------------------------------------------------
(4) Date Filed:
- - --------------------------------------------------------------------------------
<PAGE>
[NABISCO LOGO]
NABISCO HOLDINGS CORP.
7 CAMPUS DRIVE
PARSIPPANY, NEW JERSEY
07054-0311
March 11, 1997
Dear Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of Stockholders
of Nabisco Holdings Corp. The meeting will be held at 10:00 a.m. (local time) on
Thursday, April 17, 1997 at Nabisco Tablespreads Company, 4300 West 62nd Street,
Indianapolis, Indiana 46268.
Please note that attendance at the Annual Meeting will be limited to
stockholders (or their authorized representatives) as of March 4, 1997, the
record date, and to guests of the company. If your shares are registered in your
name and you plan to attend the Annual Meeting, please mark the appropriate box
on the enclosed proxy card and you will be pre-registered for the meeting. If
your shares are held of record by a broker, bank or other nominee and you plan
to attend the meeting, you must also pre-register by returning the registration
card forwarded to you by your bank or broker. Stockholders who are not
pre-registered will only be admitted to the Annual Meeting upon verification of
stock ownership.
Please give these proxy materials careful attention. It is important that
your shares be represented and voted at the Annual Meeting regardless of the
size of your holdings. Accordingly, whether or not you plan to attend the Annual
Meeting, please complete, sign, date and return the accompanying proxy card in
the enclosed envelope in order to make certain that your shares will be
represented at the Annual Meeting.
Sincerely,
[SIGNATURE]
H. JOHN GREENIAUS
Chairman, President and Chief Executive
Officer
IMPORTANT: YOUR PROXY CARD IS ENCLOSED IN THE ADDRESS WINDOW OF THE ENVELOPE
CONTAINING THIS MATERIAL
<PAGE>
[NABISCO LOGO]
NABISCO HOLDINGS CORP.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 17, 1997
To the Stockholders:
The Annual Meeting of Stockholders of Nabisco Holdings Corp., a Delaware
corporation (the "Company"), will be held at Nabisco Tablespreads Company, 4300
West 62nd Street, Indianapolis, Indiana 46268 at 10:00 a.m. (local time) on
Thursday, April 17, 1997 for the following purposes:
1. To elect seven Directors to serve until the 1998 annual meeting of
stockholders and until their respective successors are duly elected and
qualified;
2. To ratify the appointment of Deloitte & Touche LLP as independent
auditors for the Company's 1997 fiscal year;
3. To approve the amendment and restatement of the Company's 1994 Long
Term Incentive Plan; and
4. To transact such other business as may be properly brought before
the meeting and any adjournments or postponements thereof.
Only holders of record of the Company's Class A Common Stock and Class B
Common Stock as of the close of business on March 4, 1997 are entitled to notice
of and to vote at the Annual Meeting and any adjournments or postponements
thereof. A list of such stockholders may be examined for any purpose germane to
the meeting during the ten-day period preceding the meeting at Nabisco
Tablespreads Company, 4300 West 62nd Street, Indianapolis, Indiana, 46268.
JAMES A. KIRKMAN III
Executive Vice President and Secretary
Parsippany, New Jersey
March 11, 1997
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE URGED TO COMPLETE, SIGN,
DATE AND RETURN THE ACCOMPANYING PROXY CARD WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING.
<PAGE>
NABISCO HOLDINGS CORP.
7 Campus Drive
Parsippany, New Jersey
07054-0311
PROXY STATEMENT
This Proxy Statement and enclosed form of proxy are being furnished
commencing on or about March 11, 1997 in connection with the solicitation by the
Board of Directors (the "Board") of Nabisco Holdings Corp., a Delaware
corporation (the "Company"), of proxies in the enclosed form for use at the
annual meeting of stockholders (the "Annual Meeting") to be held on April 17,
1997 for the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders. Any proxy given pursuant to this solicitation and received in time
for the Annual Meeting will be voted as specified in such proxy. If no
instructions are given, proxies will be voted FOR the election of the nominees
listed below under the caption "Election of Directors--Information Concerning
the Nominees," FOR the ratification of the appointment of Deloitte & Touche LLP
as independent auditors for the Company's 1997 fiscal year, FOR the amendment
and restatement of the Company's 1994 Long Term Incentive Plan and in the
discretion of the proxies named on the proxy card with respect to any other
matters properly brought before the Annual Meeting and any adjournments or
postponements thereof. Any proxy may be revoked by written notice received by
the Secretary of the Company at any time prior to the voting thereof by
submitting a subsequent proxy or by attending the Annual Meeting and voting in
person.
A proxy card is enclosed for your use. YOU ARE SOLICITED ON BEHALF OF THE
BOARD TO COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD IN THE ACCOMPANYING
ENVELOPE, which is postage-paid if mailed in the United States.
Only holders of record of the Company's voting securities as of the close of
business on March 4, 1997 (the "Record Date") are entitled to notice of and to
vote at the Annual Meeting and any adjournments or postponements thereof. As of
the Record Date, the following shares of voting securities were outstanding:
51,819,653 shares of Class A Common Stock, par value $.01 per share ("Class A
Common Stock"), and 213,250,000 shares of Class B Common Stock, par value $.01
per share ("Class B Common Stock").
Class A Common Stock and Class B Common Stock (collectively, the "Common
Stock") vote as a single class on all matters properly brought before the Annual
Meeting. Holders of Class A Common Stock and Class B Common Stock are entitled
to one (1) vote and ten (10) votes per share, respectively. The presence of the
holders of a majority in voting power of the Common Stock, represented at the
meeting in person or by proxy, will constitute a quorum. Shares represented by
proxies that are marked "abstain" will be counted as shares present for purposes
of determining the presence of a quorum on all matters. Proxies relating to
"street name" shares that are voted by brokers on some but not all of the
matters will be treated as shares present for purposes of determining the
presence of a quorum on all matters, but they will not be treated as shares
entitled to vote at the Annual Meeting on those matters as to which authority to
vote is withheld by the broker ("Broker Non-Votes"). The seven nominees
receiving the highest vote totals will be elected as Directors of the Company.
Accordingly, abstentions and Broker Non-Votes will not affect the outcome of the
election. All other matters to be voted on will be decided by a majority vote of
the shares represented at the Annual Meeting and entitled to vote. On any such
matter, an abstention will have the same effect as a negative vote, but, because
shares held by brokers will not be considered entitled to vote on matters as to
which the brokers withhold authority, a Broker Non-Vote will have no effect on
the outcome of the voting.
Securities and Exchange Commission (the "SEC") rules generally require that
an annual report precede or accompany proxy materials. However, if you are a
stockholder of record, have the same address as another stockholder of record
and do not hold shares in nominee name, you may wish to authorize the Company to
discontinue sending more than one annual report to the same address. You can
eliminate such duplicate mailings by marking the appropriate box on the proxy
card for any account for which you do not wish to receive annual reports. You
will, however, continue to receive proxy statements and proxy cards to vote the
shares for all of your accounts.
<PAGE>
ITEM 1 -- ELECTION OF DIRECTORS
INFORMATION CONCERNING NOMINEES
At the upcoming Annual Meeting, a board of seven Directors will be elected
to hold office until the next Annual Meeting of stockholders and until their
successors have been elected and qualified. Directors are elected by a plurality
of the votes cast. Although management does not anticipate that any of the
persons named below will be unable or unwilling to stand for election, in the
event of such an occurrence, proxies may be voted for a substitute designated by
the Board. All of the Board's nominees are incumbent Directors of the Company
and its wholly-owned subsidiary, Nabisco, Inc. ("Nabisco") and all of them were
elected to their present terms by the stockholders in April 1996 except Mr.
Goldstone, who was elected by the Board in May 1996.
Background information about the Board's nominees for election is set forth
below. See "Security Ownership of Management" for information about the
nominees' holdings of equity securities issued by the Company and its
affiliates.
<TABLE>
<CAPTION>
YEAR
FIRST BUSINESS EXPERIENCE DURING PAST FIVE YEARS
NAME AGE ELECTED AND OTHER INFORMATION
- - ------------------------------ ----------- ----------- ------------------------------------------------------------------
<S> <C> <C> <C>
Herman Cain................... 51 1995 Chairman of Godfather's Pizza, Inc. since 1988; Chief Executive
Officer of Godfather's Pizza from 1988 to December 1996. Chief
Executive Officer and President of National Restaurant
Association since December 1996. Member of the Boards of
SUPERVALU, INC., UtiliCorp United and Whirlpool Corporation.
John T. Chain, Jr............. 62 1994 President of Quarterdeck Equity Partners, Inc., an investor in the
defense industry, since December 1996. Special Assistant to the
Chairman of Burlington Northern Santa Fe Corporation from
November 1995 to March 1996; Executive Vice President of
Burlington Northern from 1991 to November 1995. For more than
five years prior thereto, General (Commander-in-Chief, Strategic
Air Command) in the United States Air Force. Member of the
Boards of RJR Nabisco Holdings Corp. ("RJRN Holdings"), RJR
Nabisco, Inc. ("RJRN"), Northrop Grumman Corporation and The
Thomas Group, Inc.
Steven F. Goldstone........... 51 1996 Chairman of RJRN Holdings and RJRN since May 1996; Chief Executive
Officer of RJRN Holdings and RJRN since December 1995; President
of RJRN Holdings and RJRN since October 1995; General Counsel of
RJRN Holdings and RJRN from March to December 1995. Partner with
the law firm of Davis Polk & Wardwell until October 1995 and for
more than five years prior thereto.
H. John Greeniaus............. 52 1994 Chairman, President and Chief Executive Officer of the Company and
Nabisco since May 1996; President and Chief Executive Officer of
the Company and Nabisco from October 1994 to May 1996; Vice
Chairman of RJRN Holdings and RJRN from June 1995 to May 1996;
Chairman and Chief Executive Officer of Nabisco from 1993 to
1994; President of Nabisco from 1987 to 1993.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
YEAR
FIRST BUSINESS EXPERIENCE DURING PAST FIVE YEARS
NAME AGE ELECTED AND OTHER INFORMATION
- - ------------------------------ ----------- ----------- ------------------------------------------------------------------
<S> <C> <C> <C>
David B. Jenkins.............. 66 1995 Director of J. Sainsbury International from January 1994 to
September 1995; Chairman and Chief Executive Officer of Shaw's
Supermarkets, Inc. from 1982 to December 1993. Member of the
Board of Citizens Financial Group.
Kay Koplovitz................. 51 1995 Founder, Chairman and Chief Executive Officer of USA Networks
since its establishment in 1980. Member of the Boards of General
Re Corporation and Liz Claiborne, Inc.
John G. Medlin, Jr............ 63 1995 Chairman of Wachovia Corporation since 1988 and Chief Executive
Officer of Wachovia Corporation until December 1993. Member of
the Boards of RJRN Holdings, RJRN, BellSouth Corporation,
Burlington Industries, Inc., Media General, Inc., National
Services Industries, Inc., USAir Group, Inc. and Wachovia
Corporation.
</TABLE>
The Board recommends that the stockholders vote FOR the election of each
nominee for Director named above.
MEETINGS AND COMMITTEES OF THE BOARD
The Board met seven times during the 1996 fiscal year. During 1996, all then
incumbent Directors attended at least 75% of the meetings of the Board and the
Board committees on which they served.
The standing committees of the Board are the Audit Committee and the
Compensation Committee. The Board does not have a nominating committee; its
customary functions are performed by the entire Board.
AUDIT COMMITTEE. The Audit Committee reviews the adequacy of the Company's
internal system of accounting controls, confers with the independent auditors
and the internal auditors concerning their examination of the books and records
of the Company and its subsidiaries, reviews actions taken to ensure compliance
with the Company's Code of Conduct, recommends to the Board the appointment of
independent auditors and considers other appropriate matters regarding the
financial affairs of the Company and its subsidiaries. The Audit Committee,
whose current members are Messrs. Jenkins and Medlin, held five meetings during
the 1996 fiscal year.
COMPENSATION COMMITTEE. The Compensation Committee makes recommendations to
the Board with respect to compensation and grants of stock options to management
employees. In addition, the Compensation Committee administers plans and
programs relating to employee benefits, incentives and compensation. The
Compensation Committee, whose current members are Messrs. Cain and Chain and Ms.
Koplovitz, met seven times during the 1996 fiscal year.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information, as of March 4, 1997,
regarding the beneficial ownership of (i) Class A Common Stock and (ii) common
stock, par value $.01 per share, of RJRN Holdings ("RJRN Common Stock"), by each
director of the Company, by each of the five most highly compensated executive
officers of the Company during the last fiscal year and by all directors and
executive officers of the Company as a group. Except as otherwise noted, the
persons named in the table below do not own any other capital stock of the
Company or any of its parents or subsidiaries and have sole voting and
investment power for all securities for which they are shown as beneficial
owner.
3
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
CLASS A NUMBER OF SHARES OF
COMMON STOCK PERCENT OF RJRN COMMON STOCK
NAME OF BENEFICIALLY CLASS A BENEFICIALLY PERCENT OF
BENEFICIAL OWNER OWNED(1)(2) COMMON STOCK OWNED(1) RJRN COMMON STOCK
- - ----------------------------- ---------------------- --------------- -------------------- ---------------------
<S> <C> <C> <C> <C>
Herman Cain.................. 0 * 0 *
John T. Chain, Jr.(4)........ 1,000 * 10,165 *
Douglas R. Conant(3)(4)...... 1,051 * 198 *
Steven F. Goldstone(4)(5).... 14,981 * 228,566 *
H. John Greeniaus(4)......... 110,101 0.21% 132,466 *
David B. Jenkins............. 1,000 * 0 *
Kay Koplovitz(3)............. 0 * 0 *
John G. Medlin, Jr.(3)(4).... 1,000 9,031 *
James J. Postl(3)(4)......... 1,001 * 523 *
All Directors and Officers as
a Group(3)(4).............. 132,140 0.26% 401,833 0.15%
- - ----------------------
H.F. Powell(4)(6)............ 1,965 * 2,596 *
Charles A. Lieppe(3)(4)(6)... 1,000 * 53 *
</TABLE>
- - ------------------------
* Less than 0.1%.
(1) For purposes of this table, a person or group of persons is deemed to be the
"beneficial owner" of any shares that such person has the right to acquire
within 60 days. For purposes of computing the percentage of outstanding
shares held by each person or group of persons named above on a given date,
any security that such person or persons has the right to acquire within 60
days is deemed to be outstanding, but it is not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person.
(2) No director or officer of the Company holds any options exercisable within
60 days to acquire shares of Class A Common Stock.
(3) The number of shares of Class A Common Stock beneficially owned does not
include the 948, 2,037, 22,000, 25,000 and 22,000 units issued to Ms.
Koplovitz and Messrs. Medlin, Conant, Postl and Lieppe, respectively. The
units issued to the two directors are common stock equivalents and were
received as deferred compensation. The units issued to the three officers
are equivalent to restricted stock grants and were received as equity
incentives.
(4) The number of shares of RJRN Common Stock beneficially owned includes (i)
8,165 and 2,165 shares subject to currently exercisable options granted to
Gen. Chain and Mr. Medlin, respectively; 212,000, 66,000 and 288,330 shares
subject to currently exercisable options granted to Messrs. Goldstone,
Greeniaus and all directors and executive officers as a group, respectively;
and (ii) 198, 37, 444, 175, 2,871, 53, and 443 shares issuable on conversion
of shares of ESOP Convertible Preferred Stock issued by RJRN Holdings and
owned by Messrs. Conant, Goldstone, Greeniaus, Postl, all directors and
executive officers as a group and Messrs. Lieppe and Powell, respectively.
The number of shares of RJRN Common Stock beneficially owned does not
include the following deferred units, which are common stock equivalents
received as equity incentives or as deferred fees and other compensation:
1,046.30 units for Gen. Chain and 3,268.64 units for Mr. Medlin.
(5) Mr. Goldstone is also the holder of 200,000 performance stock units each
equal in value to one share of RJRN Common Stock which will be paid to Mr.
Goldstone only if (i) Mr. Goldstone remains employed by RJRN Holdings
through December 31, 1998 (unless he is terminated by RJRN Holdings without
cause or he voluntarily terminates his employment with good reason) and (ii)
the market price
4
<PAGE>
for RJRN Common Stock averages $43.75 or more for any consecutive 30-day
period ending on or prior to December 31, 1998.
(6) "Directors and Executive Officers as a Group" does not include Mr. Lieppe or
Mr. Powell because neither one continued to be an executive officer of the
Company after February 28, 1997.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Section 16(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires
the Company's officers and directors and persons who own more than 10% of a
registered class of the Company's equity securities to file initial statements
of beneficial ownership (Form 3), and statements of changes in beneficial
ownership (Forms 4 or 5) of Common Stock and other equity securities of the
Company with the SEC and The New York Stock Exchange, Inc. Officers, directors
and greater than 10% stockholders are required by SEC regulation to furnish the
Company with copies of all such forms they file.
Based solely on a review of the copies of the forms that it has received,
and on written representations from certain reporting persons that no additional
forms were required, the Company believes that its officers, directors and
greater than 10% beneficial owners complied with all of these filing
requirements in 1996 except for Mr. Powell, who had one late filing. Mr. Powell
filed a Form 5 covering a November 21, 1996 purchase of 24 shares of Class A
Common Stock for his Individual Retirement Account on February 26, 1997, 12 days
past the February 14 deadline for the filing.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information, as of March 4, 1997,
regarding the beneficial ownership of persons known to the Company to be the
beneficial owners of more than 5% of any class of the Company's voting
securities. The information was obtained from Company records and information
supplied by the stockholders, including information on Schedules 13D and 13G and
Forms 3, 4 and 5 provided to the SEC. Except as otherwise noted, the persons
named in the table below have sole voting and investment power with respect to
all shares shown as beneficially owned by them.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS BENEFICIALLY PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OWNED OF CLASS
- - ----------------- ------------------------------------------------------- ----------------- ---------
<S> <C> <C> <C>
Class A Southeastern Asset Management, Inc. (1) 4,220,600 8.14%
Common Stock 6075 Poplar Avenue, Suite 900
Memphis, TN 38119
Class A The Equitable Companies Incorporated (2) 2,605,491 5.03%
Common Stock 787 Seventh Avenue
New York, NY 10019
Class B RJR Nabisco Holdings Corp. (3) 213,250,000 100%
Common Stock RJR Nabisco, Inc.
1301 Avenue of the Americas
New York, NY 10019-1643
</TABLE>
- - ------------------------
(1) According to the Schedule 13G dated January 31, 1997 jointly filed by
Southeastern Asset Management, Inc. ("Southeastern") and O. Mason Hawkins,
Southeastern is a registered investment adviser and Mr. Hawkins is its
Chairman and Chief Executive Officer. Southeastern and Mr. Hawkins disclaim
beneficial ownership of the reported shares, which are legally owned by
Southeastern's investment advisory clients. Southeastern and Mr. Hawkins
have sole voting power over 1,870,700 of the shares, shared voting power
over 2,298,900 of the shares, and no power to vote 51,000 of the shares. The
Schedule 13G reports that Southeastern and Mr. Hawkins have sole power to
dispose of 1,921,700 of the shares and shared power to dispose of 2,298,900
of the shares. The shares over which
5
<PAGE>
Southeastern and Mr. Hawkins have shared voting and dispositive power are
owned by Longleaf Partners Fund.
(2) According to the Schedule 13G (the "Equitable 13G"), dated February 12,
1997, jointly filed by AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie
Mutuelle, Alpha Assurances I.A.R.D. Mutuelle, Alpha Assurances Vie Mutuelle,
AXA Courtage Assurance Mutuelle (formerly, Uni Europe Assurance Mutuelle)
(collectively, the "Mutuelles AXA"), AXA, and The Equitable Companies
Incorporated ("Equitable"), Mutuelles AXA is a parent holding company with
respect to AXA, and AXA is a parent holding company with respect to
Equitable. The Equitable 13G indicates that, as of December 31, 1996, the
2,605,491 shares of Class A Common Stock shown as beneficially owned by
Mutuelles AXA, AXA and Equitable are held by subsidiaries of Equitable and
include (i) 59,920 shares beneficially owned by The Equitable Life Assurance
Society of the United States ("Equitable Life") solely for investment
purposes; (ii) 2,531,170 shares beneficially owned by Alliance Capital
Management L.P. ("Alliance") on behalf of client discretionary investment
advisory accounts; (iii) 13,301 shares beneficially owned by Donaldson,
Lufkin & Jenrette ("DLJ") solely for investment purposes and (iv) 1,100
shares beneficially owned by Wood, Struthers & Winthrop Management Corp.
("Wood Struthers") on behalf of client discretionary investment advisory
accounts. According to the Equitable 13G, each of Mutelles AXA, AXA and
Equitable (i) have sole voting power and sole investment power with respect
to the shares beneficially owned by Equitable Life, (ii) have sole voting
power with respect to 2,200,370 shares and sole investment power with
respect to all the shares beneficially owned by Alliance; (iii) have sole
investment and voting power with respect to one share and shared investment
and voting power with respect to the remainder of the shares beneficially
owned by DLJ and (iv) sole investment power over the shares beneficially
owned by Wood Struthers.
(3) RJRN Holdings and RJRN, its wholly-owned subsidiary, are the beneficial
owners of all 213,250,000 outstanding shares of Class B Common Stock, which
account for approximately 80.5% of the economic interest in the Company and
97.6% of the combined voting power of its outstanding Common Stock. Because
each of these shares is immediately convertible into a share of Class A
Common Stock at the option of the holder, RJRN Holdings and RJRN are also
deemed to be the beneficial owners of the same number of shares of Class A
Common Stock. Upon such conversion, these shares would account for 80.5% of
the economic interest in the Company and 80.5% of the voting power of the
outstanding Common Stock. Together, RJRN Holdings and RJRN share voting and
investment power over these shares.
ITEM 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Subject to stockholder ratification, the Board has appointed the firm of
Deloitte & Touche LLP ("Deloitte & Touche") as independent auditors for the
fiscal year ending December 31, 1997 and until their successors are selected.
The appointment was made upon the recommendation of the Audit Committee, which
is comprised of Directors who are not employees of the Company or its
subsidiaries.
A representative of Deloitte & Touche is expected to be present at the
Annual Meeting, will have the opportunity to make a statement if he or she
desires to do so and will be available to answer appropriate questions.
The Board considers Deloitte & Touche to be well qualified and recommends
that the stockholders vote FOR ratification of its appointment as independent
auditors of the Company for the upcoming fiscal year.
ITEM 3 -- AMENDMENT AND RESTATEMENT OF THE NABISCO HOLDINGS CORP.
1994 LONG-TERM INCENTIVE PLAN
On December 6, 1994, the Board of Directors of the Company adopted the
Nabisco Holdings Corp. 1994 Long Term Incentive Plan (the "Nabisco LTIP"), and
RJRN as the sole stockholder of the Company approved the adoption of the Nabisco
LTIP. In 1996 stockholders approved certain amendments to the Nabisco LTIP in
order to meet the requirements of Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), regarding "performance-based compensation" to
preserve the deductibility of compensation provided through the Nabisco LTIP.
6
<PAGE>
As of March 1, 1997, 14,239,758 shares of Class A Common Stock had been
allocated to 630 current and former employees of the Company and of RJRN
Holdings and its subsidiaries pursuant to awards under the Nabisco LTIP. Of that
amount, 5,971,858 shares had been allocated for a one-time grant of options to
purchase Class A Common Stock in exchange for the cancellation of the optionee's
outstanding options to purchase RJRN Common Stock. This was done in connection
with the initial public offering of Class A Common Stock in early 1995, in large
part to focus the stock-based incentives of Company executives on the
performance of Class A Common Stock. The remaining 8,267,900 allocated shares
had been used for regular long-term incentive grants. On February 26, 1997, the
Board amended and restated the Nabisco LTIP, to be effective upon stockholder
approval, principally to provide for issuance under the Nabisco LTIP of an
additional 12 million shares of Class A Common Stock.
The following summary of the Nabisco LTIP is qualified in its entirety by
reference to the full text of the Nabisco LTIP, a copy of which is attached as
Exhibit A to this Proxy Statement.
The Nabisco LTIP provides for the granting of awards to employees of the
Company or its subsidiaries who are primarily responsible for the management,
growth or protection of all or part of the business of the Company and other
individuals who have a unique relationship with the Company or its subsidiaries
(including employees of RJRN Holdings or its subsidiaries who are expected to
make a significant contribution to some portion of the business of the Company
or its subsidiaries) all as determined by the Compensation Committee. Currently,
over 600 individuals are eligible to participate in the Nabisco LTIP. The
Compensation Committee is authorized to establish rules and regulations for
administration of the Nabisco LTIP, to make determinations and interpretations
under the Nabisco LTIP and to grant awards pursuant to the Nabisco LTIP.
The Nabisco LTIP is not subject to any provision of ERISA and is not
qualified under section 401(a) of the Code.
SHARES AVAILABLE FOR GRANTS. The maximum number of shares of Class A Common
Stock which may be granted in respect of all awards during the term of the
Nabisco LTIP is proposed to be amended from 16.3 million shares to 28.3 million
shares, which may be adjusted in the event of certain capital changes as
described below. No more than 1% of the authorized shares of Class A Common
Stock, as of the effective date of the Nabisco LTIP, may be granted as
"Incentive Stock Options," (subject to adjustment as described below).
Shares related to prior grants that are forfeited, terminated, canceled,
expire unexercised, settled in cash or in any other manner are not issued as
shares of Class A Common Stock shall again become eligible for grant under the
Nabisco LTIP.
AWARDS. Under the terms of the Nabisco LTIP, the Compensation Committee in
its sole discretion, or the Board of Directors in lieu of the Compensation
Committee, may grant awards in such amounts and in such of the forms permitted
by the Nabisco LTIP as it deems appropriate. The permissible forms of awards
under the Nabisco LTIP are: stock options (both incentive stock options and
other stock options); stock appreciation rights; restricted stock; dividend
equivalent rights; performance units; performance shares; purchase stock; and
other stock-based grants. The material terms and features of the various forms
of awards are set forth below.
(a) INCENTIVE STOCK OPTIONS--These are stock options that are granted
pursuant to the restrictions of Section 422 of the Code. Generally,
incentive stock options may not be exercised more than ten years after the
date they are granted and may not have an option price less than 100% of the
fair market value of Class A Common Stock on the date they are granted.
Payment of the option price may be made in cash, shares of Class A Common
Stock or any combination thereof, as determined by the Compensation
Committee. No participant may receive a grant of incentive stock options in
any calendar year covering more than one million shares of Class A Common
Stock.
7
<PAGE>
(b) OTHER STOCK OPTIONS--These are options to purchase Class A Common
Stock under terms other than those applicable to incentive stock options.
Such options may not be exercised more than fifteen years after the date
they are granted, may not have an exercise price less than 50% of the fair
market value of Class A Common Stock on the date they are granted and,
except in the case of death or disability, may not be exercised within six
months of the grant date. Payment of the option price may be made in cash,
shares of Class A Common Stock or any combination thereof, as determined by
the Compensation Committee. No participant may receive a grant of such other
stock options in any calendar year covering more than one million shares of
Class A Common Stock.
(c) STOCK APPRECIATION RIGHTS--These are rights to receive cash or Class
A Common Stock in an amount equal to the appreciation of shares of Class A
Common Stock subsequent to the date the stock appreciation rights are
granted. Stock appreciation rights have a base price value equal to a share
of Common Stock on the date of grant or, if granted in tandem with stock
options, the exercise price of such options. Stock appreciation rights are
granted for no consideration, cannot be exercised within six months of grant
or following fifteen years from the date of grant, may be granted in tandem
with options or separately and may be terminated by the Compensation
Committee. No participant may receive grants of more than one million stock
appreciation rights in any calendar year.
(d) RESTRICTED STOCK--These are shares of Class A Common Stock, or units
equivalent to Class A Common Stock, delivered to an individual generally
without payment of consideration that are subject to restrictions or
conditions. No participant may receive grants of more than 100,000 shares of
restricted stock in any calendar year.
(e) DIVIDEND EQUIVALENT RIGHTS--These are rights to receive cash
payments at the same time and in the same amounts as cash dividends paid on
an equal number of shares of Class A Common Stock. No participant may
receive grants of dividend equivalent rights on more than one million
notional shares of Class A Common Stock in any calendar year.
(f) PERFORMANCE UNITS--These are rights to receive cash payments at a
future date based upon the Company's performance during a performance
period. The performance factors which may be selected by the Compensation
Committee may be based on any of the following: price of Class A Common
Stock or the stock of any affiliate, shareholder return, return on equity,
return on investment, return on capital, return on invested capital,
economic profit, economic value added, net income, cash net income, free
cash flow, earnings per share, cash earnings per share, operating company
contribution or market share. These factors will have a minimum performance
standard below which no amount will be paid and may have a maximum
performance standard above which no additional payments will be made. The
performance period may not exceed ten years. No participant may receive
grants of performance units in any calendar year which could result in a
maximum payment (assuming maximum performance is attained) in excess of $8
million.
(g) PERFORMANCE SHARES--These are similar to performance units, but the
ultimate cash payments are determined not only on the basis of the Company's
performance during the interim period, but also upon the price of Class A
Common Stock at the end of the period. The performance factors that the
Compensation Committee may select are the same as those available in respect
of performance units and similar conditions relating to minimum and maximum
performance standards and minimum performance periods are applicable. No
participant may receive grants of performance shares in any calendar year
that could result in a maximum payment (assuming maximum performance is
attained) in excess of 300,000 shares of Class A Common Stock or the cash
equivalent thereof.
(h) PURCHASE STOCK--These are shares of Class A Common Stock offered to
a participant at not less than 50% of the fair market value of such shares
on the offer date, the purchase of which will make the participant eligible
to receive another award under the Nabisco LTIP. No participant may purchase
more than one million shares of Class A Common Stock pursuant to a purchase
stock grant in any calendar year.
8
<PAGE>
(i) OTHER STOCK-BASED GRANTS--These are grants to acquire shares of
Class A Common Stock (or the cash equivalent thereof) under terms other than
as described in the awards set forth above. Such grants may be for no
consideration or, if payment consideration is required, at a price of not
less than 50% of the fair market value of Class A Common Stock on the date
of grant. No participant may receive other stock-based grants covering more
than one million shares of Class A Common Stock in any calendar year.
PLAN BENEFITS. It is not possible to determine future awards under the
Nabisco LTIP. As of March 1, 1997, awards have been made under the Nabisco LTIP
in the form of non-qualified stock options. In addition, the 1997 annual bonus
opportunity for Mr. Greeniaus was denominated in a combination of one-year
Performance Units and Restricted Stock Units granted under the Nabisco LTIP.
These awards are set forth in the table below.
<TABLE>
<CAPTION>
1997 ANNUAL BONUS
------------------------------------------
<S> <C> <C> <C>
1-YEAR
PERFORMANCE UNITS RESTRICTED
NAME STOCK OPTIONS(#)(1) ($)(2) STOCK UNITS(#)(2)
- - ------------------------------------------------- ------------------- ----------------------- -----------------
Mr. Greeniaus.................................... 190,000 $ 918,000 $ 4,026
Mr. Postl........................................ 100,000 $ 0 0
Mr. Powell....................................... 0 $ 0 0
Mr. Conant....................................... 65,000 $ 0 0
Mr. Lieppe....................................... 0 $ 0 0
Executive Officers as a Group.................... 606,000 $ 918,000 4,026
Non-Executive Directors as a Group (3)........... 60,000 $ 0 0
Non-Executive Officer Employee Group............. 1,871,100 $ 0 0
</TABLE>
- - ------------------------
(1) The options vest 33% on January 1 following the date of grant and,
thereafter, on each subsequent January 1 for 33% and 34%, respectively. The
exercise price is $37.00, the closing price of Class A Common Stock on
January 10, 1997, the date of the grant.
(2) Mr. Greeniaus' annual bonus for 1997 is denominated in the form of a
combination of one-year Performance Units and Restricted Stock Units whose
value may fluctuate up or down based on the market price of Class A Common
Stock. These columns show the maximum value of one-year Performance Units
that can be awarded to Mr. Greeniaus in connection with his annual bonus and
the maximum number of Restricted Stock Units which can be earned (based on
performance) by Mr. Greeniaus in connection with his annual bonus. The
Compensation Committee has retained the discretion to reduce the value of
the one-year Performance Units granted and/or the number of Restricted Stock
Units earned. Restricted Stock Units vest two years after they are earned.
(3) This reflects stock options granted to Mr. Goldstone, which have the terms
described in footnote 1 above.
ADJUSTMENTS. The total number of shares of Class A Common Stock that may be
allocated pursuant to awards made under the Nabisco LTIP or that may be
allocated to any one individual, the number of shares of Class A Common Stock
subject to outstanding options, the exercise price for such options, the number
of outstanding stock appreciation rights, the base value of such rights, the
number of outstanding dividend equivalent rights, the number of outstanding
performance shares and other terms and conditions of awards may be equitably
adjusted by the Compensation Committee in the event of certain corporate
transactions, including a spin-off, stock dividend, extraordinary cash dividend,
stock split or subdivision, recapitalization, combination or reclassification of
shares, merger or consolidation, change of control or similar event.
TERMINATION AND AMENDMENT. The Board may terminate or amend the Nabisco
LTIP, except that no amendment or termination of the Nabisco LTIP may adversely
affect any participant's rights with respect
9
<PAGE>
to previously granted awards without the consent of such participant, but stock
appreciation rights and dividend equivalent rights may be changed or canceled
without a participant's consent.
FEDERAL INCOME TAX CONSEQUENCES OF STOCK OPTIONS. The following is a brief
summary of the Federal income tax rules currently applicable to incentive stock
options and other stock options.
INCENTIVE STOCK OPTIONS. The grant of an incentive stock option will have
no immediate tax consequences to the optionee or to the Company. The exercise of
an incentive stock option by the payment of cash to the Company will generally
have no immediate tax consequences to the optionee (except to the extent it is
an adjustment in computing alternative minimum taxable income) or to the
Company. If an optionee holds the shares acquired pursuant to the exercise of an
incentive stock option for the required holding period, the optionee generally
will realize long-term capital gain or long-term capital loss upon a subsequent
sale of the shares in the amount of the difference between the amount realized
upon the sale and the purchase price of the shares (i.e., the exercise price).
In such a case, no deduction will be allowable to the Company in connection with
the grant or exercise of the incentive stock option or the sale of shares of
Class A Common Stock acquired pursuant to such exercise.
If, however, an optionee disposes of the shares prior to the expiration of
the required holding period (a "disqualifying disposition"), the optionee will
recognize ordinary income (and the Company will be entitled to a deduction)
equal to the excess of the fair market value of the shares of Class A Common
Stock on the date of exercise (the proceeds of the disposition, if less) over
the exercise price. Special rules apply in the event all or a portion of the
exercise price is paid in the form of stock.
OTHER (NONQUALIFIED) STOCK OPTIONS. The grant of a nonqualified stock
option will have no immediate tax consequences to the optionee or to the
Company. Upon the exercise of a nonqualified stock option, the optionee will
recognize ordinary income (and the Company will generally be entitled to a
deduction subject to compliance with any applicable reasonableness and
performance-based requirements under the Code) in an amount equal to the excess
of the fair market value of the shares of Class A Common Stock on the date of
the exercise of the option over the exercise price. The optionee's tax basis in
the shares will be the exercise price plus the amount of ordinary income
recognized by the optionee, and the optionee's holding period will commence on
the date the shares are transferred. Special rules apply in the event all or a
portion of the exercise price is paid in the form of stock.
Upon a subsequent sale of shares of Class A Common Stock acquired pursuant
to the exercise of a nonqualified stock option, any difference between the
optionee's tax basis in the shares and the amount realized on the sale is
treated as long-term or short-term capital gain or loss, depending on the
holding period of the shares.
Ordinary income recognized by virtue of the exercise of nonqualified stock
options is subject to applicable withholding as required by law.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE
NABISCO LTIP.
EXECUTIVE COMPENSATION
SUMMARY
The following pages describe the components of the total compensation of the
five most highly compensated executive officers (as defined under SEC rules) of
the Company at the end of the last completed fiscal year. The principal
components of such individuals' current cash compensation are the annual base
salary and bonus included in the Summary Compensation Table. The bonus amounts
represent amounts that the Compensation Committee and the Board approved for
each named individual based on Company performance for the applicable year. The
long-term compensation shown in the Summary Compensation Table was provided
under the Nabisco LTIP and, in some cases, under RJRN Holdings' 1990 Long-Term
Incentive Plan (the "RJRN LTIP") as described below. Also described below is the
future
10
<PAGE>
compensation such individuals may receive under RJRN's retirement plans or,
following termination of employment under certain circumstances, under private
employment agreements. The stockholders of the Company are being asked to
approve certain amendments to the Nabisco LTIP (see "Item 3--Amendment and
Restatement of the Nabisco Holdings Corp. 1994 Long-Term-Incentive Plan",
above).
SUMMARY COMPENSATION TABLE
The following table presents certain specific information regarding the
compensation of the five most highly compensated executive officers of the
Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION -----------------------------------------------
-------------------------------------------
AGGREGATE RESTRICTED
NAME & PRINCIPAL BASE SALARY OTHER ANNUAL STOCK AWARD(S) RN STOCK NA STOCK
POSITION YEAR ($) BONUS ($)(1) COMPENSATION ($) ($)(2) OPTIONS (#) OPTIONS (#)(3)
- - ----------------------- --------- ----------- ------------ ---------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
H. John Greeniaus...... 1996 $ 850,000 $ 684,000 $ 430,809(6) $ 0 0 180,000
Chairman, President & 1995 $ 837,500 $ 693,000 $1,896,714 $ 0 200,000 880,600
CEO 1994 $ 700,000 $ 983,400 $2,045,752 $ 0 0 0
James J. Postl......... 1996 $ 375,000 $ 400,000 $ 63,009(7) $ 978,125 0 70,000
President, Nabisco 1995 $ 320,833 $ 404,000 $ 56,343 $ 0 0 45,918
Biscuit Company 1994 $ 258,077 $ 550,000 $ 49,419 $ 0 200,000 0
H. F. Powell........... 1996 $ 350,000 $ 253,000 $ 55,943(8) $ 0 0 0
Executive Vice 1995 $ 345,833 $ 176,000 $1,121,875 $ 0 0 41,326
President 1994 $ 320,833 $ 588,000 $ 693,291 $ 0 0 0
Douglas R. Conant...... 1996 $ 285,000 $ 234,000 $ 123,310(9) $ 860,750 0 75,000
Group Executive Vice 1995 $ 267,499 $ 207,000 $ 115,314 $ 0 0 74,852
President 1994 $ 235,000 $ 394,000 $ 94,960 $ 168,750 0 0
Charles A. Lieppe...... 1996 $ 281,250 $ 225,000 $ 44,025(10) $ 860,750 0 100,000
President & Chief
Executive Officer,
Nabisco International
<CAPTION>
LONG-TERM
INCENTIVE ALL OTHER
NAME & PRINCIPAL PAYOUTS COMPENSATION
POSITION ($)(4) (5)
- - ----------------------- ------------- -------------
<S> <C> <C>
H. John Greeniaus...... $ 661,317 $ 105,487
Chairman, President & $ 699,627 $ 54,628
CEO $ 254,496 $ 24,990
James J. Postl......... $ 161,053 $ 23,370
President, Nabisco $ 0 $ 23,125
Biscuit Company $ 0 $ 6,375
H. F. Powell........... $ 160,747 $ 15,780
Executive Vice $ 215,022 $ 30,048
President $ 167,750 $ 9,812
Douglas R. Conant...... $ 149,118 $ 14,760
Group Executive Vice $ 269,400 $ 16,845
President $ 60,681 $ 8,370
Charles A. Lieppe...... $ 0 $ 318,234
President & Chief
Executive Officer,
Nabisco International
</TABLE>
- - ------------------------
(1) The bonus amount shown in the table for Mr. Greeniaus was based solely on
Company performance during 1996 as determined using financial objectives
established early in 1996. The bonus amounts shown for the other named
executive officers were based on a combination of financial objectives and
individual performance objectives. Mr. Lieppe's bonus was determined in
accordance with his employment agreement.
(2) On November 15, 1996, Restricted Stock Equivalent units were granted to: Mr.
Postl (25,000 units), Mr. Conant (22,000 units) and Mr. Lieppe (22,000
units). The units vest five years from the date of grant (subject to
pro-rata vesting in certain circumstances) and are payable in cash based on
the price of Class A Common Stock on November 15, 2001. Dividend equivalents
are paid on the grant in the same manner as dividends are paid on Class A
Common Stock. As of December 31, 1996, the value of the number of shares of
Class A Common Stock equal to the number of units granted was $971,875 for
Mr. Postl and $855,250 for each of Messrs. Conant and Lieppe. Upon Mr.
Lieppe's termination of employment on February 28, 1997, he became vested in
a pro-rata portion of his grant (1,283 units) and forfeited the remainder of
his grant.
(3) The amounts shown in the table reflect options to purchase Class A Common
Stock granted to the named executive officers on March 13, 1996.
(4) The amounts shown in the table represent long-term incentive payouts under
the 1994 Performance Unit Program of the RJRN LTIP (for Messrs. Greeniaus,
Postl, Conant and Powell) and the Executive Equity Program of the RJRN LTIP
(for Messrs. Greeniaus and Conant). Performance Unit awards, denominated in
cash, were granted in 1994. The amount earned was based on cumulative
operating company contribution for the performance period from 1994 to 1996.
The Performance Unit payout was made in cash in early 1997. The Executive
Equity Program applies to individuals who previously acquired RJRN Holdings'
purchase stock under the RJRN LTIP. The named executive officers who
participate in the Program receive cash grants on three annual grant dates
(four, for Mr. Greeniaus) beginning July, 1994 and ending July, 1996 (1997,
for Mr. Greeniaus). The amount awarded on each grant date is equal to the
excess, if any, of (i) 33% (25%, for Mr. Greeniaus) of the maximum amount
the individual could have borrowed to acquire purchase stock, over (ii) the
then fair market value of the same percentage of such individual's purchase
stock. The grant is increased by the amount necessary to hold the individual
11
<PAGE>
harmless from income taxes due as a result of the grant. No grant will be
made on a grant date if, on such grant date, the amount determined under
clause (ii) above equals or exceeds the amount determined in clause (i)
above.
(5) The amounts shown in the table reflect company contributions made on behalf
of the named individuals under RJRN's qualified and non-qualified defined
contribution plans, as follows:
<TABLE>
<CAPTION>
COMPANY MATCHING CONTRIBUTION COMPANY CONTRIBUTION
NAME (QUALIFIED PLAN) (NON-QUALIFIED PLAN)
- - --------------------------------------- ------------------------------- ---------------------
<S> <C> <C>
H. John Greeniaus...................... $ 4,500 $ 32,790
James J. Postl. ....................... $ 4,500 $ 18,870
H. F. Powell........................... $ 4,500 $ 11,280
Douglas R. Conant...................... $ 4,500 $ 10,260
Charles A. Lieppe...................... $ 4,032 $ 3,938
</TABLE>
The amount shown in the table for Mr. Greeniaus also includes $68,197 which
was the 1996 premium for certain Company-paid insurance policies. The amount
shown in the table for Mr. Lieppe also includes a $100,000 special payment
to induce him to accept employment with the Company and relocation expenses
of $210,264.
(6) The amount shown in the table for Mr. Greeniaus for 1996 includes certain
income tax liabilities related to his life insurance policy and to his
participation in the Executive Equity Program (described in footnote (4)),
which liabilities were reimbursed to Mr. Greeniaus. The amount shown in the
table also reflects amounts attributable to his participation in the
Company's executive perquisite program, which provides him with supplemental
insurance, a leased automobile and an annual allowance ($54,750) which may
be used to reimburse miscellaneous expenses and, to the extent not so used,
is paid to him in cash. The supplemental insurance consists of medical,
dental, business travel accident and, to the extent elected, life, spousal
life, automobile and personal liability insurance.
(7) Effective January 1, 1996, Mr. Postl became President of Nabisco Biscuit
Company. The amount shown in the table for Mr. Postl for 1996 includes
amounts attributable to his participation in the Company's executive
perquisite program, which provides him with supplemental insurance, a leased
automobile and an annual allowance ($47,500) which may be used to reimburse
miscellaneous expenses and, to the extent not so used, is paid to him in
cash. The supplemental insurance consists of medical, dental, business
travel accident and, to the extent elected, life, spousal life, automobile
and personal liability insurance.
(8) Mr. Powell's last day of employment was December 31, 1996. The amount shown
in the table for Mr. Powell for 1996 reflects amounts attributable to his
participation in the Company's executive perquisite program, which provides
him with supplemental insurance, a leased automobile and an annual allowance
($40,000) which may be used to reimburse miscellaneous expenses and, to the
extent not so used, is paid to him in cash. The supplemental insurance
consists of medical, dental, business travel accident and, to the extent
elected, life, spousal life, automobile and personal liability insurance.
(9) The amount shown in the 1996 table for Mr. Conant includes certain income
tax liabilities related to his participation in the Executive Equity Program
(described in footnote (4)), which liabilities were reimbursed by the
Company to Mr. Conant and 1996 amounts attributable to his participation in
the Company's executive perquisite program, which provides him with
supplemental insurance, a leased automobile and an annual allowance
($40,000) which may be used to reimburse miscellaneous expenses and, to the
extent not so used, is paid to him in cash. The supplemental insurance
consists of medical, dental, business travel accident and, to the extent
elected, life, spousal life, automobile and personal liability insurance.
(10) Mr. Lieppe became President and Chief Executive Officer of Nabisco
International effective April 1, 1996. His employment terminated on February
28, 1997. The amount shown in the table for Mr. Lieppe includes amounts
attributable to his participation in the Company's executive perquisite
program, which provides him with supplemental insurance, a leased automobile
and an allowance ($30,050 for the portion of the year during which he was
employed) that may be used to reimburse miscellaneous expenses and, to the
extent not so used, is paid to him in cash. The supplemental insurance
consists of medical, dental, business travel accident and, to the extent
elected, life, spousal life, automobile and personal liability insurance.
STOCK-BASED AWARDS
The Company seeks to insure that a significant portion of executive
compensation is tied to the price performance of Class A Common Stock and to
quantifiable measures of the Company's operational performance. The regular
long-term incentive grant for 1996 for all of the named participating executive
officers was made in the form of options to purchase Class A Common Stock (as
set forth in the table on page 11).
Certain options previously granted to Messrs. Greeniaus and Conant under the
RJRN LTIP were conditioned on the purchase by them of RJRN Common Stock. In
connection with the purchase of RJRN Common Stock under the RJRN LTIP,
executives were permitted to borrow on a secured basis from RJRN the purchase
price for the shares of the purchased stock. In addition, purchasers were
entitled to borrow
12
<PAGE>
money from RJRN on substantially the same terms to pay taxes, if any, due on any
taxable income recognized in connection with such purchases. The current annual
interest rate, which was set in July, 1993 at the then applicable federal rate
for long-term loans, is 6.37%. The indebtedness, plus accrued interest and
taxes, must be repaid upon the earlier of sale of the shares or termination of
participation in the RJRN LTIP. Mr. Conant repaid his indebtedness in 1996. As
of February 1, 1997, Mr. Greeniaus' outstanding indebtedness in connection with
such loans was $1,435,475. The largest amount of indebtedness since January 1,
1996 for Messrs. Greeniaus and Conant was $1,690,934 and $138,969, respectively.
During 1996, the Company permitted Messrs. Greeniaus and Goldstone to
purchase Class A Common Stock under the Nabisco LTIP at a price equal to the
fair market value of such stock on the date of purchase. In connection with
these purchases, Messrs. Greeniaus and Goldstone were permitted to borrow on a
secured basis from the Company the purchase price for the shares of the
purchased stock. The current annual interest rates were set at the then
applicable federal rate for long-term loans. For Mr. Greeniaus, the current
annual interest rate is 6.0% for $690,000 of indebtedness and 5.98% for $692,500
of indebtedness. For Mr. Goldstone, the current annual interest rate is 6.72%.
The indebtedness, plus accrued interest and taxes, must be repaid upon the
earlier of sale of the shares or termination of participation in the Nabisco
LTIP. As of February 1, 1997, the outstanding indebtedness of Messrs. Greeniaus
and Goldstone to the Company in connection with such loans was $1,359,000 and
$524,293, respectively.
13
<PAGE>
The following table identifies the grants of stock options made to the named
executive officers in 1996 under the Nabisco LTIP.
OPTION GRANTS IN THE LAST FISCAL YEAR (1996)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NUMBER OF
SECURITIES PERCENT OF TOTAL OPTIONS EXERCISE GRANT DATE
UNDERLYING OPTIONS GRANTED TO EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED (#)(1) FISCAL YEAR(2) ($/SHARE) DATE VALUE(3)
- - ---------------------------- ------------------ ------------------------- --------- ----------- ---------------
Mr. Greeniaus............... 180,000 5.78% $ 34.000 3/13/06 $ 1,935,000
Mr. Postl................... 70,000 2.25% $ 34.000 3/13/06 $ 752,500
Mr. Powell.................. 0 0.00% $ 0.000 -- $ 0
Mr. Conant.................. 50,000 1.61% $ 34.000 3/13/06 $ 537,500
25,000 0.80% $ 31.750 9/19/06 $ 267,750
Mr. Lieppe.................. 100,000 3.21% $ 32.375 4/8/06 $ 1,053,000
</TABLE>
- - ------------------------
(1) These stock options become vested and exercisable over three years in
accordance with the following schedule: 33% on each of the first and second
anniversaries of the date of grant and 34% on the third anniversary of the
date of grant. The stock options have terms of 10 years from the date of
grant but are subject to earlier cancellation in certain circumstances.
(2) The percentages shown in this column represent the percentage of all options
to purchase Class A Common Stock granted in 1996 under the Nabisco LTIP.
(3) The grant date present values shown in the table were determined pursuant to
the Black-Scholes option valuation model using the following assumptions:
stock price volatility of .2315, dividend yield of 1.74%; a 7 year term and
interest rates of 6.02% (for the $34.00 option), 6.88% (for the $31.750
option) and 6.39% (for the $32.375 option).
The following table provides information relating to the number and value of
shares of Class A Common Stock subject to options held by the named executive
officers as of December 31, 1996. There were no stock option exercises during
1996 by any of the named individuals.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END VALUES (1996)
<TABLE>
<CAPTION>
TOTAL NO. UNEXERCISED VALUE OF UNEXERCISED,
OPTIONS HELD IN-THE-MONEY OPTIONS HELD
AT FY-END(#)(1) AT FY-END($)(2)
-------------------------- --------------------------
NAME TYPE(3) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ------------------------------------------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Mr. Greeniaus.................................... NA 0 1,060,606 $ 0 $ 13,536,211
RN 66,000 134,000 $ 387,750 $ 787,250
Mr. Postl........................................ NA 0 115,918 $ 0 $ 1,001,321
Mr. Powell....................................... NA 0 41,326 $ 0 $ 594,061
Mr. Conant....................................... NA 0 149,852 $ 0 $ 1,246,799
Mr. Lieppe....................................... NA 0 100,000 $ 0 $ 650,000
</TABLE>
- - ------------------------
(1) Some of the unexercisable stock options are vested.
(2) Calculated based on the excess of the fair market value on December 31, 1996
of Class A Common Stock ($38.875) or RJRN Common Stock ($34.00), as
appropriate, over the option exercise price.
(3) NA refers to Class A Common Stock. RN refers to RJRN Common Stock.
RETIREMENT PLANS
The named executive officers participate in noncontributory defined benefit
retirement plans maintained by RJRN or its subsidiaries. Messrs. Greeniaus and
Powell also participate in a Supplemental Executive Retirement Plan (the
"SERP"). Benefits under the SERP are payable only after a participant's
14
<PAGE>
retirement at a specified retirement age. Mr. Powell has entered into agreements
with RJRN that establish his normal retirement date under the SERP as the first
day of the month following his 62nd birthday, but that permit him to receive a
benefit even if his employment is terminated after that date.
The following table shows the estimated annual benefits payable upon
retirement under the SERP as described in the preceding paragraph. The
retirement benefits shown are computed without regard to the Social Security
offset and are based upon retirement at age 60 for Mr. Greeniaus and age 64 for
Mr. Powell and the payment of a single-life annuity to the employee.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
YEARS OF SERVICE
-------------------------------------
<S> <C> <C> <C>
AVERAGE FINAL
COMPENSATION 10 OR FEWER 15 20 OR MORE
- - ------------- ----------- ---------- ------------
6$00,000..... $ 200,000 $ 225,000 $ 300,000
7$00,000..... $ 233,000 $ 262,500 $ 350,000
8$00,000..... $ 266,666 $ 300,000 $ 400,000
9$00,000..... $ 300,000 $ 337,500 $ 450,000
1$,000,000... $ 333,333 $ 375,000 $ 500,000
1$,200,000... $ 400,000 $ 450,000 $ 600,000
1$,600,000... $ 533,333 $ 600,000 $ 800,000
2$,000,000... $ 666,666 $ 750,000 $ 1,000,000
</TABLE>
For purposes of determining retirement benefits under this table, "Average
Final Compensation" consists of base salary, bonus in the year earned and
pre-tax contributions to plans maintained under sections 401(k) and 125 of the
Code, and is determined by considering the 36 consecutive months that yield the
highest average compensation during the participant's last 60 months of service.
Average Final Compensation as of December 31, 1996, was: Mr. Greeniaus
$1,582,643; and Mr. Powell $644,555. The estimated years of credited service at
normal retirement age (rounded to the nearest year) for the participants listed
above are: Mr. Greeniaus (at age 60) 28 years; and Mr. Powell (at age 64) 22
years.
RJRN has purchased annuity contracts to provide retirement benefits for
certain participants in the SERP (including Messrs. Greeniaus and Powell). The
annuity contracts cover the participants' after-tax vested benefits, reduced by
their vested benefit under the RJRN qualified pension plan. No annuity contracts
were purchased in 1996 for any of the named executive officers. The benefits to
be provided by the purchase of annuity contracts will not be available to the
individuals until they retire.
Messrs. Postl's and Conant's retirement benefits are determined under a
noncontributory qualified defined benefit plan maintained by RJRN that has no
Social Security offset. The following table shows the estimated annual benefits
payable under the plan. The retirement benefits shown are based on retirement at
age 65 and the payment of a single-life annuity to the participant.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
YEARS OF SERVICE
---------------------------------------------
<S> <C> <C> <C> <C>
AVERAGE FINAL
COMPENSATION 10 15 20 25
- - ------------- ---------- ---------- ---------- ---------
5$00,000..... $ 85,945 $ 118,268 $ 147,872 172,189
6$00,000..... $ 103,344 $ 142,191 $ 177,777 206,987
7$00,000..... $ 120,743 $ 166,115 $ 207,681 241,785
8$00,000..... $ 138,141 $ 190,038 $ 237,585 276,583
9$00,000..... $ 155,540 $ 213,962 $ 267,489 311,380
1$,000,000... $ 172,939 $ 237,885 $ 297,394 346,178
</TABLE>
For plan purposes, compensation includes base salary, nondeferred bonus (in
the year earned) and certain other payments. "Average Final Compensation" under
the plan is determined by considering the 36
15
<PAGE>
consecutive months that yield the highest average annual compensation during the
participant's last 60 months of service. If the participant has fewer than 36
months of service, all months are considered. Average Final Compensation as of
December 31, 1996 was: for Mr. Postl $706,998 and for Mr. Conant $507,500. The
estimated years of credited service (rounded to the nearest year) at age 65
were: for Mr. Postl 17 years and for Mr. Conant 24 years. Mr. Lieppe had no
vested retirement benefit upon termination of his employment.
AGREEMENTS WITH CERTAIN OFFICERS
Effective December 14, 1995, RJRN Holdings, RJRN, the Company and Nabisco
entered into an employment agreement with Mr. Greeniaus amending and restating
prior agreements and pursuant to which Mr. Greeniaus agreed to serve as Vice
Chairman of RJRN Holdings and RJRN and to continue to serve as President and
Chief Executive Officer of the Company and Nabisco. In June, 1996, Mr. Greeniaus
became Chairman of the Board of Directors of the Company and ceased serving as
Vice Chairman of RJRN Holdings and RJRN. Pursuant to the employment agreement,
Mr. Greeniaus is entitled to receive an annual base salary of at least $850,000
per year and is eligible for an annual target bonus opportunity of at least 70%
of his base salary for the relevant year. Mr. Greeniaus has vested retirement
benefits under the SERP and certain other plans which are funded in respect of
his service through 1994. Upon Mr. Greeniaus' retirement or the termination of
his employment other than for "cause" or without "good reason", the Company will
provide additional funding for accruals under the SERP through the earlier of
such dates, subject to certain tax reimbursements. Under the employment
agreement, the Company also provides Mr. Greeniaus with life insurance, on a
tax-reimbursed basis, with a face amount of $3 million and credits Mr. Greeniaus
with a minimum age of 55 for purposes of retiree medical coverage.
The employment agreement provides that if Mr. Greeniaus' employment is
terminated without "cause" or if Mr. Greeniaus terminates his employment for
"good reason", then Mr. Greeniaus will receive compensation and benefit
continuation for three years, during which time he is obligated to provide
certain consulting services to the Company. Compensation continuance will be
based on the total of Mr. Greeniaus' then current base salary and the most
recent annual bonus paid to, or accrued for him (or the current target level, if
higher), less certain amounts otherwise payable to him. "Cause" includes
criminal dishonesty, misconduct materially damaging to the Company, Nabisco,
RJRN Holdings or RJRN, or deliberate and continuing willful refusal by Mr.
Greeniaus to perform his duties. "Good reason" includes a reduction in Mr.
Greeniaus' responsibilities, a reduction in his salary and annual bonus
opportunity, relocation, or divestiture of the Company by RJRN Holdings
following which Mr. Greeniaus no longer serves as the Company's Chief Executive
Officer and is not offered comparable employment with the Company.
Upon a change of control of the Company (as defined in the employment
agreement), all stock options granted to Mr. Greeniaus under the Nabisco LTIP
and the RJRN LTIP will become fully vested and a pro-rata portion of performance
units granted to him thereunder will vest. In the event that a "parachute"
excise tax would be imposed on any payments to Mr. Greeniaus, he will be
entitled to tax reimbursement payments.
Nabisco has entered into employment agreements with Messrs. Postl, Powell,
Conant and Lieppe which, in each case, provides that if the executive's
employment is involuntarily terminated other than for "cause" or if the
executive terminates his employment for "good reason", he will receive two years
base salary plus bonus, payable over three years, and benefit continuation for
three years. "Cause" includes criminal dishonesty, deliberate misconduct, and
deliberate and continual refusal to perform employment duties or to act in
accordance with instructions of the Board of Directors. "Good reason" includes a
substantial reduction in the executive's responsibilities, a more than 20%
reduction in the executive's salary and annual bonus opportunity or relocation.
Mr. Powell's employment agreement provides that the period of compensation and
benefit continuance may not extend beyond his normal retirement age under the
SERP. Compensation continuance is based on the highest annual rate of salary in
effect during the twelve
16
<PAGE>
months immediately prior to termination and the current target incentive award
opportunity for the calendar year in which employment terminates or, for Mr.
Powell, the amount of such incentive award for the prior year, if greater.
DIRECTOR'S COMPENSATION
Directors who are not employees of the Company or RJRN Holdings or any of
their subsidiaries ("Outside Directors") receive an annual retainer fee of
$50,000 per year, plus meeting attendance fees of $1,250 per meeting. In
addition, directors who are committee members receive committee attendance fees
of $1,250 per committee meeting and committee chairmen receive an additional
$5,000 per year. The Company provides Outside Directors with life insurance
having a death benefit of $100,000, participation in charitable giving programs
(pursuant to which directors with at least three years of service may direct
that up to $1 million be contributed to eligible charitable institutions
following the director's death) and supplemental insurance programs. Each
Outside Director receives an initial stock option grant pursuant to a stock
option plan to purchase 6,000 shares of Class A Common Stock. The options have
an exercise price equal to the fair market value of Class A Common Stock on the
date of grant. They cannot be exercised for at least six months following the
date of grant but, thereafter, are exercisable for ten years from the date of
grant. In addition, each Outside Director receives an annual grant of stock
options pursuant to a formula set forth in the applicable plan, which is made on
the date of the Outside Director's election or re-election to the Board of
Directors. In 1996, each Outside Director received an annual stock option to
purchase 1,500 shares of Class A Common Stock as of the date of the 1996 annual
meeting, at an exercise price of $30.625 (the market price of Class A Common
Stock on the date of grant). The annually granted stock options have a ten-year
term, vest over three years (33% on the first and second anniversaries of the
date of grant and 34% on the third anniversary) and may contain additional
limitations on exercisability. Including the stock options referred to above,
Gen. Chain and Messrs. Cain, Jenkins and Medlin each have options to purchase
9,100 shares of Class A Common Stock, and Ms. Koplovitz has options to purchase
9,200 shares of Class A Common Stock. Except as described above on page 13 with
respect to Mr. Goldstone, no additional compensation is paid to directors who
are employees of the Company or RJRN Holdings or its subsidiaries in their
capacity as directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The
Compensation Committee currently consists of Gen. Chain, Mr. Cain and Ms.
Koplovitz. There are no Compensation Committee interlocks or insider
participation.
17
<PAGE>
PERFORMANCE GRAPH
NABISCO HOLDINGS CORP.
CUMULATIVE TOTAL RETURNS--NABISCO STOCK, S&P 500, S&P FOOD INDEX
1/20/95=100
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P 500 INDEX A COMMON STOCK S&P FOOD INDEX
<S> <C> <C> <C>
1/20/95 100 100 100
Dec-95 136 135 129
Dec-96 167 164 153
</TABLE>
- - ------------------------
* Total returns assume $100 invested on January 20, 1995 in Class A Common
Stock, the S&P 500 Index and the S&P Food Index with reinvestment of
dividends.
COMPENSATION COMMITTEE REPORT
This report has been submitted to the stockholders by the Compensation
Committee (the "Committee") of the Board of Directors and reflects the executive
compensation policies and practices of the Company and its subsidiaries during
1996. The Committee is principally responsible for executive compensation and
administers the Company's executive compensation programs and plans. The
Committee reports regularly to the Board of Directors, and the Board is
periodically asked to ratify certain Committee actions. During 1996, the
Committee consisted of Directors who were not employees of the Company or any of
its subsidiaries or RJRN Holdings or any of its subsidiaries, and who,
therefore, were not eligible to participate in any of the Company's executive
compensation programs or plans.
EXECUTIVE COMPENSATION PRINCIPLES AND POLICIES
In determining the amounts, composition, and terms and conditions of
compensation for executive officers of the Company, the Committee is guided by
two principles: (1) compensation opportunities must enable the Company to
attract and retain individuals with the high caliber of talent and skills which
are critical to the Company's success and (2) a substantial portion of each
executive officer's compensation must be tied to quantifiable measures of the
Company's financial results from operations and stock price performance. These
principles are reflected in the actions discussed below relating to salaries,
annual incentives and long-term incentives.
Changes made to the Internal Revenue Code in 1993 limit the ability of
publicly-traded companies to secure a tax deduction for certain compensation
paid to certain individuals named in the summary compensation table. The
Committee has taken actions to limit the impact of this change in tax law in the
event that compensation paid to a named executive officer might otherwise not be
deductible. The Committee will continue to seek ways to limit the impact of this
change; however, the Committee feels that
18
<PAGE>
the tax deduction limitation should not be permitted to compromise the Company's
ability to attract and retain the executive talent required to compete
successfully on a global basis. Accordingly, achieving the desired flexibility
in the design and delivery of compensation may periodically result in some
compensation that is not deductible for federal income tax purposes. In 1996,
only Mr. Greeniaus' compensation was affected by this tax law and the Committee
took action to limit the impact of this change.
MAJOR COMPENSATION COMPONENTS
The compensation program for executive officers is composed of annual
compensation, long-term compensation and benefits. In determining appropriate
compensation levels, the Committee relies on independent outside consultants who
provide surveys and other data regarding the compensation practices of other
companies that are representative of the size and type of company with which the
Company competes for executive talent. Accordingly, this is a broader and more
diverse group of companies than those used for the peer company index in the
Performance Graph mandated by the SEC which appears on page 18. The base salary
and targeted incentive compensation levels of the comparator companies (without
specific regard for the impact of performance on compensation actually earned)
are used by the Committee in determining base salary and targeted incentive
compensation levels of executive officers of the Company, as described below.
ANNUAL COMPENSATION
The annual compensation for each of the named executive officers is composed
of salary and an annual incentive opportunity. In general, salaries paid to
executive officers reflect the median of competitive practices used by the
Committee for comparison purposes. A senior executive receives an increase in
salary only when the Committee determines that either a change in an
individual's performance or responsibilities or market conditions warrants such
an action.
Annual compensation levels (salary plus target annual incentive award
opportunity) are set to reflect the 75th percentile of the compensation
practices of comparator companies. For the named executive officers, 1996
performance objectives were established early in 1996, based on the financial
performance of the businesses for which the individual was responsible or
performed services as determined using performance grids. Performance grids
project an executive's annual bonus opportunity upon attainment of various
financial performance targets. The measure of financial performance for the
Company's Corporate employees was cash net income. The measure for the operating
companies, with the exception of Nabisco International, was operating company
contribution and average inventory levels. Nabisco International's performance
measure was operating company contribution and free cash flow. The bonus amounts
shown in the summary compensation table for the named executive officers other
than Mr. Greeniaus were based principally on financial performance as determined
using the performance grids and based in part on individual performance. The
bonus amount shown for Mr. Greeniaus was based solely on the Company's financial
performance as determined using the performance grids.
LONG-TERM COMPENSATION
The Committee relies on various forms of stock-based grants and multi-year
incentive opportunities to motivate executives to maintain a longer term
perspective. As indicated in the table on page 14, the Committee granted stock
options to all the named executive officers other than Mr. Powell in 1996. In
determining the size of the stock option grants, the Committee targets the 75th
percentile of competitive stock option opportunities at comparator companies. In
making stock option grants, the Committee does not take into account whether an
executive has exercised or continues to hold previously granted stock options.
19
<PAGE>
On November 15, 1996, the Committee approved a one-time grant of Restricted
Stock Equivalents for certain key executives to support their retention. The
terms of this grant are described in the Summary Compensation Table on page 11.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Mr. Greeniaus' 1996 base salary and target annual bonus opportunity were
similar to his 1995 base salary and target annual bonus opportunity. The
Committee believes that this level of compensation is appropriate to ensure that
the Company be able to retain the services of an individual with the skill and
experience of Mr. Greeniaus.
As noted above, Mr. Greeniaus' annual bonus is based solely on the Company's
financial performance, determined pursuant to a performance schedule adopted by
the Committee in early 1996 using the Company's annual cash net income as the
performance measure. This approach should ensure that the Company may deduct,
for federal income tax purposes, all of Mr. Greeniaus' 1996 salary and annual
bonus award. Mr. Greeniaus' annual bonus payment for 1996 was greater than his
target award because the Company's 1996 performance was above the result at
which he would have earned his target award.
In 1996, Mr. Greeniaus was granted a stock option to purchase 180,000 shares
of Class A Common Stock with an exercise price of $34.00 (the market price of
Class A Common Stock on the date of grant). The size of Mr. Greeniaus' 1996
stock option grant was determined in accordance with the Committee's practice
(referred to above) of targeting the 75th percentile of competitive stock option
grants. The Committee also permitted Mr. Greeniaus to purchase 40,000 shares of
Class A Common Stock under the Nabisco LTIP during 1996 at the full market price
of Class A Common Stock on the date of purchase using funds borrowed from the
Company.
SUMMARY
The Committee believes that the Company's executive compensation program
must continually provide compensation potential of such significance that
individuals of exceptional talent and skills are encouraged to join and remain
with the Company and perform in an exceptional manner. By ensuring that such
persons are managing the Company's operations, the long-term interests of
stockholders are best served. This focus on stockholder interests is reinforced
by the heavy stock-based component in the executive compensation program. The
actions taken by the Committee for 1996 were consistent with this focus and the
principles outlined above.
John T. Chain, Jr. (Chairman)
Herman Cain
Kay Koplovitz
RELATIONSHIP AND TRANSACTIONS WITH
RJR NABISCO HOLDINGS CORP. AND RJR NABISCO, INC.
RJRN, a wholly-owned subsidiary of RJRN Holdings, owns 100% of the
outstanding Class B Common Stock, which represents approximately 80.5% of the
economic interest in the Company and 97.6% of the combined voting power of all
of the outstanding Common Stock. Beneficial ownership of at least 80% of the
total voting power and value of the outstanding Common Stock is required in
order for RJRN Holdings to continue to include the Company in its consolidated
group for federal income tax purposes, and ownership of at least 80% of the
total voting power and 80% of each class of nonvoting capital stock is required
in order for RJRN Holdings to be able to effect a tax-free spin-off of the
Company.
RJRN Holdings has advised the Company that its current intent is to continue
to hold all of the Class B Common Stock beneficially owned by RJRN Holdings, and
RJRN Holdings' Board of Directors has adopted policies setting forth RJRN
Holdings' intention not to make such a distribution prior to
20
<PAGE>
December 31, 1998 if such distribution would cause the ratings of the senior
indebtedness of RJRN to be reduced from investment grade to non-investment grade
or if, after giving effect to such distribution, any publicly held senior debt
of the Company would not be rated investment grade. However, the Board is aware
that the Board of Directors of RJRN Holdings is committed to effecting a
spin-off of the Company at the appropriate time. RJRN Holdings has no agreement
with the Company not to sell or distribute such shares, and there can be no
assurance concerning the period of time during which RJRN Holdings will maintain
the present levels of its beneficial ownership of Common Stock.
RJRN Holdings has received notices from Carl C. Icahn, Bennett S. LeBow and
their respective affiliates of their intent to launch separate proxy
solicitations to elect a new slate of directors of RJRN Holdings. The notices
from the two groups state that their respective nominees are committed to an
immediate spin-off of the Company. On February 27, 1997, Mr. Icahn filed an
amendment (the "Amendment") to Schedule 13D on behalf of himself and several
affiliated entities (together, the "Icahn Group") and Mr. Thomas Rattigan. The
Amendment stated that it would be "exceedingly difficult" to prevail in a proxy
contest with the management of RJRN Holdings. The Amendment also stated that the
Icahn Group had sold all of its shares of RJRN Common Stock. RJRN Holdings
opposes both the Icahn and LeBow solicitations.
The Company's ongoing relationship with RJRN Holdings and RJRN is governed
by agreements entered into in connection with the initial public offering of
Class A Common Stock completed on January 26, 1995, including a corporate
services agreement, a corporate agreement and a tax-sharing agreement, all of
which are described below.
SERVICES AGREEMENT. The Company and RJRN entered into an intercompany
services and operating agreement (the "Services Agreement") with respect to
various services provided by RJRN to the Company and by the Company to RJRN,
including certain tax services, and the provision of certain facilities. The
Services Agreement provides that such services are to be provided in exchange
for service fees that do not exceed the fees that would be paid if such services
were provided by an independent third party. Under the Services Agreement, the
fees for services provided by the Company to RJRN during 1996 totaled less than
$1 million, exclusive of reimbursements at cost for payments made to third
parties. The Company made no payments to RJRN for services performed in 1996
under the Services Agreement, other than reimbursements at cost for third-party
fees and expenses.
In addition, during 1996 RJRN continued coverage of the Company under RJRN's
umbrella liability, property, casualty and fiduciary insurance policies. RJRN
bills the Company for the portion of RJRN's premium cost with respect to such
insurance that is attributable to coverage of the Company. The Company paid RJRN
approximately $1 million for its allocable portion of the premium cost and made
certain premium payments directly to the insurers. Either RJRN or the Company
may terminate the Company's coverage under the RJRN policies at any time on 90
days' written notice.
TAX SHARING AGREEMENT. The Company is included in RJRN Holdings'
consolidated tax group and the Company's tax liability is included in the
consolidated federal income tax liability of RJRN Holdings and its subsidiaries.
The Company and RJRN Holdings entered into a tax-sharing agreement (the "Tax
Agreement") pursuant to which the Company and RJRN Holdings make payments
between them such that, with respect to any period, the amount of taxes to be
paid by the Company is determined as though the Company filed separate federal,
foreign, state and local income tax returns (including, except as provided
below, any amounts determined to be due as a result of a redetermination of the
tax liability of RJRN Holdings arising from an audit or otherwise) as the common
parent of an affiliated group of corporations filing a consolidated return
rather than a consolidated subsidiary of RJRN Holdings. The Company is
reimbursed, however, for tax attributes, such as foreign tax credits and losses,
if and when they are used on a consolidated basis. In general, any adjustments
to the Company's tax liabilities for 1989 or earlier are the obligation of RJRN
Holdings and any adjustments to the Company's tax liabilities for years
21
<PAGE>
after 1989 are the obligation of the Company. RJRN Holdings generally pays to
the Company any tax refund actually received by RJRN Holdings and attributable
to the Company for years after 1989.
In determining the amount of tax-sharing payments, RJRN Holdings prepares a
pro forma consolidated return for the Company that reflects the same positions
and elections used by RJRN Holdings in preparing the returns for RJRN Holdings'
consolidated group. RJRN Holdings continues to have all the rights of a common
parent of a consolidated group, is the sole and exclusive agent for the Company
in all matters relating to the income tax liability of the Company, has
exclusive responsibility for the preparation and filing of consolidated federal
and consolidated or combined state income tax returns (or amended returns), and
has the power, in its sole discretion, to contest or compromise any asserted tax
adjustment or deficiency and to file, litigate or compromise any claim for
refund on behalf of the Company.
Each member of a consolidated group for federal income tax purposes is
jointly and severally liable for the federal income tax liability of each other
member of its consolidated group. For benefit plan purposes, the Company and its
subsidiaries are part of the RJRN Holdings controlled group, which includes RJRN
Holdings and its other subsidiaries. Under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and federal income tax law, each
member of the controlled group is jointly and severally liable for the funding
and termination liabilities of RJRN Holdings' and its subsidiaries' tax
qualified defined benefit retirement plans as well as certain plan taxes.
Consequently, the Company and its subsidiaries could be liable under such
provisions in the event any such liability is incurred, and not discharged, by
any other member of the RJRN Holdings consolidated or controlled group.
Accordingly, each of the Company and RJRN Holdings has agreed to indemnify the
other for their respective obligations under the Tax Agreement.
CORPORATE AGREEMENT. The Company and RJRN are parties to a corporate
agreement (the "Corporate Agreement") under which the Company has granted to
RJRN (i) a continuing option, transferable to RJRN Holdings or any of its
subsidiaries, to purchase, under certain circumstances, additional shares of
Class B Common Stock or shares of nonvoting capital stock of the Company (the
"Stock Option") and (ii) certain registration rights.
In 1996, the Company paid two quarterly dividends of $.1375 and two
quarterly dividends of $.1550 on each outstanding share of Common Stock. RJRN
received a total of approximately $125 million from these dividends, the amount
representing its PRO RATA share.
CERTAIN LEGAL PROCEEDINGS
In the fourth quarter of 1995, purported stockholders of RJRN Holdings, for
themselves and derivatively for RJRN Holdings and the Company, filed three
putative class and derivative actions in the Court of Chancery of the State of
Delaware in and for New Castle County against members of RJRN Holdings' Board of
Directors, some of whose members serve on the Board. The actions were
consolidated in December 1995. The plaintiffs allege, among other things, that
the defendants breached their fiduciary duty and wasted corporate assets by
undertaking the debt exchange offer and consent solicitation completed by RJRN
and Nabisco in June 1995 and by amending, in August 1995, RJRN Holdings By-Law
provisions concerning the calling of stockholder meetings and procedures for
stockholder action by written consent. The plaintiffs allege that management
took these and other actions to obstruct a spin-off of the Company wrongfully,
to enrich the defendants at the expense of RJRN Holdings, its stockholders and
the Company and to entrench the defendants in the management and control of RJRN
Holdings. By agreement of the parties, the defendants' time to respond to the
complaint in these consolidated actions has been extended, most recently, to May
9, 1997. RJRN Holdings believes that these allegations are without merit and, if
necessary, will defend these actions vigorously.
22
<PAGE>
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the next Annual
Meeting must be received by the Secretary of the Company no later than November
11, 1997 at the Company's principal executive offices: Nabisco Holdings Corp., 7
Campus Drive, Parsippany, New Jersey 07054.
OTHER INFORMATION
In addition to soliciting proxies by mail, directors, officers and regular
employees of the Company may solicit proxies in person or by telephone or
telecopy. These individuals will receive no additional compensation for these
solicitation services. The Company will reimburse brokers, fiduciaries,
custodians and other nominees for out-of-pocket expenses incurred in forwarding
this proxy statement and related materials to, and obtaining instructions
relating to such materials from, beneficial owners of the Company's capital
stock. The Company will bear all of the other costs of these solicitations.
The Board has no knowledge of any other matters to be presented at the
Annual Meeting other than those described herein. If any other matters should
properly come before the Annual Meeting, it is the intention of the persons
designated in the proxy to vote thereon according to their best judgment.
STOCKHOLDERS ARE URGED TO FORWARD THEIR PROXIES WITHOUT DELAY. A PROMPT
RESPONSE WILL BE GREATLY APPRECIATED.
NABISCO HOLDINGS CORP.
Parsippany, New Jersey
March 11, 1997
If you have any questions or need assistance in voting your shares, please
contact First Chicago Trust Company of New York at its toll free number:
1-800-519-3111.
23
<PAGE>
EXHIBIT A
NABISCO HOLDINGS CORP. 1994
LONG TERM INCENTIVE PLAN
(AS AMENDED AND RESTATED
EFFECTIVE APRIL 17, 1997)
1. PURPOSE OF PLAN
The Nabisco Holdings Corp. 1994 Long Term Incentive Plan (the "Plan"), as
amended and restated effective April 17, 1997, subject to the approval of
Nabisco's shareholders (the "Plan"), is designed:
(a) to promote the long term financial interests and growth of Nabisco
Holdings Corp. and subsidiaries (the "Corporation") by attracting and
retaining management personnel with the training, experience and ability to
enable them to make a substantial contribution to the success of the
Corporation's business;
(b) to motivate management personnel by means of growth-related
incentives to achieve long range goals; and
(c) to further the identity of interests of participants with those of
the stockholders of the Corporation through opportunities for increased
stock, or stock-based, ownership in the Corporation.
2. DEFINITIONS
As used in the Plan, the following words shall have the following meanings:
(a) "Base Value" means not less than the Fair Market Value on the date a
Stock Appreciation Right is granted, or, in the case of a Stock Appreciation
Right granted retroactively in tandem with (or in replacement of) an
outstanding stock option, not less than the exercise price of such option;
(b) "Board of Directors" means the Board of Directors of Nabisco;
(c) "Code" means the Internal Revenue Code of 1986, as amended;
(d) "Committee" means the Compensation Committee of the Board of
Directors;
(e) "Common Stock" or "Share" means Class A Common Stock of Nabisco
which may be authorized but unissued, or issued and reacquired;
(f) "Dividend Equivalent Rights" shall have the meaning set forth in
Section 5(f);
(g) "Effective Date" shall have the meaning set forth in Section 12;
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended;
(i) "Fair Market Value" means the value of a Share as reported for stock
exchange transactions and/or determined in accordance with any applicable
resolutions or regulations of the Committee in effect at the relevant time;
(j) "Grant" means an award made to a Participant pursuant to the Plan
and described in Paragraph 5, including, without limitation, an award of
Incentive Stock Options, Stock Options, Stock Appreciation Rights, Dividend
Equivalent Rights, Restricted Stock, Purchase Stock, Performance Units,
Performance Shares or Other Stock-Based Grants, or any combination of the
foregoing;
(k) "Grant Agreement" means an agreement between Nabisco and a
Participant that sets forth the terms, conditions and limitations applicable
to a Grant;
A-1
<PAGE>
(l) "Incentive Stock Options" shall have the meaning set for in Section
5(a);
(m) "Nabisco" means Nabisco Holdings Corp.;
(n) "Other Stock Based Grants" shall have the meaning set for in Section
5(i);
(o) "Other Stock Options" shall have meaning set forth in Section 5(b);
(p) "Participant" means an employee, or other person having a unique
relationship with Nabisco or one of its Subsidiaries, to whom Grants may be
made in accordance with Paragraph 4, or to whom one or more Grants have been
made and such Grants have not all been forfeited or terminated under the
Plan; provided, however, a non-employee director of RJRN, Nabisco or one of
its Subsidiaries may not be a Participant;
(q) "Performance Units" shall have the meaning set forth in Section
5(g);
(r) "Performance Shares" shall have the meaning set forth in Section
5(h);
(s) "Purchase Stock" shall have the meaning set forth in Section 5(e);
(t) "Restricted Stock" shall have the meaning set forth in Section 5(d);
(u) "RJRN" means RJR Nabisco Holdings Corp.;
(v) "Stock Appreciation Rights" shall have the meaning set forth in
Section 5(c); and
(w) "Subsidiary" means any corporation other than Nabisco in an unbroken
chain of corporations beginning with Nabisco if each of the corporations
other than the last corporation in the unbroken chain owns 50% or more of
the voting stock in one of the other corporations in such chain.
3. ADMINISTRATION OF PLAN
(a) The Plan shall be administered by the Committee or, in lieu of the
Committee, the Board of Directors. The Committee may adopt its own rules of
procedure, and the action of a majority of the Committee, taken at a meeting or
taken without a meeting by a writing signed by such majority, shall constitute
action by the Committee. The Committee shall have the power and authority to
administer, construe and interpret the Plan, to make rules for carrying it out
and to make changes in such rules. Any such interpretations, rules, and
administration shall be consistent with the basic purposes of the Plan.
(b) The Committee may delegate to the Chief Executive Officer and to other
senior officers of the Corporation its duties under the Plan, subject to such
conditions and limitations as the Committee shall prescribe, except that only
the Committee may designate and make Grants to Participants who are subject to
Section 16 of the Exchange Act.
(c) The Committee may employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, Nabisco, and the officers
and directors of Nabisco shall be entitled to rely upon the advice, opinions or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon all Participants, Nabisco and all other interested persons. No member of
the Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Grants, and
all members of the Committee shall be fully protected by Nabisco with respect to
any such action, determination or interpretation.
4. ELIGIBILITY
The Committee may from time to time make Grants under the Plan to such
employees, or other persons having a unique relationship with Nabisco or any of
its Subsidiaries, and in such form and having such terms, conditions and
limitations as the Committee may determine. No Grants may be made under
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<PAGE>
this Plan to non-employee directors of RJRN, Nabisco or any of its Subsidiaries.
Grants may be granted singly, in combination or in tandem. The terms, conditions
and limitations of each Grant under the Plan shall be set forth in a Grant
Agreement, in a form approved by the Committee, consistent, however, with the
terms of the Plan; provided, however, such Grant Agreement shall contain
provisions dealing with the treatment of Grants in the event of the termination,
death or disability of a Participant, and may also include provisions concerning
the treatment of Grants in the event of a change of control of Nabisco.
5. GRANTS
From time to time, the Committee will determine the forms and amounts of
Grants for Participants. Such Grants may take the following forms in the
Committee's sole discretion:
(a) INCENTIVE STOCK OPTIONS--These are stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended ("Code"), to
purchase Common Stock. In addition to other restrictions contained in the Plan,
an option granted under this Section 5(a), (i) may not be exercised more than 10
years after the date it is granted, (ii) may not have an option price less than
the Fair Market Value of Common Stock on the date the option is granted, (iii)
must otherwise comply with Code Section 422, and (iv) must be designated as an
"Incentive Stock Option" by the Committee. The maximum aggregate Fair Market
Value of Common Stock (determined at the time of each Grant) with respect to
which any Participant may first exercise Incentive Stock Options under this Plan
and any Incentive Stock Options granted to the Participant for such year under
any plans of RJRN, Nabisco or any Subsidiary in any calendar year is $100,000.
Payment of the option price shall be made in cash or in shares of Common Stock,
or a combination thereof, in accordance with the terms of the Plan, the Grant
Agreement, and of any applicable guidelines of the Committee in effect at the
time. No Participant may receive Grants of Incentive Stock Options in any
calendar year to purchase more than one million shares.
(b) OTHER STOCK OPTIONS--These are options to purchase Common Stock which
are not designated by the Committee as "Incentive Stock Options". At the time of
the Grant the Committee shall determine, and shall have contained in the Grant
Agreement or other Plan rules, the option exercise period, the option price, and
such other conditions or restrictions on the grant or exercise of the option as
the Committee deems appropriate, which may include the requirement that the
grant of options is predicated on the acquisition of Purchase Stock under
Section 5(e) by the Optionee. In addition to other restrictions contained in the
Plan, an option granted under this Section 5(b), (i) may not be exercised more
than 15 years after the date it is granted and (ii) may not have an option
exercise price less than 50% of the Fair Market Value of Common Stock on the
date the option is granted. Payment of the option price shall be made in cash or
in shares of Common Stock, or a combination thereof, in accordance with the
terms of the Plan and of any applicable guidelines of the Committee in effect at
the time. Payment of the option price may also be made by tender of an amount
equal to the full exercise price which has been borrowed from Nabisco or one of
its Subsidiaries if the Participant also authorizes the concurrent sale of the
exercised Common Stock by a broker (through an arrangement established by
Nabisco, or one of its Subsidiaries, for Participants) and repays the borrowing,
all in accordance with any applicable guidelines of the Committee. No
participant may receive Grants of options in any calendar year to purchase more
than one million Shares.
(c) STOCK APPRECIATION RIGHTS--These are rights that on exercise entitle the
holder to receive the excess of (i) the Fair Market Value of a share of Common
Stock on the date of exercise over (ii) the Base Value multiplied by (iii) the
number of rights exercised in cash, stock or a combination thereof as determined
by the Committee. Stock Appreciation Rights granted under the Plan may, but need
not be, granted in conjunction with an option under Paragraphs 5(a) or 5(b). The
Committee, in the Grant Agreement or by other Plan rules, may impose such
conditions or restrictions on the exercise of Stock Appreciation Rights as it
deems appropriate, and may terminate, amend, or suspend such Stock Appreciation
Rights at any time. No Stock Appreciation Right granted under this Plan may be
exercised more than 15 years after the date it is granted. To the extent that
any Stock Appreciation Right that shall have
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<PAGE>
become exercisable, but shall not have been exercised or canceled or, by reason
of any termination of employment, shall have become non-exercisable, it shall be
deemed to have been exercised automatically, without any notice of exercise, on
the last day of which it is exercisable, provided that any conditions or
limitations on its exercise are satisfied (other than (i) notice of exercise and
(ii) exercise or election to exercise during the period prescribed) and the
Stock Appreciation Right shall then have value. Such exercise shall be deemed to
specify that, the holder elects to receive cash and that such exercise of a
Stock Appreciation Right shall be effective as of the time of automatic
exercise. Stock Appreciation Rights will be granted for no consideration. No
Participant may receive Grants of more than one million Stock Appreciation
Rights in any calendar year.
(d) RESTRICTED STOCK--Restricted Stock is a Grant of Common Stock or stock
units equivalent to Common Stock subject to such conditions and restrictions as
the Committee shall determine. Any rights to dividends or dividend equivalents
accruing due to a grant of Restricted Stock shall also be determined by the
Committee. The number of shares of Restricted Stock and the restrictions or
conditions on such shares shall be as the Committee determines, in the Grant
Agreement or by other Plan rules, and the certificate for the Restricted Stock
shall bear evidence of the restrictions or conditions. No Participant may
receive Grants of more than 100,000 shares of Restricted Stock in any calendar
year.
(e) PURCHASE STOCK--Purchase Stock are shares of Common Stock offered to a
Participant at such price as determined by the Committee, the acquisition of
which may make him eligible to receive other grants under the Plan, including,
but not limited to, Stock Options; provided, however, that the price of such
Purchase Shares may not be less than 50% of the Fair Market Value of the Common
Stock on the date such shares of Purchase Stock are offered. No Participant may
receive Grants of more than one million shares of Purchase Stock in any calendar
year.
(f) DIVIDEND EQUIVALENT RIGHTS--These are rights to receive cash payments
from Nabisco at the same time and in the same amount as any cash dividends paid
on an equal number of shares of Common Stock to shareholders of record during
the period such rights are effective. The Committee, in the Grant Agreement or
by other Plan rules, may impose such restrictions and conditions on the Dividend
Equivalent Rights, including the date such rights will terminate, as it deems
appropriate, and may terminate, amend, or suspend such Dividend Equivalent
Rights at any time. No Participant may receive Grants of Dividend Equivalent
Rights on the equivalent of more than one million Shares in any calendar year.
(g) PERFORMANCE UNITS--These are rights to receive at a specified future
date, payment in cash or stock of an amount equal to all or a portion of the
value of a unit granted by the Committee. At the time of the Grant, in the Grant
Agreement or by other Plan rules, the Committee must determine the base value of
the unit, the performance factors applicable to the determination of the
ultimate payment value of the unit and the period over which Corporation
performance will be measured. The performance factors for any specific Grants
hereunder shall be determined in the discretion of the Committee, and may be
based on any of the following: price of Common Stock or the stock of any
affiliate, shareholder return; return on equity; return on investment; return on
capital; return on invested capital; economic profit; economic value added; net
income; cash net income; free cash flow; earnings per share; cash earnings per
share; operating company contribution or market share. These factors must
include a minimum performance standard for the Corporation below which no
payment will be made and may include a maximum performance level above which no
increased payment will be made. No Participant may receive Grants of Performance
Units in any calendar year with a maximum payment (if maximum performance level
is attained) in excess of $8 million. The term over which Corporation
performance will be measured shall not exceed ten years.
(h) PERFORMANCE SHARES--These are rights to receive at a specified future
date, payment in cash or Common Stock, as determined by the Committee, of an
amount equal to all or a portion of the Fair Market Value for all days that the
Common Stock is traded during the last forty-five (45) days of the specified
period of performance of a specified number of shares of Common Stock at the end
of a specified period based on Corporation performance during the period. At the
time of the Grant, the
A-4
<PAGE>
Committee, in the Grant Agreement or by Plan rules, will determine the factors
which will govern the portion of the rights so payable and the period over which
Corporation performance will be measured. The performance factors for any
specific Grants hereunder shall be determined in the discretion of the
Committee, and may be based on any of the following: return on equity; net
income; cash net income; free cash flow; earnings per share; cash earnings per
share; or operating company contribution. The factors will be based on
Corporation performance and must include a minimum performance standard for the
Corporation below which no payment will be made and a maximum performance level
above which no increased payment will be made. No Participant may receive Grants
of Performance Shares in any calendar year with a maximum payment (if the
maximum performance level is attained) of more than 300,000 Shares (or its cash
equivalent). The term over which Corporation performance will be measured shall
be not less than six months. Performance Shares will be granted for no
consideration.
(i) OTHER STOCK-BASED GRANTS--The Committee may make other Grants under the
Plan pursuant to which shares of Common Stock (which may, but need not, be
shares of Restricted Stock pursuant to Paragraph 5(d)), are or may in the future
be acquired, or Grants denominated in stock units, including ones valued using
measures other than market value. Other Stock-Based Grants may be granted with
or without consideration; provided, however, that the price of any such Grant
made for consideration that provides for the acquisition of shares of Common
Stock or other equity securities of the Corporation may not be less than 50% of
the Fair Market Value of the Common Stock or such other equity securities on the
date of grant of such Grant. Such Other Stock-Based Grants may be made alone, in
addition to or in tandem with any Grant of any type made under the Plan and must
be consistent with the purposes of the Plan. No Participant may receive Other
Stock-Based Grants of more than one million shares in any calendar year.
6. LIMITATIONS AND CONDITIONS
(a) The number of Shares available for Grants under this Plan shall be 28.3
million shares of the authorized Common Stock as of the effective date of the
Plan. The number of Shares subject to Grants under this Plan to any one
Participant during the term of this Plan shall not be more than 10 million
shares. No more than 1% of the authorized Common Stock as of the effective date
of the Plan may be granted as Incentive Stock Options as described in Paragraph
5(a). Shares related to Grants that are forfeited, terminated, canceled, expire
unexercised, settled in cash in lieu of stock or in such manner that all or some
of the Shares covered by a Grant are not issued to a Participant, shall
immediately become available for Grants; provided, however, that the number of
Shares available for Grants shall be limited to the extent necessary to satisfy
Section 16 of the Exchange Act. Subject to the overall limitation on the number
of shares of Common Stock that may be delivered under this Plan, the Committee
may use available shares of Common Stock as the form of payment for
compensation, grants or rights earned or due under any other compensation plans
or arrangements of Nabisco, including the plan of any entity acquired by
Nabisco.
(b) No Grants shall be made under the Plan beyond ten years after the
effective date of the Plan, but the terms of Grants made on or before the
expiration thereof may extend beyond such expiration. At the time a Grant is
made or amended or the terms or conditions of a Grant are changed, the Committee
may provide for limitations or conditions on such Grant.
(c) Nothing contained herein shall affect the right of the Corporation to
terminate any Participant's employment at any time or for any reason.
(d) Deferrals of Grant payouts may be provided for, at the sole discretion
of the Committee, in the Grant Agreements.
(e) Except as otherwise prescribed by the Committee, the amounts of the
Grants for any employee of a Subsidiary, along with interest, dividend, and
other expenses accrued on deferred Grants shall be charged to the Participant's
employer during the period for which the Grant is made. If the Participant is
employed by more than one Subsidiary or by both Nabisco and a Subsidiary during
the period for which the Grant is
A-5
<PAGE>
made, the Participant's Grant and related expenses will be allocated between the
companies employing the Participant in a manner prescribed by the Committee.
(f) No benefit under the Plan shall, prior to receipt thereof by the
Participant, be in any manner liable for or subject to the debts, contracts,
liabilities, engagements, or torts of the Participant.
(g) Except to the extent otherwise provided in any other retirement or
benefit plan, any grant under this Plan shall not be deemed compensation for
purposes of computing benefits or contributions under any retirement plan of
Nabisco or its Subsidiaries and shall not affect any benefits under any other
benefit plan of any kind or subsequently in effect under which the availability
or amount of benefits is related to level of compensation. This Plan is not a
"Retirement Plan" or "Welfare Plan" under the Employee Retirement Income
Security Act of 1974, as amended.
(h) Unless the Committee determines otherwise, no benefit or promise under
the Plan shall be secured by any specific assets of Nabisco or any of its
Subsidiaries, nor shall any assets of Nabisco or any of its Subsidiaries be
designated as attributable or allocated to the satisfaction of Nabisco's
obligations under the Plan.
(i) In the event of a Participant's death, the right to receive benefits or
exercise awards shall pass to the Participant's spouse, and if the Participant
does not have a spouse at the date of death, to the Participant's designated
beneficiary under the Company's SELECT Core Life Insurance Plan.
7. TRANSFERS AND LEAVES OF ABSENCE
For purposes of the Plan: (a) a transfer of a Participant's employment
without an intervening period of separation from Nabisco to a Subsidiary or vice
versa, or from one Subsidiary to another, shall not be deemed a termination of
employment, and (b) a Participant who is granted in writing a leave of absence
shall be deemed to have remained in the employ of the Corporation during such
leave of absence.
8. ADJUSTMENTS
(a) In the event of any stock split, spin-off, stock dividend, extraordinary
cash dividend, stock combination or reclassification, recapitalization, merger,
or similar event, the Committee may adjust appropriately the number of Shares
subject to the Plan and available for or covered by Grants and Share prices
related to outstanding Grants and make such other revisions to outstanding
Grants as it deems are equitably required.
(b) In the event of a Change of Control (as defined in paragraph 8 (c)
hereof), except as otherwise set forth in the terms of a Grant:
(i) Stock options granted pursuant to paragraphs 5 (a) or 5 (b) hereof
shall become fully vested and exercisable (subject to paragraph 5 (b)
(iii)); provided, however, that the Committee may elect to make a cash
payment to Participants in lieu of the delivery of shares upon exercise,
equal to the product of (x) and (y), where (x) is the excess of the fair
market value of Common Stock on the date of exercise over the exercise
price, and (y) is the number of Shares subject to the stock options being
exercised;
(ii) Stock Appreciation Rights granted pursuant to paragraph 5 (c)
hereof shall become fully vested and exercisable;
(iii) Performance Units granted pursuant to paragraph 5 (g) hereof whose
performance periods end after the date of the Change of Control shall become
vested as to a percentage of performance units granted equal to the number
of months (including partial months) in the performance period before the
date of the Change of Control, divided by the total number of months in the
performance period. The value of the performance units shall be equal to the
greater of the target value of the units or the value derived from the
actual performance as of the date of the Change of Control; and
A-6
<PAGE>
(iv) the Committee shall have authority to establish or revise the terms
of any other Grant as it, in its discretion, deems appropriate; provided,
however, that the Committee may not make revisions that are adverse to the
Participant without the Participant's consent unless such revision is
provided for or contemplated in the terms of the Grant.
(c) For purposes of the Plan, a "Change of Control" shall be deemed to occur
on the date upon which one of the following events occurs:
(i) Any individual, corporation, partnership, group, associate or other
entity or "person" as such term is defined in Section 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"), other than Nabisco,
RJRN or any of its subsidiaries, or any employee benefit plan(s) sponsored
by Nabisco, RJRN or any of its subsidiaries, is or becomes the "beneficial
owner" (as defined in Rule 13D-3 under the Exchange Act), directly or
indirectly, of 50% or more of the combined voting power of Nabisco's
outstanding securities ordinarily having the right to vote at elections of
directors;
(ii) Individuals who constitute the Board of Nabisco on April 13, 1995
(the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to
the date hereof whose election, or nomination for election by Nabisco's
shareholders, was approved by a vote of at least three-quarters of the
directors comprising that Incumbent Board (either by a specific vote or by
approval of the proxy statement of Nabisco in which such person is named a
nominee for director, without objection to such nominee) shall be, for
purposes of this paragraph 8(c)(ii) considered as though such person were a
member of the Incumbent Board; or
(iii) The approval by the shareholders of Nabisco of a plan or agreement
providing (I) for a merger or consolidation of Nabisco other than with a
wholly-owned subsidiary or with RJRN, Nabisco or any of its subsidiaries,
and other than a merger or consolidation that would result in the voting
securities of Nabisco outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined voting
power of the voting securities of Nabisco or such surviving entity
outstanding immediately after such merger or consolidation or (II) for a
sale, exchange or other disposition of all or substantially all of the
assets of Nabisco. If any of the events enumerated in this paragraph 8(c)
(iii) occur, the Board of Directors shall determine the effective date of
the Change of Control resulting therefrom for purposes of the Plan.
9. AMENDMENT AND TERMINATION
The Committee shall have the authority to make such amendments to any terms
and conditions applicable to outstanding Grants as are consistent with this Plan
provided that, except for adjustments under Paragraph 8 hereof, no such action
shall modify such Grant in a manner adverse to the Participant without the
Participant's consent except as such modification is provided for or
contemplated in the terms of the Grant.
The Board of Directors may amend, suspend or terminate the Plan.
10. FOREIGN OPTIONS AND RIGHTS
(a) The Committee may make Grants to employees who are subject to the tax
laws of nations other than the United States, which Grants may have terms and
conditions that differ from the terms thereof as provided elsewhere in the Plan
for the purpose of complying with the foreign tax laws. Grants of Options may
have terms and conditions that differ from Incentive Stock Options and Other
Stock Options for the purposes of complying with the foreign tax laws.
(b) The terms and conditions of Options granted under Paragraph 10(a) may
differ from the terms and conditions which the Plan would require to be imposed
upon Incentive Stock Options and Other Stock
A-7
<PAGE>
Options if the Committee determines that the Grants are desirable to promote the
purposes of the Plan for the employees identified in Paragraph 10(a); provided
that the Committee may not grant such Options or Stock Appreciation Rights that
do not comply with the limitations of Paragraph 6.
11. WITHHOLDING TAXES
The Corporation shall have the right to deduct from any payment or
settlement made under the Plan any federal, state or local income or other taxes
required by law to be withheld with respect to such payment.
12. EFFECTIVE DATE AND TERMINATION DATES
The Plan shall be effective on and as of April 17, 1997, subject to approval
by the stockholders of Nabisco and shall terminate ten years later, subject to
earlier termination by the Board of Directors pursuant to Paragraph 9. The terms
of Grants made on or before the expiration of the Plan shall extend beyond such
expiration. Grants made under the Plan prior to the Effective Date shall be
governed by the terms of the Plan as in effect on the date such Grant was made.
A-8
<PAGE>
PROXY [CLASS A COMMON STOCK]
NABISCO HOLDINGS CORP.
ANNUAL MEETING OF STOCKHOLDERS - APRIL 17, 1997
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints each of H. John Greeniaus
and James A. Kirkman III his true and lawful agent and proxy, with full power of
substitution, to represent the undersigned at the Annual Meeting of Stockholders
of Nabisco Holdings Corp. (the "Company") and at any adjournments or
postponements thereof, and to vote all the shares of stock of the Company which
the undersigned may be entitled to vote on all matters coming before the meeting
as set forth below.
Election of Directors. Nominees: H. Cain; J.T. Chain, Jr.; S.F. Goldstone; H.J.
Greeniaus;
D.B. Jenkins; K. Koplovitz; and J.G. Medlin, Jr.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3. PLEASE MARK THIS PROXY CARD, FILL IN THE DATE AND SIGN
ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE. NO POSTAGE
IS NECESSARY IF MAILED IN THE UNITED STATES.
Change of address:
(If you have written in the above space, please mark the corresponding box on
the reverse side of this card)
(SEE REVERSE SIDE)
<PAGE>
/X/ Please mark your votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
<TABLE>
<C> <S> <C> <C> <C>
1. Election of Directors (see reverse) For, except withheld from the FOR / / WITHHELD / /
following nominee(s):
-----------------------------------------------------------------------
2. Ratify the appointment of Deloitte & Touche LLP as Independent Auditors FOR / / AGAINST / / ABSTAIN / /
3. Approve the amendment and restatement of the Company's 1994 Long Term FOR / / AGAINST / / ABSTAIN / /
Incentive Plan
Change of address on Reverse Side / / Will attend Annual Meeting / /
Do not send Annual Report / /
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.
----------------------------------------
Signature(s)
----------------------------------------
Date Title
</TABLE>
<PAGE>
P R O X Y [CLASS B COMMON STOCK]
NABISCO HOLDINGS CORP.
ANNUAL MEETING OF STOCKHOLDERS - APRIL 17, 1997
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints each of H. John Greeniaus
and James A. Kirkman III its true and lawful agent and proxy, with full power of
substitution, to represent the undersigned at the 1997 Annual Meeting of
Stockholders of Nabisco Holdings Corp. (the "Company"), and at any adjournments
or postponements thereof, and to vote all the shares of Class B Common Stock of
the Company on all matters coming before the meeting as set forth below.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER AND IN THE DISCRETION OF THE PROXIES ON
ALL OTHER MATTERS.
<TABLE>
<S> <C> <C> <C>
1. Election of Directors
FOR WITHHELD
H. Cain
J.T. Chain, Jr.
H.J. Greeniaus
S.F. Goldstone
D.B. Jenkins
K. Koplovitz
J.G. Medlin,
Jr.
</TABLE>
<TABLE>
<S> <C> <C> <C>
2. Ratify the appointment of Deloitte & Touche LLP as Independent Auditors
FOR AGAINST ABSTAIN
3. Approve the amendment and restatement of the Company's 1994 Long Term Incentive Plan
FOR AGAINST ABSTAIN
</TABLE>
RJR NABISCO, INC.
By:_______________________________________
Name: Steven F. Goldstone
Title: Chairman and Chief Executive
Officer
Date:_____________________
<PAGE>
VANGUARD
- - --------------------------------------------------------------------------------
Vanguard Group
100 Vanguard Boulevard
Malvern, PA 19355
DE TENER ALGUNA DUDA RELATIVO A ESTOS DOCUMENTOS FAVOR DE COMUNICARSE CON EL
DEPARTAMENTO DE RECURSOS HUMANOS.
March 1997
To: Participants in the Nabisco/Life Savers Puerto Rico Capital Accumulation
Plan ("NLSCAP")
Participants in the Savings and Investment Plan for Employees of R. J.
Reynolds
Tobacco Company in Puerto Rico ("PRSIP")
As a participant in a Company sponsored employee benefit savings plan that
requires pass through voting, you are entitled to instruct Vanguard, in its
capacity as Custodian of the above named plans, how to vote shares of Common
Stock allocated to your account. Enclosed are the following:
1. Nabisco Holdings Corp. 1996 Annual Report.
2. Notice of Annual Meeting of Stockholders to be held on April 17, 1997
and the accompanying Proxy Statement.
3. This Proxy/Voting Instruction Card (SEE REVERSE SIDE FOR VOTING).
4. A postage-paid return envelope.
The number and type of shares you hold in your plan account as of the most
recent date available is shown on the reverse side of this card. These shares
will be voted as you direct if this card is completed by you and received by
First Chicago Trust Company of New York on or before April 14, 1997. First
Chicago Trust Company is responsible for tabulating the returns. Shares for
which no instructions are received shall be voted in the same proportion as the
shares for which instructions are received.
We appreciate your completing, dating and signing the reverse side of this
card and returning it promptly in the postage-paid return envelope.
Cordially yours,
Vanguard Group
Custodian
SEE REVERSE SIDE
Enclosures
<PAGE>
PROXY
NABISCO HOLDINGS CORP.
ANNUAL MEETING OF STOCKHOLDERS - APRIL 17, 1997
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having received the Notice of Annual Meeting and Proxy
Statement, hereby directs Vanguard Group, Custodian under the Nabisco/Life
Savers Puerto Rico Capital Accumulation Plan ("NLSCAP") and Custodian under the
Savings and Investment Plan for Employees of R. J. Reynolds Tobacco Company in
Puerto Rico ("PRSIP"), to vote in person or by proxy all shares of Common Stock
of Nabisco Holdings Corp. allocated to any accounts of the undersigned under
such Plans, and which the undersigned is entitled to instruct, in each case, on
all matters which may come before the 1997 Annual Meeting of Stockholders to be
held at Nabisco Tablespreads Company, 4300 West 62nd Street, Indianapolis,
Indiana, on Thursday, April 17, 1997, at 10:00 A.M., and at adjournments or
postponements thereof, and to vote all the shares of stock of the Company which
the undersigned may be entitled to instruct on all matters coming before said
meeting.
<TABLE>
<S> <C>
Election of Directors. Nominees: Change of address:
H. Cain; J.T. Chain, Jr.; H.J. Greeniaus; S.F.
Goldstone; D.B. Jenkins; K. Koplovitz; and J.G.
Medlin, Jr.
</TABLE>
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES (SEE
REVERSE SIDE), BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. YOU MUST SIGN AND RETURN THIS CARD
TO DIRECT VANGUARD HOW TO VOTE YOUR SHARES.
SEE REVERSE SIDE
<PAGE>
/X/ Please mark your votes as in this example.
THIS INSTRUCTION CARD WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS INSTRUCTION CARD WILL BE VOTED
FOR ELECTION OF DIRECTORS AND FOR PROPOSALS 2 AND 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
<TABLE>
<C> <S> <C> <C> <C>
1. Election of Directors. For, except vote withheld from the following FOR / / WITHHELD / /
nominee(s):
-----------------------------------------------------------------------
2. Ratify the appointment of Deloitte & Touche LLP as Independent FOR / / AGAINST / / ABSTAIN / /
Auditors.
3. Approve the amendment and restatement of the Company's 1994 Long Term FOR / / AGAINST / / ABSTAIN / /
Incentive Plan.
Will attend Annual Meeting / /
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.
----------------------------------------
Signature(s)
----------------------------------------
Date Title
</TABLE>
<PAGE>
WACHOVIA
- - --------------------------------------------------------------------------------
Employee Benefit Trust Services
381 North Main Street
Winston Salem, NC 37160-2088
March 1997
To: Participants in the RJR Nabisco Capital Investment Plan ("CIP")
Participants in the Nabisco Employee Savings Plan ("ERSP")
As a participant in a Company sponsored employee benefit savings plan that
requires pass through voting, you are entitled to instruct Wachovia Bank of
North Carolina, N.A., in its capacity as Trustee of the above named plans how to
vote shares of Common Stock allocated to your account. Enclosed are the
following:
1. Nabisco Holdings Corp. 1996 Annual Report.
2. Notice of Annual Meeting of Stockholders to be held on April 17, 1997
and the accompanying Proxy Statement.
3. This Proxy/Voting Instruction Card (SEE REVERSE SIDE FOR VOTING).
4. A postage-paid return envelope.
The number of shares you hold in your account as of the most recent date
available is shown on the reverse side of this card. These shares will be voted
as you direct if this card is completed by you and received by First Chicago
Trust Company of New York on or before April 14, 1997. First Chicago Trust
Company is responsible for tabulating the returns. Shares for which no
instructions are received shall be voted in the same proportion as the shares
for which instructions are received.
We appreciate your completing, dating and signing the reverse side of this
card and returning it promptly in the postage-paid return envelope.
Cordially yours,
Wachovia Bank of North Carolina, N.A.
Custodian
SEE REVERSE SIDE
Enclosures
<PAGE>
PROXY
NABISCO HOLDINGS CORP.
ANNUAL MEETING OF STOCKHOLDERS - APRIL 17, 1997
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned having received the Notice of Annual Meeting and Proxy
Statement, hereby directs Wachovia Bank of North Carolina, N.A., Trustee under
the RJR Nabisco Capital Investment Plan ("CIP"), and Trustee under the Nabisco
Employee Savings Plan ("ESP"), to vote in person or by proxy all shares of
Common Stock of Nabisco Holdings Corp. allocated to any accounts of the
undersigned under such Plans, and which the undersigned is entitled to instruct,
in each case, on all matters which may come before the 1997 Annual Meeting of
Stockholders to be held at Nabisco Tablespreads Company, 4300 West 62nd Street,
Indianapolis, Indiana, on Thursday, April 17, 1997, at 10:00 A.M., and at
adjournments or postponements thereof, and to vote all the shares of stock of
the Company which the undersigned may be entitled to instruct on all matters
coming before said meeting.
<TABLE>
<S> <C>
Election of Directors. Nominees: Change of address:
H. Cain; J.T. Chain, Jr.; H.J. Greeniaus; S.F.
Goldstone; D.B. Jenkins; K. Koplovitz; and J.G.
Medlin, Jr.
</TABLE>
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES (SEE
REVERSE SIDE), BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. YOU MUST SIGN AND RETURN THIS CARD
TO DIRECT WACHOVIA HOW TO VOTE YOUR SHARES.
SEE REVERSE SIDE
<PAGE>
/X/ Please mark your votes as in this example.
THIS INSTRUCTION CARD WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS INSTRUCTION CARD WILL BE VOTED
FOR ELECTION OF DIRECTORS AND FOR PROPOSALS 2 AND 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
<TABLE>
<C> <S> <C> <C> <C>
1. Election of Directors. For, except vote withheld from the following FOR / / WITHHELD / /
nominee(s):
-----------------------------------------------------------------------
2. Ratify the appointment of Deloitte & Touche as Independent Auditors. FOR / / AGAINST / / ABSTAIN / /
3. Approve amendment and restatement of the Company's 1994 Long Term FOR / / AGAINST / / ABSTAIN / /
Incentive Plan.
Will attend Annual Meeting / /
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.
----------------------------------------
----------------------------------------
Signature(s) Date
</TABLE>
