<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)
<TABLE>
<CAPTION>
Payment of Filing Fee (Check the appropriate box):
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
</TABLE>
<PAGE>
[LOGO]
NABISCO HOLDINGS CORP.
7 CAMPUS DRIVE
PARSIPPANY, NEW JERSEY
07054-0311
March 26, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of Nabisco Holdings Corp. The meeting will be held at 10:30 a.m. (local time) on
Tuesday, May 4, 1999 at the Hotel DuPont, 11th and Market Streets, Wilmington,
Delaware 19801.
Please note that attendance at the Annual Meeting will be limited to
stockholders (or their authorized representatives) as of March 19, 1999, 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,
[LOGO]
STEVEN F. GOLDSTONE
Chairman
IMPORTANT: YOUR PROXY CARD IS ENCLOSED IN THE
ADDRESS WINDOW OF THE ENVELOPE CONTAINING THIS MATERIAL
<PAGE>
[LOGO]
NABISCO HOLDINGS CORP.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 1999
To the Stockholders:
The Annual Meeting of Stockholders of Nabisco Holdings Corp., a Delaware
corporation (the "Company"), will be held at the Hotel DuPont, 11th and Market
Streets, Wilmington, Delaware 19801 at 10:30 a.m. (local time) on Tuesday, May
4, 1999 for the following purposes:
1. To elect six Directors to serve until the 2000 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 1999 fiscal year; and
3. 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 19, 1999 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 the Hotel DuPont, 11th and Market Streets, Wilmington, Delaware 19801.
JAMES A. KIRKMAN III
Executive Vice President and Secretary
Parsippany, New Jersey
March 26, 1999
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 26, 1999 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 May 4, 1999
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 1999 fiscal year 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 19, 1999 (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:
51,525,119 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 six 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 six 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 1998.
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................... 53 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............. 64 1994 Chairman of Thomas Group, Inc., since May 1998; 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 Thomas Group, Inc.
Steven F. Goldstone........... 53 1996 Chairman of the Company and Nabisco since January 1998; 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.
David B. Jenkins.............. 68 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
Boards of Citizens Capital, Inc. and Relationship Marketing Group.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
YEAR
FIRST BUSINESS EXPERIENCE DURING PAST FIVE YEARS
NAME AGE ELECTED AND OTHER INFORMATION
- ------------------------------ ----------- ----------- ------------------------------------------------------------------
<S> <C> <C> <C>
James M. Kilts................ 51 1998 President and Chief Executive Officer of the Company and Nabisco
since January 1998; Executive Vice President, Worldwide Food, of
Philip Morris Companies from January 1994 to March 1997; President
of Kraft USA from 1989 to 1994. Member of the Board of May
Department Stores Company.
Kay Koplovitz................. 53 1995 Chief Executive Officer of Koplovitz and Company since June 1998;
Founder, Chairman and Chief Executive Officer of USA Networks
since its establishment in 1977 until June 1998. Member of the
Boards of Liz Claiborne, Inc. and Oracle Corp.
</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 six times during the 1998 fiscal year. During 1998, 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 Mr. Cain and Mr. Jenkins, held four meetings during
the 1998 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 General Chain and Ms.
Koplovitz, met five times during the 1998 fiscal year.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of March 19, 1999,
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
3
<PAGE>
below do not own any other capital stock of the Company or any of its parents or
subsidiaries and have sole voting investment power for all securities for which
they are shown as beneficial owner.
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES
OF CLASS A OF RJRN
COMMON STOCK PERCENT OF COMMON STOCK PERCENT OF
BENEFICIALLY CLASS A BENEFICIALLY RJRN
NAME OF BENEFICIAL OWNER OWNED COMMON STOCK OWNED COMMON STOCK
- ------------------------------------------ ----------------- -------------- ----------------- --------------
<S> <C> <C> <C> <C>
(1)(2)(3) (1) (1)(4)
Herman Cain(2)............................ 9,100 * 0 *
John T. Chain, Jr.(2)(4).................. 10,100 * 13,333 *
Douglas R. Conant(2)(4)................... 125,903 * 361 *
Elizabeth R. Culligan(4).................. 227 * 2,264 *
Steven F. Goldstone(2)(4)(5).............. 214,981 * 1,160,308 0.36%
James E. Healey(4)........................ 2,000 * 65 *
David B. Jenkins(2)....................... 10,700 * 0 *
James M. Kilts(3)(4)(6)................... 1,000 * 82,565 *
Kay Koplovitz(2)(3)....................... 9,200 * 0 *
Richard H. Lenny(4)....................... 1,220 * 54 *
All Directors and Officers as a
Group(2)(3)(4).......................... 1,065,701 0.21% 1,313,039 0.40%
</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 persons 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) The number of shares of Class A Common Stock beneficially owned includes
shares subject to currently exercisable options in the following amounts;
(i) 9,100 shares for each of General Chain and Messrs. Cain and Jenkins and
9,200 shares for Ms. Koplovitz; (ii) 124,852 shares for Mr. Conant; (iii)
200,000 shares for Mr. Goldstone; and (iv) 1,039,991 shares for all
directors and executive officers as a group.
3) The number of shares of Class A Common Stock beneficially owned does not
include units issued in the following amounts; (i) 4,994 to Ms. Koplovitz;
(ii) 50,000 units to Mr. Kilts; (iii) 22,000 units for Mr. Conant; (iv)
12,500 units for Ms. Culligan; (v) 10,000 units for Mr. Lenny and (vi)
133,994 units to all directors and executive officers as a group. The units
issued to Ms. Koplovitz are common stock equivalents and were received as
deferred compensation. The units issued to the officers are equivalents to
restricted stock grants and were received as deferred equity incentives.
4) The number of shares of RJRN Common Stock beneficially owned includes shares
subject to currently exercisable options in the following amounts; (i)
11,333 shares for General Chain; (ii) 943,600 shares for Mr. Goldstone;
(iii) 82,500 shares for Mr. Kilts and (iv) 1,075,233 shares for all
directors and executive officers as a group. The number of shares of RJRN
Common Stock beneficially owned also includes 178, 65, 361, 65, 54, 129 and
4,610 shares issuable on conversion of ESOP Convertible Preferred Stock
issued by RJRN Holdings and owned by Messrs. Goldstone, Kilts, Conant,
Healey, Lenny, Ms. Culligan and all directors and executive officers as a
group, 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 and other
compensation: 3,382 units for General Chain.
4
<PAGE>
5) Mr. Goldstone's beneficial ownership reflects 14,981 shares of Class A
Common Stock purchased by him on May 15, 1996. Mr. Goldstone is also the
holder of options to purchase 460,000 shares of Class A Common Stock, of
which 200,000 options will vest within the next 60 days.
6) In addition to the 50,000 restricted stock units referred to in footnote 3,
Mr. Kilts is the holder of 415,000 options to purchase Class A Common Stock
which are not exercisable and 250,000 options to purchase RJRN Common Stock
of which 82,500 are exercisable.
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 1998.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information, as of March 19, 1999,
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 Schedule 13G. 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 B RJR Nabisco Holdings Corp. 213,250,000 100%
Common Stock RJR Nabisco, Inc.(1)
1301 Avenue of the Americas
New York, New York 10019-6013
</TABLE>
- ------------------------
(1) 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. See "Relationship and Transactions with
RJR Nabisco Holdings Corp. and RJR Nabisco, Inc." below for certain recent
developments.
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, 1999 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.
5
<PAGE>
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.
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 Company's 1994 Long-Term Incentive Plan (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 compensation such
individuals may receive under RJRN's retirement plans or, following termination
of employment under certain circumstances, under individual employment
agreements.
SUMMARY COMPENSATION TABLE
The following table presents certain specific information regarding the
compensation of the five most highly compensated executive officers of the
Company.
ANNUAL COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION SECURITIES
------------------------------------- RESTRICTED UNDERLYING LONG- TERM
AGGREGATE OTHER ANNUAL STOCK OPTIONS INCENTIVE
YEAR BASE SALARY BONUS COMPENSATION AWARDS AWARDED PAYOUTS
NAME & PRINCIPAL POSITION (1) ($) (2)($) (3)($) (4)($) (#)(5) ($)
- -------------------------------------- --------- ----------- --------- ------------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
James M. Kilts........................ 1998 $ 900,000 $ 765,000 $ 132,832 $ 2,396,875 415,000(7) $ 0
President & CEO 250,000(8)
Richard H. Lenny...................... 1998 380,048 335,000 54,905 448,750 60,000(7) 0
President, Nabisco Biscuit Company
Douglas R. Conant..................... 1998 345,833 239,000 54,441 18,435 60,000(7) 0
President, USFG 1997 325,000 82,000 53,768 0 65,000(7) 632,000
1996 285,000 234,000 136,309 860,750 75,000(7) 149,118
James E. Healey....................... 1998 325,000 220,000 55,301 0 45,000(7) 0
Executive Vice President 1997 189,583 111,000 30,788 0 55,000(7) 0
& Chief Financial Officer
Elizabeth R. Culligan................. 1998 295,378 216,000 79,045 2,634 25,000(7) 0
President, Nabisco International 1997 255,000 109,000 47,391 21,479 18,000(7) 0
1996 83,333 64,000 10,532 489,063 20,000(7) 0
<CAPTION>
ALL OTHER
COMPENSATION
NAME & PRINCIPAL POSITION (6)($)
- -------------------------------------- -------------
<S> <C>
James M. Kilts........................ $ 49,435
President & CEO
Richard H. Lenny...................... 160,625
President, Nabisco Biscuit Company
Douglas R. Conant..................... 12,835
President, USFG 16,770
14,760
James E. Healey....................... 8,019
Executive Vice President 51,188
& Chief Financial Officer
Elizabeth R. Culligan................. 8,861
President, Nabisco International 20,150
75,000
</TABLE>
- ------------------------------
(1) Mr. Kilts and Mr. Lenny were not executive officers of the Company prior to
1998. Mr. Healey was not an executive officer of the Company prior to 1997.
6
<PAGE>
(2) The 1998 bonus amount shown in the table for Mr. Kilts reflects annual cash
bonus payments that were based on Company performance during 1998. The
amount for Mr. Kilts also reflects adjustments made by the Committee to the
applicable financial results. The bonus amounts shown for the other named
executive officers were based on a combination of financial objectives and
individual performance objectives. The amount shown in the table for Ms.
Culligan for 1998 also includes a special incentive payment of $20,000 paid
in January 1998, for accomplishments in her prior position.
(3) The 1998 amounts shown in the table for Mr. Kilts, Mr. Lenny, Mr. Conant,
Mr. Healey and Ms. Culligan include amounts attributable to their
participation in the Company's executive perquisite program, which provides
each of them with supplemental insurance, a leased automobile and an annual
allowance ($54,750 for Mr. Kilts, $42,425 for Mr. Lenny, $40,000 for Mr.
Conant, $40,000 for Mr. Healey, and $38,069 for Ms. Culligan), which may be
used to reimburse miscellaneous expenses and, to the extent not so used, is
paid 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. The amount shown in the table
for Mr. Kilts for 1998 also includes certain income tax liabilities related
to his life insurance policy, which liabilities were reimbursed by the
Company to Mr. Kilts. The amounts shown in the table for Mr. Kilts and Ms.
Culligan also include amounts attributable to the Company's reimbursement of
certain country club initiation fees ($37,363 for Mr. Kilts and $25,000 for
Ms. Culligan).
(4) The 1998 amounts shown in the table for Messrs. Kilts and Lenny represent
restricted stock grants made in respect of the 1998 fiscal year under the
Nabisco LTIP. The 1998 amount shown in the table for Mr. Conant represents a
portion of his 1998 annual bonus that was paid to him in 1999 in the form of
approximately 415.435 restricted stock units that are scheduled to vest on
December 31, 2000. The 1998 and 1997 amounts shown in the table for Ms.
Culligan represent portions of her 1998 and 1997 bonuses that were paid to
her in 1999 and 1998, respectively, in the form of approximately 59.348
restricted stock units that are scheduled to vest on December 31, 2000 and
approximately 488.157 restricted stock units that are scheduled to vest on
December 31, 1999 for the 1998 and 1997 grants, respectively. In 1996,
certain of the named executive officers were granted restricted stock units
that vest five years from the date of grant and are payable in cash based on
the price of Class A Common Stock on November 15, 2001. As of December 31,
1998, the value of the number of shares of Class A Common Stock equal to the
number of units held by the named executive officers are as follows: Mr.
Kilts (50,000 units), $2,396,900; Mr. Lenny (10,000 units), $448,750; Mr.
Conant (22,415.435 units), $930,241; and Ms. Culligan (13,047.505 units),
$541,471. Dividend equivalents are paid on the grant in the same manner as
dividends are paid on Class A Common Stock.
(5) The grants shown in the table reflect the number of shares subject to
options to purchase Class A Common Stock granted to the named executive
officers, except that the grants shown for Mr. Kilts for 1998 also includes
an option to purchase 250,000 shares of RJRN Holdings Common Stock granted
to Mr. Kilts under the RJRN LTIP.
(6) 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. The following is a breakout of the 1998 amounts:
<TABLE>
<CAPTION>
COMPANY
COMPANY MATCHING CONTRIBUTION
CONTRIBUTION (NON-QUALIFIED
NAME (QUALIFIED PLAN) PLAN)
- ---------------------------------------------------------- ------------------- -------------------
<S> <C> <C>
James M. Kilts............................................ $ 4,800 $ 24,525
Richard H. Lenny.......................................... 4,024 6,601
Douglas R. Conant......................................... 4,800 8,035
James E. Healey........................................... 4,800 3,219
Elizabeth R. Culligan..................................... 4,800 4,061
</TABLE>
The amount shown in the table for Mr. Kilts for 1998 also includes $20,110,
which was the 1998 premium for certain Company paid insurance policies. The
amount shown in the table for Mr. Lenny for 1998 also includes a $150,000
special employment/ sign-on bonus paid by the Company to replace benefits
from his former employer which he forfeited upon his employment with the
Company.
(7) Denominated in shares of Nabisco Class A Common Stock.
(8) Denominated in shares of RJRN Holdings Common Stock.
LONG-TERM INCENTIVE COMPENSATION
The Company seeks to insure that a significant portion of executives'
compensation is tied to the price performance of Class A Common Stock and to
quantifiable measures of the Company's operational performance. The regular
long-term incentive grant for 1998 for all of the named participating executive
officers was made in the form of options to purchase Class A Common Stock.
The following table identifies the grants of stock options made to the named
executive officers in 1998 under the Nabisco LTIP, and, in the case of Mr.
Kilts, under the RJRN LTIP. All of the stock options
7
<PAGE>
identified on the following table have exercise prices equal to the per-share
fair market value of the covered securities on the date of grant.
OPTION GRANTS IN FISCAL YEAR 1998
<TABLE>
<CAPTION>
INDIVIDUAL PERCENT OF
GRANTS NUMBER TOTAL OPTIONS
OF SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE GRANT DATE
OPTIONS GRANTED IN FISCAL YEAR PRICE EXPIRATION PRESENT VALUE
NAME (#)(1) (%)(2) ($/SHARE) DATE ($)(3)
- --------------------------------------- --------------- --------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Mr. Kilts.............................. 250,000(4) 8.85% $ 47.938 1/02/08 $ 3,972,500
165,000(4) 5.84% 45.063 2/05/08 2,463,450
250,000(5) 39.18% 37.375 1/02/08 1,862,500
Mr. Lenny.............................. 60,000(4) 2.12% 44.875 2/09/08 892,200
Mr. Conant............................. 60,000(4) 2.12% 45.063 2/05/08 895,800
Mr. Healey............................. 45,000(4) 1.59% 45.063 2/05/08 671,850
Ms. Culligan........................... 25,000(4) .88% 45.063 2/05/08 373,250
</TABLE>
- ------------------------
(1) The Nabisco stock options vest over three years in accordance with the
following schedule: 33% on each of the first and second January 1 following
the date of grant and 34% on the third January 1 following the date of
grant. The Nabisco stock options are not exercisable until the third
anniversary of the date of grant. The RJRN stock options vest over three
years in accordance with the following schedule: 33% on each of the first
and second anniversary of the date of grant and 34% on the third anniversary
of the date of grant. The RJRN stock options are exercisable after each
installment. The stock options have terms of 10 years from the date of
grant, 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 1998 under the Nabisco LTIP
except for the grant to Mr. Kilts of options to purchase 250,000 shares of
RJRN Holdings Common Stock.
(3) The grant date present values shown in the table were determined pursuant to
the Black-Scholes option valuation model using the following assumptions:
(i) for options on Nabisco Class A Common Stock, stock price volatility of
.2588, dividend yield of 1.62%; a 7 year term and an interest rate of 5.46%;
and (ii) for options on RJRN Holdings Common Stock, stock price volatility
of .3116, dividend yield of 6.08%, a 7 year term and an interest rate of
5.46%.
(4) Denominated in shares of Nabisco Class A Common Stock.
(5) Denominated in shares of RJRN Holdings Common Stock.
The following table provides information relating to the number and value of
shares of Class A Common Stock and RJRN Holdings Common Stock subject to options
held by the named executive officers as of December 31, 1998. There were no
stock option exercises during 1998 by any of the named individuals.
8
<PAGE>
AGGREGATED OPTION VALUES AT FISCAL YEAR-END (12/31/98)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED,
OPTIONS HELD AT IN-THE-MONEY OPTIONS
FY-END (#)(1) HELD AT FY-END ($)(2)
-------------------------- --------------------------
NAME TYPE(3) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Mr. Kilts....................................... NA 0 415,000 $ 0 $ 0
RN 0 250,000 0 0
Mr. Lenny....................................... NA 0 60,000 0 0
Mr. Conant...................................... NA 74,852 200,000 1,021,411 911,250
Mr. Healey...................................... NA 0 100,000 0 158,125
Ms. Culligan.................................... NA 0 63,000 0 251,000
</TABLE>
- ------------------------
(1) Some of the unexercisable stock options are vested.
(2) Calculated based on the excess of the fair market value on December 31, 1998
of Nabisco Class A Common Stock ($41.50) or RJR Nabisco Class A Common Stock
($29.6875), as appropriate, over the option exercise price.
(3) NA refers to Nabisco Class A Common Stock; RN refers to RJRN Holdings Common
Stock.
RETIREMENT PLANS
The named executive officers participate in noncontributory defined benefit
retirement plans maintained by RJRN or its subsidiaries (the "Retirement
Plans"). Retirement benefits for Messrs. Kilts, Lenny, Conant and Healey and Ms.
Culligan are determined under a noncontributory qualified defined benefit plan
maintained by RJRN that has no Social Security offset. Mr. Kilts' employment
agreement provides him with a minimum annual pension equal to $200,000 (payable
as a single life annuity beginning at age 60) if he completes five years of
service or if he is involuntarily terminated prior thereto. In the event that
Mr. Kilts' benefits under the Retirement Plans are less than the minimum
pension, Mr. Kilts will receive a supplemental pension from the Company. 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.
ESTIMATED ANNUAL RETIREMENT BENEFITS
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------
AVERAGE FINAL COMPENSATION 10 15 20 25
- ---------------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
$ 400,000............................................................. 68,411 94,171 117,756 137,160
500,000............................................................. 85,810 118,094 147,660 171,958
600,000............................................................. 103,208 142,017 177,564 206,755
800,000............................................................. 138,006 189,864 237,373 276,351
1,000,000............................................................ 172,804 237,711 297,181 345,946
1,200,000............................................................ 207,602 285,558 356,990 415,542
1,400,000............................................................ 242,399 333,405 416,799 485,137
1,600,000............................................................ 277,197 381,252 476,607 554,733
1,800,000............................................................ 311,995 429,099 536,416 624,328
2,000,000............................................................ 346,793 476,946 596,224 693,924
</TABLE>
For Plan purposes, compensation includes base salary, annual bonus (in the
year earned) and certain other payments. "Average Final Compensation" under the
plan is determined by considering the 36
9
<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, 1998 was: for Mr. Kilts, $1,665,000; for Mr. Lenny, $800,636; for
Mr. Conant, $507,500; for Mr. Healey, $523,797; and for Ms. Culligan, $406,926.
The estimated years of credited service (rounded to the nearest year) at age 65
were for Mr. Kilts, 15; for Mr. Lenny, 19; for Mr. Conant, 24; for Mr. Healey,
9; and for Ms. Culligan, 19.
AGREEMENTS WITH CERTAIN OFFICERS
On November 20, 1997, the Company and Holdings entered into an employment
agreement with Mr. Kilts pursuant to which Mr. Kilts agreed to serve as
President and Chief Executive Officer of the Company and as a member of the
Board of Directors of the Company and Holdings, all as of January 1, 1998.
Pursuant to the employment agreement, Mr. Kilts is entitled to receive an annual
base salary of at least $900,000 per year and is eligible for an annual target
bonus opportunity of at least 85% of his base salary for the relevant year. Upon
his completion of five years of active service (or earlier involuntary
termination of employment), Mr. Kilts is entitled to a minimum annual pension of
$200,000 (payable as a single life annuity beginning at age 60). Under the
employment agreement, the Company also provides Mr. Kilts with life insurance,
on a tax-reimbursed basis, with a face amount of $1 million and will provide Mr.
Kilts with retiree medical coverage (with minimum of 10 years credited service)
upon his retirement or after age 55.
The employment agreement provides that if Mr. Kilts' employment is
terminated without "cause" or if Mr. Kilts terminates his employment for "good
reason," then he will receive two times his annual salary and annual target
bonus opportunity payable over three years and continued benefits for the same
period during which time is obligated to provide certain consulting services to
the Company. If the termination is following a change of control of the Company
(as defined in the employment agreement), the compensation will be paid in a
discounted lump-sum based on three times his annual salary and target bonus
opportunity as in effect immediately prior to such termination or, if higher,
immediately prior to the change of control. "Cause" includes criminal
dishonesty, misconduct materially damaging to the Company, Holdings or RJRN, or
deliberate and continuing willful refusal by Mr. Kilts to perform his duties.
"Good reason" includes a reduction in Mr. Kilts' responsibilities, a reduction
in his salary and annual target bonus opportunity, relocation, or a change of
control or divestiture of the Company following which the Chairman of the
Company is anyone other than the Chairman of Holdings. If a "parachute" excise
tax is imposed on any payments to Mr. Kilts, he will be entitled to tax
reimbursement payments.
Nabisco has also entered into employment agreements with Messrs. Lenny,
Conant and Healey and Ms. Culligan 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 or she 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. "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.
Compensation continuance is based on the highest annual rate of salary in effect
during the twelve months immediately prior to termination and the current target
incentive award opportunity for the calendar year in which employment
terminates.
10
<PAGE>
DIRECTORS' 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 a $5,000 retainer
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 director's election or re-election to the Board of Directors. In
1998, each eligible director as of the April 1998 annual meeting received an
annual stock option to purchase 900 shares of Class A Common Stock at an
exercise price of $51.125 (the fair 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
exercisablilty. 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 General Chain and Ms. Koplovitz.
There are no Compensation Committee interlocks or insider participation.
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>
NABISCO S&P FOOD INDEX S&P 500 INDEX
<S> <C> <C> <C>
01/20/1995 100 100 100
Dec-95 135 129 136
Dec-96 164 153 167
Dec-97 207 219 222
Dec-98 181 236 286
</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.
Common Stock was first issued to the public under a registration statement which
was effective January 19, 1995. January 20, 1995 was the first trading day for
Class A Common Stock.
11
<PAGE>
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
1998. 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 1998, 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 the
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 provision of the 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 provision; however, the Committee feels that 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. For example, as discussed below
(under "Annual Compensation"), Nabisco revised its annual operating objectives
during 1998. The Committee modified Nabisco's incentive compensation objectives
accordingly to ensure that compensation incentives support Nabisco's operating
objectives, even though, as a result, the 1998 annual bonus payout for Mr. Kilts
is subject to the deduction limitation.
MAJOR COMPENSATION COMPONENTS
The compensation program for executive officers is composed of annual
compensation, long-term compensation and benefits. In determining appropriate
compensation plans and 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 Securities and Exchange
Commission which appears on page 12. 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. In addition, in 1998 the
Committee established an executive retention program designed to prevent
depletion of the Company's executive talent pool. Under this program retention
bonuses, based on base salary and targeted bonus, will be paid to participating
executives who do not terminate their employment with the Company prior to July
1, 2001, for Mr. Healey, and prior to December 31, 2001 for Messrs. Conant and
Lenny and Ms. Culligan. Mr. Kilts does not participate in this program.
12
<PAGE>
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. Annual compensation levels (salary plus
target annual incentive award opportunity) are set to reflect the 75th
percentile of the compensation practices of comparator companies. 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. In 1998, Mr. Conant received a salary
increase of $25,000.
Each of the named executive officers has a target annual incentive award
opportunity which is expressed as a percentage of his base salary and which is
set, at target, to provide annual cash compensation at the 75th percentile of
comparator companies. For each of the named executive officers other than Mr.
Kilts, the actual bonus earned for 1998 and shown in the Summary Compensation
Table was based principally on the attainment of financial performance
objectives (described below) and partly on individual performance. The 1998
performance measures and objectives were 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 (including Messrs. Kilts and Healey) was cash net income, sales and
free cash flow. The financial performance measure for the Company's operating
company employees (including Messrs. Conant, Lenny and Ms. Culligan) are
operating company contributions, sales, accounts receivable days and inventory
days. If the targeted financial performance is attained or exceeded, the award
is supplemented with restricted stock units equal to 20% of the target award.
The units, which do not vest for two years, are intended to provide a
longer-term incentive to participants. Restricted stock units were earned by Mr.
Conant and Ms. Culligan in connection with their 1998 bonus.
In early 1998, in connection with the retention of Mr. Kilts as Chief
Executive Officer, Nabisco engaged in a reassessment of its annual operating
objectives. Performance grids for the Company and its operating companies were
established in early 1998, subject to the results of the reassessment. When the
reassessment was completed, performance grids for the Company's and Nabisco's
headquarters employees (including Mr. Kilts) were revised to conform to
Nabisco's revised annual operating objectives.
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. In 1998, long-term incentive grants to the named executive officers
were in the form of stock options. 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.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
In connection with Mr. Kilts becoming President and Chief Executive Officer
of the Company, the Committee established Mr. Kilts' annual base salary at
$900,000 and target annual bonus opportunity of 85% of base salary. The
Committee believes that this compensation level is necessary to maintain his
compensation package at a competitive level commensurate with his skills and
experience.
As noted above, Mr. Kilts' annual bonus was based on the Company's cash net
income, sales and free cash flow, determined pursuant to a performance schedule
adopted by the Committee in early 1998 and revised in mid-1998. Although the
Company's targeted performance goals were not achieved, the Committee awarded
him 100% of his target award in recognition of his significant achievements,
which enabled the
13
<PAGE>
Company to regain its core business momentum with the opportunity to enhance the
Company's future performance.
In 1998, in connection with his employment with the Company, Mr. Kilts was
granted a stock option to purchase 250,000 shares of Class A Common Stock with
an exercise price of $47.938 (the market price of Class A Common Stock on the
date of grant) and 250,000 shares of RJRN Holdings Common Stock with an exercise
price of $37.375 (the market price of RJRN Holdings Common Stock on the date of
grant). In accordance with the Company's practice of making annual stock option
grants, Mr. Kilts was granted a stock option to purchase 165,000 shares of Class
A Common Stock with an exercise price of $45.063, (the market price of Class A
Common Stock on the date of grant). The size of Mr. Kilts' regular 1998 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.
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 1998 were consistent with this focus and the
principles outlined above.
John T. Chain, Jr. (Chairman)
Kay Koplovitz
14
<PAGE>
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.
On March 9, 1999, RJRN Holdings announced that its board of directors had
entered into a definitive agreement to sell its international tobacco business
and had approved a plan to separate its domestic tobacco business from the
Company's food business. Under the plan, the separation of the businesses will
be accomplished through a tax-free spin-off to RJRN Holdings shareholders of
shares in the domestic tobacco business.
Upon completion of the spin-off, RJRN Holdings will continue to exist as a
holding company, owning 80.6% of the Company, and will be renamed Nabisco Group
Holdings. Nabisco Group Holdings and the Company will each continue to trade as
separate companies on the New York Stock Exchange. The separation is subject to
final board approval and is expected to occur following completion of the sale
of RJRN Holdings' international tobacco business.
The Company's 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. It is possible that the spin-off will require the amendment of
these agreements, but the Company does not anticipate that these amendments will
be material.
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 1998 totaled
approximately $2 million, exclusive of reimbursements at cost for payments made
to third parties. The Company made no payments to RJRN for services performed in
1998 under the Services Agreement, other than reimbursements at cost for
third-party fees and expenses.
In addition, during 1998 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
less than $1 million for its allocable portion of the premium cost and made most
premium payments directly to the insurers. The Services Agreement permits either
RJRN or the Company to 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). 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 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.
15
<PAGE>
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 the Internal Revenue Code of
1986, 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 1998, the Company paid four quarterly dividends of $.175 on each
outstanding share of Common Stock. RJRN received a total of approximately $149
million from these dividends, the amount representing its PRO RATA share.
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 December
5, 1999 at the Company's principal executive offices: Nabisco Holdings Corp., 7
Campus Drive, Parsippany, New Jersey 07054-0311.
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 26, 1999
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.
16
<PAGE>
NABISCO HOLDINGS CORP.
ANNUAL MEETING OF STOCKHOLDERS-MAY 4, 1999
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
P
R The undersigned hereby constitutes and appoints Steven F. Goldstone, James M.
Kilts and James A. Kirkman III, and each of them, his true and lawful agents
O and proxies with full power of substitution in each, to represent the
undersigned at the Annual Meeting of Stockholders of Nabisco Holdings Corp.,
X to be held at the Hotel DuPont, 11th and Market Streets., Wilmington,
Delaware, on Tuesday, May 4, 1999, at 10:30 A.M., and at adjournments or
Y 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
said meeting.
Election of Directors. Nominees: Change of Address
H. Cain, J.T. Chain, Jr., S.F. Goldstone, --------------------------------
D.B. Jenkins, J.M. Kilts and K.Koplovitz.
--------------------------------
--------------------------------
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 AND 2. 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.
----------------
SEE REVERSE SIDE
----------------
FOLD AND DETACH HERE
<PAGE>
5185
PLEASE MARK YOUR
/X/ VOTES AS IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF DIRECTORS AND
FOR PROPOSAL 2.
The Board of Directors recommends a vote for proposals 1 and 2.
<TABLE>
<S> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of Directors 2. Ratify the appointment of
Deloitte & Touche as Independent
Auditors.
</TABLE>
For, except vote withheld from the following nominees(s):
- ---------------------------------------------------------
Will attend Do not
annual meeting. 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
FOLD AND DETACH HERE
<PAGE>
NABISCO HOLDINGS CORP.
ANNUAL MEETING OF STOCKHOLDERS--MAY 4, 1999
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
P The undersigned, having received the Notice of Annual meeting and Proxy
Statement, hereby directs Vanguard Group, Custodian under the Nabisco/Life
R Savers Puerto Rico Capital Accumulation Plan ("NLSCAP") and Custodian for
the Participants in the Savings and Investment Plan for Employees of R.J.
O 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
X 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
Y the 1999 Annual Meeting of Stockholders to be held at The Hotel DuPont,
11th and Market Streets, Wilmington, Delaware, on Tuesday, May 4, 1999, at
10:30 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
instructs on all matters coming before said meeting.
Election of Directors. Nominees: Change of Address
H. Cain, J.T. Chain, Jr., S.F. Goldstone, --------------------------
D.B. Jenkins, J.M. Kilts and K. Koplovitz.
--------------------------
--------------------------
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.
FOLD AND DETACH HERE
VANGUARD
- --------------------------------------------------------------------------------
VANGUARD GROUP
100 VANGUARD BOULEVARD-M33
MALVERNE, PA 19355
- --------------------------------------------------------------------------------
DE TENER ALGUNA DUDA RELATIVO A ESTOS DOCUMENTOS FAVOR DE COMUNICARSE CON EL
DEPARTAMENTO DE RECURSOS HUMANOS.
- --------------------------------------------------------------------------------
March 1999
To: Participants in the Nabisco/LifeSavers 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. 1998 Annual Report.
2. Notice of Annual Meeting of Stockholders to be held on May 4, 1999 and the
accompanying Proxy Statement.
3. This Proxy/Voting Instruction Card (SEE REVERSE SIDE FOR VOTING) and
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 30, 1999. 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
Enclosures
----------------
SEE REVERSE SIDE
----------------
<PAGE>
7503
PLEASE MARK YOUR
/X/ 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 PROXY WILL BE VOTED FOR
ELECTION OF DIRECTORS AND FOR PROPOSAL 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
<TABLE>
<S> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of Directors 2. Ratify the appointment of
Deloitte & Touche as Independent
Auditors.
</TABLE>
For, except vote withheld from the following nominees(s):
- ---------------------------------------------------------
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
FOLD AND DETACH HERE
<PAGE>
NABISCO HOLDINGS CORP.
ANNUAL MEETING OF STOCKHOLDERS--MAY 4, 1999
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
P The undersigned, having received the Notice of Annual Meeting and Proxy
Statement, hereby directs Wachovia Bank N.A., Trustee under the RJR
R Nabisco Capital Investment Plan ("CIP"), and Trustee under the Nabisco
Employee Savings Plan ("ESP"), to vote in person or by proxy all shares of
O Common Stock of Nabisco Holdings Corp. allocated to any accounts of the
undersigned under such Plans, and which the undersigned is entitled to
X instruct, in each case, on all matters which may come before the 1999
Annual meeting of Stockholders to be held at The Hotel DuPont, 11th and
Y Market Streets, Wilmington, Delaware, on Tuesday, May 4, 1999, at 10:30
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.
Election of Directors. Nominees: Change of Address
H. Cain, J.T. Chain, Jr., S.P. Goldstone, -----------------------------
D.B. Jenkins, J.M. Kilts and K. Koplovitz.
-----------------------------
-----------------------------
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.
FOLD AND DETACH HERE
WACHOVIA
- --------------------------------------------------------------------------------
EMPLOYEE BENEFIT TRUST SERVICES
301 NORTH MAIN STREET
WINSTON SALEM, NC 27150-3000
March 1999
To: Participants in the RJR Nabisco Capital Investment Plan ("CIP")
Participants in the Nabisco Employee Savings Plan ("ESP")
As a participant in a Company sponsored employee benefit savings plan that
requires pass through voting, you are entitled to instruct Wachovia Bank, 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. 1998 Annual Report.
2. Notice of Annual Meeting of Stockholders to be held on May 4, 1999 and the
accompanying Proxy Statement.
3. This Proxy/Voting Instruction Card (SEE REVERSE SIDE FOR VOTING) and
4. A postage-paid return envelope.
The number 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 30, 1999. 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, N.A.
Trustee
Enclosures
<PAGE>
7017
PLEASE MARK YOUR
/X/ 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 PROXY WILL BE VOTED FOR
ELECTION OF DIRECTORS AND FOR PROPOSAL 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
<TABLE>
<S> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of Directors 2. Ratify the appointment of
Deloitte & Touche as Independent
Auditors.
</TABLE>
For, except vote withheld from the following nominees(s):
- ---------------------------------------------------------
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
FOLD AND DETACH HERE
