<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Tambrands Inc.
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(Name of Registrant as Specified In Its Charter)
Tambrands Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:/1/
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4) Proposed maximum aggregate value of transaction:
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/1/ Set forth the amount on which the filing fee is calculated and state how it
was determined.
[_] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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TAMBRANDS INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 26, 1994
The Annual Meeting of the shareholders of Tambrands Inc. (the "Corporation")
will be held at The Rye Town Hilton, 699 Westchester Avenue, Rye Brook, New
York, on Tuesday, April 26, 1994, at 9:00 A.M., for the following purposes:
(1) To elect directors for the ensuing year;
(2) To vote upon a proposal to approve an amendment to the 1992 Directors
Stock Incentive Plan as described in the accompanying Proxy Statement; and
(3) To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on February 28, 1994
will be entitled to vote at the meeting. A list of shareholders eligible to
vote at the meeting will be available for inspection at the meeting and during
business hours from April 15, 1994 to the date of the meeting at the corporate
headquarters at the address set forth below and at The Rye Town Hilton at the
address set forth above.
Whether you expect to attend the Annual Meeting or not, your proxy vote is
important. To assure your representation at the meeting, please sign and date
the enclosed proxy card and return it promptly in the enclosed envelope, which
requires no additional postage if mailed in the United States or Canada.
By Order of the Board of Directors
Raymond F. Wright,
Senior Vice President --
Chief Financial Officer
777 Westchester Avenue
White Plains, New York 10604
March 11, 1994
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE COMPLETED AND RETURNED PROMPTLY
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<PAGE>
TAMBRANDS INC.
PROXY STATEMENT
March 11, 1994
This Statement is furnished in connection with the solicitation of proxies by
the Board of Directors of Tambrands Inc. (the "Corporation") for use at the
Annual Meeting of its shareholders to be held on April 26, 1994.
Shares cannot be voted at the meeting unless the owner thereof is present in
person or by proxy. All properly executed and unrevoked proxies in the
accompanying form that are received in time for the meeting will be voted at
the meeting or any adjournment thereof in accordance with any specification
thereon, or if no specification is made, will be voted "FOR" the election of
the named nominees and approval of the proposal set forth in the Notice of
Annual Meeting of Shareholders of the Corporation. Any person giving a proxy
may revoke it by written notice to the Corporation at any time prior to
exercise of the proxy. In addition, although mere attendance at the meeting
will not revoke the proxy, a person present at the meeting may withdraw his or
her proxy and vote in person.
The Annual Report of the Corporation (which does not form a part of the proxy
solicitation material), including the financial statements of the Corporation
for the fiscal year 1993, is enclosed herewith.
The mailing address of the principal executive offices of the Corporation is
777 Westchester Avenue, White Plains, New York 10604. This Statement and the
accompanying form of proxy are being mailed to the shareholders of the
Corporation on or about March 11, 1994.
VOTING SECURITIES
The Corporation has only one class of voting securities, its Common Stock,
par value $.25 per share (the "Common Stock"). On February 28, 1994, 38,151,786
shares of Common Stock were outstanding. At the meeting, each shareholder of
record at the close of business on February 28, 1994 will be entitled to one
vote for each share of Common Stock owned on that date as to each matter
presented to the meeting.
ELECTION OF DIRECTORS
Unless otherwise directed, the persons named in the accompanying form of
proxy intend to vote at the Annual Meeting for the election of the nominees
named in the following table as directors of the Corporation to serve until the
next Annual Meeting and until their successors are duly elected and have
qualified.
To be elected, each nominee for director requires the affirmative vote of a
plurality of the votes cast.
If any nominee is unable to be a candidate when the election takes place, the
shares represented by valid proxies will be voted in favor of the remaining
nominees and for such person, if any, as shall be designated by the Board of
Directors to replace such nominee. The Board of Directors does not presently
anticipate that any nominee will be unable to be a candidate for election.
<PAGE>
The following information with respect to the principal occupation or
employment, other affiliations and business experience of each nominee during
the last five years has been furnished to the Corporation by such nominee.
Except as indicated, each of the nominees has had the same principal
occupation for the last five years.
INFORMATION REGARDING NOMINEES FOR ELECTION
AS DIRECTORS OF TAMBRANDS INC.
Lilyan H. Affinito
Former Vice Chairman of MAXXAM Group Inc., Houston, Texas (forest products
operations, real estate management and development and integrated aluminum
production) from before February 1989 to June 1991; director of Caterpillar
Inc., Chrysler Corporation, Jostens, Inc., Kmart Corp., Lillian Vernon
Corporation and New York Telephone Co.; director of the Corporation since
1986; age 62.
Charles J. Chapman
Executive Vice President and President, North America of the Corporation
since July 1993, and from August 1989 to September 1991; President and
Chief Operating Officer of the Corporation from February 1992 to June 1993;
Executive Vice President of the Corporation from October 1991 to February
1992; Vice President of The Spectrum Group, Inc., Los Angeles, California
(investment company) from before February 1989 to August 1989; director of
M.G. Products, Inc.; director of the Corporation since 1992; age 55.
Paul S. Doherty
Member of the law firm of Doherty, Wallace, Pillsbury & Murphy, P.C.,
Springfield, Massachusetts, from before February 1989; trustee of NWNL
Northstar Series Trust; director of the Corporation since 1979; age 59.
Floyd Hall
Chairman and Chief Executive Officer of The Museum Company, East
Rutherford, New Jersey (museum art replica retailing) from before February
1989; Chairman and Chief Executive Officer of Alva Museum Replicas, Inc.,
East Rutherford, New Jersey (museum art replica manufacturing) since July
1989; director of Jamesway Corp. and Jundt Associates, Inc.; director of
the Corporation since 1990; age 55.
Robert P. Kiley
President of Neal Ward Realty Inc., Damariscotta, Maine (real estate
development) from before February 1989; director of the Corporation since
1981; age 58.
John Loudon
Chairman of Caneminster Limited, London, United Kingdom (investment
company) from before February 1989; director of Exel, Ltd.; director of the
Corporation since 1991; age 58.
Ruth M. Manton
Chairman, President and Chief Executive Officer and owner of Aries Design
Management, Inc., New York, New York (marketing and licensing consulting)
from before February 1989; director of the Corporation since 1981; age 68.
2
<PAGE>
John A. Meyers
Chairman and President of J.A.M. Enterprises, Vero Beach, Florida
(marketing and publishing consulting) from before February 1989; director
of the Corporation since 1989; age 65.
H.L. Tower
Chairman of the Board of Stanhome Inc., Westfield, Massachusetts (direct
selling, giftware and direct response) since August 1990; Chairman of the
Board and Chief Executive Officer of Stanhome Inc. from before February
1989 to August 1990; director of the Corporation since 1985; age 61.
Howard B. Wentz, Jr.
Chairman of the Board of Directors of the Corporation since June 1993;
Chairman of the Board of ESSTAR Incorporated, New Haven, Connecticut
(manufacturing of portable electric tools and architectural hardware) since
July 1989; Chairman, President and Chief Executive Officer of Amstar
Corporation, Stamford, Connecticut (diversified manufacturing) from before
February 1989 to June 1989; director of Colgate-Palmolive Company and
Crompton & Knowles Corp.; director of the Corporation since 1985; age 64.
Robert M. Williams
Chairman of the Board of RFE Management Corporation, New Canaan,
Connecticut (management corporation for four venture capital limited
partnerships of which Mr. Williams is also the managing partner) from
before February 1989; director of the Corporation since 1981; age 53.
Each of the nominees was elected to his or her present term of office at the
last Annual Meeting of Shareholders. The Board of Directors of the Corporation
currently has twelve members. Brian Healey is currently a director of the
Corporation, but is not a nominee for election as a director at the Annual
Meeting. The authorized number of directors has been reduced to eleven,
effective immediately prior to the election of directors at the Annual Meeting.
3
<PAGE>
INFORMATION REGARDING THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD
The Board of Directors presently has standing Audit, Compensation, Executive,
Investment Review and Nominating Committees, the membership and principal
responsibilities of which are described below:
Audit Committee
Members: Mr. Doherty (Chairman), Mr. Loudon, Ms. Manton, Mr. Meyers and Mr.
Williams.
The Audit Committee's functions include recommending to the Board of
Directors the selection of the Corporation's independent public accountants and
reviewing with such accountants the plan for and results of their audit, the
adequacy of the Corporation's systems of internal accounting controls, any
material breakdown in such controls and any material violation of the
Corporation's Code of Conduct. In addition, the Audit Committee reviews the
independence of the independent public accountants and their fees for services
rendered to the Corporation.
Compensation Committee
Members: Ms. Affinito (Chairperson), Mr. Hall and Mr. Tower.
The Compensation Committee's functions include reviewing and making proposals
to the Board of Directors or to a committee appointed by the Board (the
"Administrative Committee") with respect to matters having to do with the
compensation of senior executive officers and directors of the Corporation and
administering certain plans relating to the compensation of officers and
certain plans relating to the compensation of directors. To assure compliance
with Rule 16b-3, as promulgated by the Securities and Exchange Commission, the
Administrative Committee currently is responsible for the administration of all
stock-based compensation plans for officers, including the 1981 Long Term
Incentive Program, the 1991 Stock Option Plan, the 1991 Employee Stock Purchase
Plan, the 1989 Restricted Stock Plan, and the exchange features of the 1992
Directors Stock Incentive Plan. The current members of the Administrative
Committee are Paul S. Doherty, E. Russell Sprague, a former officer and
director of the Corporation, and George N. Lindsay, a retired partner of
Debevoise & Plimpton. The Compensation Committee makes recommendations to the
Administrative Committee regarding the awards that are made under such plans.
Executive Committee
Members: Mr. Wentz (Chairman), Ms. Affinito, Mr. Hall, Ms. Manton and Mr.
Williams.
The Executive Committee may, between meetings of the Board of Directors,
exercise all of the authority of the Board in the management of the business
and affairs of the Corporation, except with respect to certain significant
corporate matters reserved to the Board by Delaware law, such as amendments to
the Certificate of Incorporation or By-Laws of the Corporation.
Investment Review Committee
Members: Mr. Tower (Chairman), Mr. Hall, Mr. Healey, Mr. Kiley, Mr. Loudon
and Mr. Wentz.
4
<PAGE>
The Investment Review Committee's functions include reviewing, monitoring and
reporting to the Board of Directors on each investment by the Corporation in
the amount of $2 million or more for new products or product improvements,
acquisitions or dispositions of other businesses or the construction,
alteration or purchase of property, plant or equipment. The Investment Review
Committee is authorized to approve any such investment of $2 million or more
that is less than $5 million.
Nominating Committee
Members: Mr. Meyers (Chairman), Mr. Doherty, Mr. Loudon, Mr. Tower and Mr.
Wentz.
The Nominating Committee evaluates prospective candidates for election to the
Board of Directors and recommends specific nominees to fill any vacancy in the
Board that may occur. The Nominating Committee will consider a candidate for
nomination as a director of the Corporation upon receipt of a timely written
notice of a shareholder's recommendation, addressed to the Secretary of the
Corporation at the Corporation's address set forth on the first page of this
Proxy Statement. In accordance with the Corporation's By-Laws, no person may be
nominated as a director by a shareholder at any Annual Meeting of Shareholders
unless written notice of such proposed nomination, containing certain
information required under the By-Laws, is delivered to the Secretary not less
than 60 days nor more than 90 days prior to the anniversary of the preceding
year's Annual Meeting, subject to certain exceptions set forth in the By-Laws.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During the 1993 fiscal year the Board of Directors held twelve meetings. The
Audit Committee met four times, the Compensation Committee met fifteen times,
the Executive Committee met five times, the Investment Review Committee met
four times and the Nominating Committee met once. During such fiscal year each
director other than Mr. Healey attended at least 85% of the aggregate of (i)
the meetings of the Board and (ii) the meetings of the committees of the Board
on which such director served. Mr. Healey, who resides in Australia, attended
73% of such meetings.
COMPENSATION OF DIRECTORS
An annual cash fee of $20,000 is payable by the Corporation to each director
who is not also an officer of the Corporation ("Non-Employee Director"). To the
extent that a Non-Employee Director attends in a calendar year more than ten
meetings of the Board and any committees of the Board of which he or she is a
member, the Corporation will pay such director a per-meeting fee of $500 for
telephonic meetings and $1,000 for in-person meetings.
Under the 1992 Directors Stock Incentive Plan (the "Directors Stock Plan"),
which is described in greater detail below under the caption "Proposal to
Approve Amendment to the 1992 Directors Stock Incentive Plan," each Non-
Employee Director receives 400 shares of the Corporation's Common Stock for
each full year served as a Non-Employee Director of the Corporation. If a Non-
Employee Director serves less than a full-year term, such director receives a
pro rata award of shares for such year. Non-Employee Directors also are
eligible under the Directors Stock Plan to receive options to purchase 1,100
shares of the Corporation's Common Stock on or about November 15 in each year
from 1990 to 1994, inclusive. A Non-Employee Director who is first elected to
the Board after November 15 receives an initial pro rata grant. The per share
exercise price of the options is the fair market value of a share of Common
Stock on the date of
5
<PAGE>
grant, which is determined as the mean between the high and low sales prices of
a share of Common Stock on such date as reflected in the report of consolidated
trading of New York Stock Exchange issues.
In 1993, most Non-Employee Directors also were eligible to elect at fixed
dates established under the Directors Stock Plan to receive additional stock
options ("Exchange Options") or share awards ("Exchange Shares") instead of
their annual retainer fees otherwise payable in cash or their annual share
awards. The number of Exchange Options granted is determined by dividing the
value of the compensation forgone by the per share value of an Exchange Option
as determined by Morgan Stanley & Co., Inc. (or another organization selected
pursuant to the terms of the Directors Stock Plan). The number of Exchange
Shares is determined by dividing the amount of cash fees forgone for each
calendar quarter by the fair market value of a share of Common Stock on the
first day of such quarter. Exchange Options and Exchange Shares are granted or
awarded at fixed dates established under the Directors Stock Plan.
Under the Pension Plan for Non-Employee Directors, each Non-Employee Director
is entitled to receive an annual retirement benefit equal to the annual cash
fee payable for the year in which the director retires from the Board. The
benefit is payable for the number of full years served as a Non-Employee
Director, up to a maximum of 10 years (with actuarially equivalent alternative
forms of benefits available in certain circumstances). Payments commence at the
later of age 65 or retirement from the Board. In the event that a Non-Employee
Director leaves the Board within one year after a change of control of the
Corporation (as defined in the plan), the director will receive a lump sum
payment equal to the actuarial value of the payments to which the director
otherwise would have been entitled under the plan. Benefits under the plan are
funded in an irrevocable grantor trust established by the Corporation.
Any director who is also an officer receives no additional compensation for
services as a director of the Corporation.
Under an agreement that went into effect on June 2, 1993 and which will
generally continue in effect until a new Chief Executive Officer of the
Corporation is appointed by the Board, Mr. Wentz receives $2,500 per day for
performing the duties of the Corporation's Chief Executive Officer. If Mr.
Wentz performs such duties on any date on which there is a Board or Board
committee meeting for which Mr. Wentz is entitled to receive a per meeting fee,
the per diem fee is reduced by the amount of the meeting fee. All amounts paid
to Mr. Wentz for his services to the Corporation, including amounts paid under
such agreement, are included in the Summary Compensation Table.
Under a consulting agreement that went into effect on July 1, 1989 and which
will expire on June 30, 1995, Mr. Healey provides services to the Corporation
with respect to its business in the Asia/Pacific region, for which he receives
$150,000 per year from the Corporation.
6
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid to the Chairman of the
Board of Directors, who has performed the duties of the Chief Executive
Officer since June 2, 1993, the former Chief Executive Officer, who ceased to
perform such duties on June 1, 1993, and each of the Corporation's four other
most highly compensated executive officers serving as executive officers on
December 31, 1993 (the "Named Executives") for services in such capacities to
the Corporation and its subsidiaries during or with respect to the previous
three fiscal years.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
- ------------------------ ---------------------------------------------- ---------------------------
(a) (b) (c) (d) (e) (f) (g) (h)
SECURITIES
RESTRICTED UNDERLYING
NAME AND OTHER ANNUAL STOCK OPTIONS/SARS ALL OTHER
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(1) COMPENSATION($) AWARD(S)($)(2) (#OF SHARES) COMPENSATION($)(3)
------------------ ---- ------------ ----------- --------------- -------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Howard B. Wentz, Jr..... 1993 280,000(4) N/A N/A 40,277(5) 1,100(6) N/A
Chairman
Martin F.C. Emmett...... 1993 287,821 N/A N/A 0 0 3,897,112
Former Chairman and 1992 400,000 65,100 N/A 0 94,663 6,053
Chief Executive Officer 1991 425,000 40,800 N/A 190,124 204,192 N/A
Charles J. Chapman...... 1993 283,833 0 N/A 0 45,127 6,941
Executive Vice 1992 289,433 16,700 N/A 0 66,099 6,053
President and 1991 275,000 6,500 N/A 203,069 119,970 N/A
President, North
America
Alain Strasser.......... 1993 260,000 47,800 15,176 0 21,883 151,526
Group Vice President-- 1992 227,167 0 20,930 0 23,755 135,923
International 1991 202,766 58,700 N/A 65,158 71,448 N/A
Raymond F. Wright....... 1993 238,000 0 N/A 0 19,955 7,243
Senior Vice President-- 1992 213,500 12,600 N/A 0 20,560 5,971
Chief Financial Officer 1991 215,000 0 N/A 65,158 73,344 N/A
Helen G. Goodman........ 1993 175,000 0 N/A 0 13,262 6,643
Senior Vice President-- 1992 160,000 11,200 N/A 0 13,151 5,538
Human Resources 1991 149,333 0 N/A 35,280 41,166 N/A
</TABLE>
- ----------
(1) Includes, where applicable, amounts electively deferred by each Named
Executive under the Corporation's Savings Plan and Employee Stock Purchase
Plan, but excludes amounts forgone at the election of a Named Executive in
exchange for other awards. The number of shares or options granted in
exchange for such amounts is included in column (f) or (g), as applicable.
(2) On December 31, 1993, the Named Executives held the following number of
shares of restricted stock, which had the following aggregate values on
such date: Mr. Wentz, no shares; Mr. Emmett, no shares; Mr. Chapman, 6,610
shares worth $292,493; Mr. Strasser, 2,820 shares worth $124,785; Mr.
Wright, 3,120 shares worth $138,060; and Ms. Goodman, 1,600 shares worth
$70,800. While all shares of restricted stock listed in the above table
require four years of post-grant service to vest in the ordinary course,
such shares may vest in less than four years in certain circumstances,
such as upon a change of control of the Corporation or the holder's death,
disability, normal retirement or approved early retirement. Dividends on
restricted stock are paid to the holders thereof at the same time and in
the same manner as dividends are paid to all other shareholders of the
Corporation.
(3) In the case of Messrs. Chapman and Wright and Ms. Goodman, amounts listed
in this column reflect the Corporation's contributions to the
Corporation's Savings Plan (exclusive of amounts deferred at the election
of the Named Executives). Messrs. Wentz and Strasser do not participate in
the Corporation's Savings Plan. For Mr. Emmett the amounts in this column
reflect the
(Footnotes continued on following page)
7
<PAGE>
(Footnotes continued from preceding page)
amounts paid in conjunction with his separation, which amounts were required
to be provided to him pursuant to his employment agreement, originally
executed in 1990. For a further discussion of these amounts, see the caption
"Other Information." For Mr. Strasser, amounts in this column reflect a
housing allowance and education expense reimbursement paid to him with
respect to his international assignment.
(4) Includes amounts paid pursuant to the agreement between Mr. Wentz and the
Corporation under which Mr. Wentz performed the duties of the Chief
Executive Officer since June 2, 1993 and the aggregate amount of all fees
paid under the standard arrangements for non-employee directors.
(5) Shares awarded, without restrictions, to Mr. Wentz as a Non-Employee
Director under the 1992 Directors Stock Incentive Plan.
(6) Options received by Mr. Wentz as a Non-Employee Director under the 1992
Directors Stock Incentive Plan.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the stock options granted during the 1993
fiscal year to the Named Executives.
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE(1)
- ---------------------------------------------------------------------- ----------
(a) (b) (c) (d) (e) (f)
% OF
TOTAL OPTIONS
GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN OR BASE EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR PRICE ($) DATE VALUE ($)
---- ------- ------------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Howard B. Wentz, Jr..... 1,100(2) 0.3(3) 43.0625 11/15/03 13,959
Martin F.C. Emmett...... 0 0 N/A N/A N/A
Charles J. Chapman...... 25,127(4) 7.0 44.8750 8/24/03 341,225
20,000(5) 5.6 43.0625 11/15/03 253,800
Alain Strasser.......... 6,683(4) 1.9 44.8750 8/24/03 90,755
15,200(5) 4.3 43.0625 11/15/03 192,888
Raymond F. Wright....... 9,855(4) 2.8 44.8750 8/24/03 133,831
10,100(5) 2.8 43.0625 11/15/03 128,169
Helen G. Goodman........ 6,562(4) 1.8 44.8750 8/24/03 89,112
6,700(5) 1.9 43.0625 11/15/03 85,023
</TABLE>
- ----------
(1) Based on the Black-Scholes option pricing model, which is an economic
model that commonly is used to estimate the present value of an option
grant. Like any economic model, the Black-Scholes option pricing model
produces different results depending on the assumptions made, and the
amounts shown above are merely good faith estimates of the present value
of such option grants. Amounts related to grants made on August 24, 1993
were estimated based upon the following assumptions: a future volatility
in the value of the Corporation's Common Stock of 29.42 percent, a risk-
free rate of return of 5.68 percent and a dividend yield on the
Corporation's Common Stock of 3.4 percent, and that the option is
exercised on the tenth anniversary of the date of grant. Amounts related
to grants made on November 15, 1993 were estimated based upon the
following assumptions: a future volatility in the value of the
Corporation's Common Stock of 31.42 percent, a risk-free rate of return of
5.72 percent and a dividend yield on the Corporation's Common Stock of 3.9
percent, and that the option is exercised on the tenth anniversary of the
date of grant. Because one of the variables in this model is the future
volatility in the value of the Corporation's Common Stock, the actual
present value of such grants cannot be determined.
(2) Represents options received as a Non-Employee Director under the 1992
Directors Stock Incentive Plan.
(Footnotes continued on following page)
8
<PAGE>
(Footnotes continued from preceding page)
(3) Percentage for Mr. Wentz determined assuming that, solely for purposes of
this calculation, Mr. Wentz's options were employee options.
(4) This option generally became exercisable on March 5, 1994. The option
generally must be exercised, if at all, not later than 90 days following
the termination of the optionee's employment with the Corporation and its
affiliates. However, in the event that the optionee's employment terminates
due to death, disability, normal retirement or approved early retirement,
the optionee (or his beneficiary) will be able to exercise the option at
any time during its original 10-year term.
(5) This option generally becomes exercisable on November 15, 1995, although it
may become exercisable earlier upon the occurrence of a change of control
of the Corporation or upon the optionee's death, disability, normal
retirement or approved early retirement. The option generally must be
exercised, if at all, not later than 90 days following the termination of
the optionee's employment with the Corporation and its affiliates. However,
in the event that the optionee's employment terminates due to death,
disability, normal retirement or approved early retirement, the optionee
(or his beneficiary) will be able to exercise the option at any time during
its original 10-year term.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
The following table sets forth information for each Named Executive with
regard to the aggregate stock options exercised during the 1993 fiscal year,
and the aggregate stock options held as of December 31, 1993.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
NUMBER OF OPTIONS AT FY-END FY-END ($)(2)
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Howard B. Wentz, Jr..... 0 N/A 2,200 0 1,100 0
Martin F.C. Emmett...... 150,000 2,592,188 118,555 0 0 0
Charles J. Chapman...... 0 N/A 119,169 141,027 175,999 20,000
Alain Strasser.......... 0 N/A 36,003 81,083 0 15,200
Raymond F. Wright....... 20,000 250,750 45,404 77,855 29,963 10,100
Helen G. Goodman........ 0 N/A 42,317 45,062 247,837 6,700
</TABLE>
- ----------
(1) Based on the fair market value of the Corporation's Common Stock on the
date of exercise, minus the exercise price.
(2) Based on the fair market value of the Corporation's Common Stock on
December 31, 1993, minus the exercise price.
PENSION PLAN AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
During 1993, the Corporation maintained a qualified Pension Plan and a
Supplemental Executive Retirement Plan (the "SERP"). Subject to applicable
vesting requirements, the SERP as currently in effect provides two types of
benefits: the first restores for all employees any benefits that cannot be paid
under the Pension Plan because of certain Internal Revenue Code limits (the
"Excess Benefits"), and the second provides additional retirement benefits (the
"Supplemental Benefits") to select employees, including the
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<PAGE>
Named Executives other than Messrs. Wentz and Strasser. Messrs. Wentz and
Strasser are not participants in the SERP or the Pension Plan, but Mr. Wentz
participates in the Pension Plan for Non-Employee Directors, and Mr. Strasser
participates in certain programs to which the Corporation's French subsidiary
contributes.
The Supplemental Benefits are calculated under whichever of the following two
alternative benefit formulas provides the greater benefit. The first formula
(the "Targeted Benefit Formula") is generally designed to provide each Named
Executive with an annual benefit at age 62 equal to forty-five percent of the
eligible participant's Highest Average Earnings (as described below). The
Targeted Benefit Formula for Mr. Emmett was equal to sixty percent of the
midpoint of the cash compensation for his salary grade. If a Named Executive
ceases to be employed prior to age 62, the targeted benefit is multiplied by a
fraction, the numerator of which is the participant's Years of Service (as
defined in the SERP) and the denominator of which is the remainder of 62 minus
the participant's age on his birthday occurring in the calendar year in which
such participant first became an employee of the Corporation or one of its
subsidiaries. The other Supplemental Benefits formula produces an annual
benefit equal to the product of (i) three percent of an eligible participant's
Highest Average Earnings and (ii) the participant's Years of Service (not in
excess of fifteen). Highest Average Earnings equals the average of a
participant's compensation during the plan year, which generally includes wages
for social security purposes determined without regard to certain limitations
(but adjusted to include certain compensation which, at the participant's
election, is not paid), for the five consecutive plan years out of the last ten
years that produce the highest average. The Supplemental Benefits payable to a
participant are reduced by a percentage of the participant's primary social
security benefit and by the benefits payable to the participant under the
Pension Plan.
An eligible executive generally must complete at least ten Years of Service
and remain employed with the Corporation until at least age 55 to become vested
in the benefits accrued under the SERP. However, the SERP has been amended,
effective as of July 1, 1994, to provide that the Excess Benefits will become
vested solely upon the completion of five Years of Service, which is the same
requirement as applies to benefits accrued under the Pension Plan.
If, within two years following a change of control of the Corporation (as
defined in the SERP), the employment of a Named Executive is terminated by the
Corporation or by a Named Executive within 90 days following (i) a material
reduction in his compensation and benefits, (ii) a material change in his
duties or responsibilities or (iii) a transfer in his principal place of
employment to a location more than 35 miles from his previous principal place
of employment, he will automatically become vested under the SERP and receive
an additional two years of credited service thereunder.
Under the terms of the Pension Plan for Non-Employee Directors, had Mr. Wentz
retired from the Board as of December 31, 1993, Mr. Wentz would have been
entitled to a retirement benefit on such date of $20,000 per year for eight
years, commencing at age 65.
As required by applicable law, Mr. Strasser participates in the French public
pension system. This system has a formula that would provide Mr. Strasser a
retirement benefit at age 65 equal to approximately 70% of his qualifying
compensation. The Corporation's French subsidiary maintains a separate plan
which is intended to assure that its participants (including Mr. Strasser)
receive retirement benefits in the aggregate that are comparable to those which
would generally have been provided under the French system, without taking into
account certain limitations on the benefits that may be provided under such
system.
The following table shows the estimated annual benefits payable to
hypothetical participants who are entitled to the maximum benefits under the
Pension Plan, as supplemented by the Excess Benefits under the
10
<PAGE>
SERP, in the compensation and years-of-service categories indicated in the
table upon retirement at normal retirement age under the Pension Plan.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS
----------------------------------------------------------------------------
ANNUALIZED
AVERAGE 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
EARNINGS OF SERVICE OF SERVICE OF SERVICE OF SERVICE OF SERVICE OF SERVICE OF SERVICE
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$100,000................ $14,370 $21,555 $28,740 $35,925 $43,110 $50,295 $57,480
140,000................ 20,370 30,555 40,740 50,925 61,110 71,295 81,480
180,000................ 26,370 39,555 52,740 65,925 79,110 92,295 105,480
220,000................ 32,370 48,555 64,740 80,925 97,110 113,295 129,480
260,000................ 38,370 57,555 76,740 95,925 115,110 134,295 153,480
300,000................ 44,370 66,555 88,740 110,925 133,110 155,295 177,480
340,000................ 50,370 75,555 100,740 125,925 151,110 176,295 201,480
380,000................ 56,370 84,555 112,740 140,925 169,110 197,295 225,480
420,000................ 62,370 93,555 124,740 155,925 187,110 218,295 249,480
460,000................ 68,370 102,555 136,740 170,925 205,110 239,295 273,480
500,000................ 74,370 111,555 148,740 185,925 223,110 260,295 297,480
540,000................ 80,370 120,555 160,740 200,925 241,110 281,295 321,480
580,000................ 86,370 129,555 172,740 215,925 259,110 302,295 345,480
620,000................ 92,370 138,555 184,740 230,925 277,110 323,295 369,480
660,000................ 98,370 147,555 196,740 245,925 295,110 344,295 393,480
700,000................ 104,370 156,555 208,740 260,925 313,110 365,295 417,480
</TABLE>
As of December 31, 1993, the credited Years of Service and the compensation
covered under the Pension Plan and the SERP of each of the Named Executives
other than Messrs. Emmett, Wentz and Strasser are as follows: Mr. Chapman, five
years, $480,214; Mr. Wright, five years, $319,725; and Ms. Goodman, 11 years,
$180,320. Prior to 1993, Mr. Emmett was credited with ten Years of Service
under the SERP for the sole purpose of determining his eligibility for (but not
the amount of) benefits thereunder. The amounts shown in the above table
reflect the effect of a social security offset and are based upon the
assumption that benefits will be paid in the form of a life annuity. Mr. Emmett
did not attain the minimum Years of Service required under the Pension Plan
prior to his separation from the Corporation and, accordingly, will receive no
benefit under the Pension Plan.
As of December 31, 1993, the annual benefits accrued under the applicable
Supplemental Benefits formula under the SERP (taking into account the reduction
for amounts payable under the Pension Plan and calculated on the assumption
that benefits will be paid in the form of a life annuity) were $81,411, $49,057
and $17,424 for Messrs. Chapman and Wright and Ms. Goodman, respectively. Mr.
Emmett, who has elected to receive a 100% joint and survivor benefit under the
SERP, receives annual Supplemental Benefits of $256,796. Mr. Emmett's
Supplemental Benefits were determined based on compensation of $993,600 and
four Years of Service.
OTHER INFORMATION
The Corporation entered into a separation agreement with Mr. Emmett during
1993. The separation benefits paid to Mr. Emmett pursuant to the separation
agreement were those required to be provided pursuant to his employment
agreement, originally executed in 1990. These benefits were: payment of a
prorated target bonus for his actual services rendered during 1993, payment of
his legal fees incurred in connection with his separation, a lump sum payment
equal to the sum of three times the aggregate amount of his annual base salary
and his most recent annual bonus award, payment of the present value of the
additional retirement benefits he would have received with three additional
years of service and continuation of most of his benefits for three years under
the Corporation's medical and other welfare benefit plans. Under the separation
agreement, Mr. Emmett acknowledged that the amount of salary that he elected to
forgo in exchange for certain options under the exchange option program but
that he had not earned at the time of
11
<PAGE>
his separation would be subtracted from the amount of his separation benefits.
The separation agreement also recites (i) the fact that Mr. Emmett's separation
was treated as an early retirement under the 1991 Stock Option Plan solely as
to outstanding exchange options, (ii) Mr. Emmett's agreement to shorten the
term of such options so that they will expire on the third anniversary of his
separation and (iii) Mr. Emmett's acknowledgement that all other options would
remain exercisable, to the extent then exercisable, for 90 days and that all of
his outstanding shares of restricted stock were forfeited as of June 2, 1993.
The Corporation has contracts with Messrs. Chapman, Strasser and Wright and
Ms. Goodman that provide certain rights in the event of a change of control of
the Corporation (as defined in the contracts). Under these contracts, if there
is a change of control and if, within two years following the change of
control, the employment of the employee is terminated without "cause" by the
Corporation or if the employee terminates his employment for "good reason" (as
such terms are defined in the contracts), then the employee is entitled to
receive either three times, in the case of Messrs. Chapman and Strasser, or two
times, in the case of Mr. Wright and Ms. Goodman, the aggregate amount of the
officer's then current base salary, the employee's last annual bonus award and
the present value of the annual cost of the employee's participation in all
employee benefit plans of the Corporation. Any payments by the Corporation to
any such Named Executive would be grossed up on an after-tax basis with respect
to certain federal excise taxes, if applicable.
The Corporation has entered into an agreement with Mr. Chapman to provide
continuity of management to the Corporation. The agreement provides Mr. Chapman
with certain benefits to induce him to stay with the Corporation until at least
July 1, 1994. Under this agreement, if Mr. Chapman retires from the Corporation
between July 1 and September 30, 1994, he will receive his base salary through
his last day worked and be provided with a prorated bonus opportunity for 1994
(based on actual performance). If Mr. Chapman retires on or after October 1,
1994, the Corporation will pay him salary continuance in an amount equal to
three months base salary in installments and provide him with his full bonus
opportunity (based on actual performance) and regular employee benefits over
the period from his last day of active employment to April 25, 1995 (the end of
his term as a director, if reelected at the Annual Meeting). If Mr. Chapman's
employment is terminated by the Corporation prior to October 1, 1994, he will
receive the benefits and compensation he would have received had he retired on
October 1. Mr. Chapman's retirement on or after July 1, 1994 will be treated as
an early retirement with consent under the Corporation's option plans solely
with respect to options that are currently vested or that vest during the term
of the agreement. This will enable him to exercise these options for up to five
years following the term of the agreement.
The Corporation maintains a severance program that generally entitles an
executive officer of the Corporation to receive severance benefits in the event
that the officer's employment is involuntarily terminated by the Corporation.
The actual benefits payable to any executive officer under such program will be
based on several factors, including the executive officer's age and years of
service at the time of such termination. The minimum severance benefit payable
to an executive officer under the policy is one year's base salary. A prorated
target bonus, adjusted as appropriate for performance, is also generally
payable. In appropriate circumstances, the determination may be made that an
employee's performance does not warrant any bonus payment.
Executive officers and directors of the Corporation are required to file
periodic reports with the Securities and Exchange Commission regarding
transactions in the Corporation's equity securities with respect to which they
have a primary interest. Ms. Diane Forrest, a current executive officer, did
not meet filing deadlines with respect to two transactions made by her spouse
for his individual retirement account. Mr. James G.
12
<PAGE>
Mitchell, a former executive officer, did not meet filing deadlines with
respect to three transactions involving an aggregate of approximately 530
shares. Two of Mr. Mitchell's transactions occurred after he ceased to be an
executive officer, but while he was still subject to these reporting
requirements.
In early 1993, as an accommodation to Mr. Emmett while he was travelling in
Europe on business, the Corporation arranged for a bank check for $155,000 to
be issued and effected a wire transfer of $125,000 on his behalf. Mr. Emmett
delivered to the Corporation a check for the amount of the bank check prior to
its issuance and reimbursed the Corporation (without interest) for the wire
transfer within three business days of such transfer.
Mr. Paul S. Doherty, a director of the Corporation, is a partner in Doherty,
Wallace, Pillsbury & Murphy, P.C., a law firm that has performed certain
services for the Corporation since January 1, 1993. In 1993, the Corporation
paid this firm an aggregate amount of approximately $5,800 for services
performed in 1992 and 1993.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee operates independent of any interlocking
relationship with the board of directors, executive officers or committees of
any other corporation, the disclosure of which would be required under
applicable regulations of the Securities and Exchange Commission. However, as
required to be disclosed pursuant to these regulations, during a portion of
1993 two former officers, Messrs. E. Russell Sprague and Robert P. Kiley, each
served on a Board committee which had responsibility for compensation matters.
REPORT OF THE COMPENSATION COMMITTEE
This report provides an explanation of the philosophy underlying the
Corporation's executive compensation programs and details on how decisions were
implemented during 1993 regarding the compensation paid to Martin F. C. Emmett,
who served as Chairman and Chief Executive Officer of the Corporation (the
"CEO") until June 1, 1993 and to Howard B. Wentz, Jr., a Non-Employee Director
who replaced Mr. Emmett as Chairman and who has performed the duties of the CEO
since June 2, 1993. In developing the practices and policies described in this
report, the Compensation Committee has been advised by outside consultants
experienced in the design and implementation of executive compensation
arrangements.
FRAMEWORK FOR COMPENSATION DECISIONS
Decisions with respect to the compensation of executive officers of the
Corporation generally are within the authority of the Compensation Committee of
the Board of Directors; however, during 1993, the Administrative Committee
described above under the caption "Information Regarding the Board of
Directors," which is comprised of three individuals each of whom is a
"disinterested person" within the meaning of Rule 16b-3, as promulgated by the
Securities and Exchange Commission, made all decisions with respect to grants
of stock options and awards of restricted stock to executive officers, upon the
recommendation of the Compensation Committee. These committees make
recommendations to the Board of Directors with regard to the compensation of
the person fulfilling the duties of the Corporation's Chief
13
<PAGE>
Executive Officer. Pursuant to the Corporation's normal practices, in 1993 the
Board of Directors reviewed the committees' recommendations for Messrs. Emmett
and Wentz, and, after due consideration, approved such recommendations.
The Compensation Committee regularly reviews the compensation paid to
executive officers and periodically conducts reviews of the Corporation's
compensation practices.
COMPARATIVE COMPANY DATA
The Corporation uses a group of 21 companies (the "Comparative Group") both
for purposes of determining the compensation it pays its executive officers and
for purposes of the performance graph set forth below. Each of the companies in
the Comparative Group has one or more of the following characteristics:
. Widely recognized product brands.
. Significant presence in the health and beauty aid or food category.
. Significant market presence outside the United States.
. Leading market shares in significant markets.
. Similar caliber/experience of senior management.
The Comparative Group includes several of the Corporation's competitors, and
also includes other companies that are not engaged in the feminine protection
business. Because of the similarities among the Corporation and the members of
the Comparative Group with regard to the factors listed above, the Corporation
believes that comparing the Corporation's compensation practices and stock
performance to those of the Comparative Group is more reasonable than comparing
the Corporation solely to its competitors.
All Comparative Group data is adjusted to reflect differences in company size
and the scope of each executive's responsibilities.
The companies that comprise the Comparative Group are:
American Home Products Corporation
Brown-Forman Corporation
Carter-Wallace, Inc.
Church & Dwight Co. Inc.
The Clorox Company
Colgate-Palmolive Company
Commerce Clearing House, Inc.
General Mills, Inc.
The Gillette Company
Helene Curtis Industries, Inc.
Hillenbrand Industries Inc.
International Flavors & Fragrances Inc.
Johnson & Johnson
Kimberly-Clark Corporation
14
<PAGE>
Lance, Inc.
The Procter & Gamble Company
Schering-Plough Corporation
The J.M. Smucker Company
UST Inc.
Warner-Lambert Company
Wm. Wrigley Jr. Company
THE CORPORATION'S EXECUTIVE COMPENSATION PHILOSOPHY
The Compensation Committee has consistently applied the following philosophy
of the Corporation in making its recommendations or decisions on the
compensation paid or awarded to its executive officers:
. The principal management objective is to maximize shareholder value.
. Performance is the key determinant of pay for executive officers.
. Executive officers have clear management accountabilities.
Comparative Group data is used to determine rates of pay which are
competitive with compensation paid by the Comparative Group. The Corporation's
executive pay levels are intended to vary from Comparative Group standards in
accordance with the Corporation's performance. For example, if the
Corporation's performance exceeds its goals, then the incentive payouts and
stock option gains paid to executives are intended to result in total pay in
excess of the Comparative Group median. If the Corporation's performance falls
below its goals, total pay is intended to be below targeted levels.
IMPLEMENTATION OF THE PHILOSOPHY IN 1993
Consistent with the above-stated philosophy, the Corporation's executive
compensation programs were administered in 1993 in accordance with the
following guidelines:
. Base salaries for executive officers were targeted at the fiftieth
percentile of competitive practices with respect to base salaries.
. Target bonus opportunities for executive officers for 1993 services were
generally designed to provide such officers with total cash compensation
(inclusive of base salary) at the sixtieth percentile of competitive
practice, if the requisite performance objectives were attained.
. Benefits were consistent with competitive practice.
. Long-term performance pay opportunities for 1993 were intended to provide
compensation at the seventy-fifth percentile of competitive practice, if
the Corporation were to achieve its projected performance over the long
term.
Annual bonuses were structured to become payable to the Corporation's
executive officers contingent on the attainment of financial and individual
performance objectives. Financial objectives were the most significant factor
with respect to annual bonus opportunities. The financial objectives for each
executive officer were dependent on the officer's responsibilities. For each
executive officer with corporate responsibilities, the relevant financial
objectives for 1993 were an annual earnings per share target and retail
sales/shipment targets in specified geographic areas. Financial objectives for
each executive officer with primary responsibility
15
<PAGE>
for a particular division were largely based on objective criteria related to
the performance of such division, although a portion of each such officer's
bonus opportunity was based on corporate objectives.
In 1993, the Corporation did not achieve targeted financial objectives;
accordingly, no executive officer received a bonus at target levels. The total
bonus payout for executive officers employed on December 31, 1993 was 40.8% of
the target bonuses for such officers. For the Named Executives, the aggregate
dollar amount of such 1993 bonuses was $188,100, which was 60% lower than the
amount paid to such Named Executives for 1992 services. Substantially all of
this amount was exchanged by the Named Executives for the grant of stock
options under the Corporation's Exchange Option Program described below. The
percentage reduction in the amount paid to the Named Executives as bonuses for
1993 as compared to 1992 bonuses was greater than the percentage reduction in
the Corporation's 1993 earnings per share as compared to its 1992 earnings per
share.
During 1993, the Corporation continued to place a substantial emphasis on
long-term performance pay. In 1993, 87.5% of such long-term performance pay
opportunities was reflected in stock option grants, with the remainder awarded
through restricted stock grants approved during 1993.
The number of stock options granted to executive officers in 1993, other than
pursuant to the terms of the Exchange Option Program (described below), was
determined by dividing each executive officer's targeted long-term performance
pay opportunity attributable to stock options by an estimated discounted
present value of an option for one share of Common Stock at the time of the
award. Such discounted present value was determined based on certain
assumptions regarding changes in the value of the Common Stock and the period
during which the option was expected to remain outstanding. (A similar
procedure was used to determine the number of shares issued pursuant to an
award of restricted stock.) Prior stock option awards were not taken into
account in determining the size of any stock option award made in 1993.
In addition to the annual stock option grants described above, to increase
each executive officer's economic interest in the performance of the
Corporation, in 1993 the Corporation again implemented an Exchange Option
Program (as it had in 1991 and 1992) whereby executive officers and other
eligible key employees could elect to forgo receipt of future compensation
(such as annual bonuses and restricted stock awards) in exchange for stock
options having an exercise price per share equal to the fair market value of a
share of Common Stock on the date of grant. The number of shares subject to
such exchange options was based on the amount of the compensation forgone and
the value of each such stock option, as determined by an investment banking
firm selected by the Administrative Committee. Because bonus awards for 1993
did not achieve targeted levels, exchange options awarded in exchange for
targeted bonus amounts were forfeited to the extent that the actual bonus
earned was below the amount forgone.
CEO COMPENSATION
For the portion of 1993 during which he served as the Corporation's CEO, Mr.
Emmett received a base salary at the rate of $500,000 per year pursuant to the
terms of his employment agreement. In 1992, Mr. Emmett elected to forgo receipt
of $100,000 of his base salary payable in 1993 in exchange for stock options
having an equivalent value.
During 1993, the Corporation placed substantial emphasis on total performance
pay. However, total performance pay is not taken into account in determining
the amount of an executive officer's retirement
16
<PAGE>
benefits. Accordingly, in order to enable Mr. Emmett to accrue a total
retirement benefit targeted at the seventy-fifth percentile (the level of total
performance pay generally intended to be provided at targeted performance) of
the retirement benefits paid to chief executive officers at the companies in
the Comparative Group, the SERP benefit formula for Mr. Emmett was modified in
February 1993. To achieve this targeted benefit level, the SERP formula for Mr.
Emmett was revised so that his benefits were based on sixty percent of the
midpoint of the cash compensation for his salary grade, rather than on a
percentage of his highest average earnings.
In conjunction with his separation, Mr. Emmett received the amounts
(described above under the caption "Other Information") due and payable in
connection therewith under his employment agreement.
Mr. Emmett received no stock option grants in 1993. He also received no
restricted stock in 1993 because he elected in 1992 to forgo receipt of all of
the restricted stock that would have been issued to him on February 15, 1993 in
exchange for a grant of stock options having an equivalent value. Upon the
recommendation of the Compensation Committee, the Administrative Committee
granted its consent to treat Mr. Emmett's early retirement under the terms of
the SERP as an early retirement under the 1991 Stock Option Plan solely with
respect to his then outstanding options that had been granted in lieu of other
forms of compensation under the Exchange Option Program. As a result of the
granting of this consent, Mr. Emmett received the opportunity to exercise such
options for up to three years following his separation.
During 1993, Mr. Wentz received $2,500 per day for performing the duties of
the CEO, provided that any meeting fees payable to Mr. Wentz for services as a
Non-Employee Director on any date on which he also performed these CEO duties
were applied to offset the amount payable for performing such duties. Such per
diem amount was approximately equal to the amount derived by converting to a
daily rate the median base salary payable under the Corporation's usual
compensation practices to the person serving as its CEO.
All other benefits and compensation payable by the Corporation to Mr. Wentz
during 1993 were paid for his services as a director under the Corporation's
standard arrangements for Non-Employee Directors.
OTHER
Until August 1993, Robert P. Kiley, a former officer of the Corporation, was
also a member of the Compensation Committee, but resigned because at that time
he would not have qualified as an "outside director" under Section 162(m) of
the Internal Revenue Code of 1986, as amended.
Based on currently prevailing authority, including proposed Treasury
regulations issued in December 1993, the Committee has determined, with the
advice of counsel, that it is highly unlikely that the Corporation would pay
any amounts in 1994 that would result in the loss of a Federal income tax
deduction under such Section 162(m), and accordingly has not recommended that
any special actions be taken or plans or programs be revised at this time in
light of such tax law provision.
The Compensation Committee of the
Board of Directors
Lilyan H. Affinito, Chairperson
Floyd Hall
H.L. Tower
17
<PAGE>
PERFORMANCE COMPARISON
The following graph illustrates the return that would have been realized
(assuming quarterly reinvestment of dividends) by an investor who invested $100
on December 31, 1988 in each of (i) the Standard & Poor's Composite Index of
500 Stocks (the "S&P 500"), (ii) the Corporation's Common Stock and (iii) a
fund making investments in the common stock of each of the companies in the
Comparative Group described in the Report of the Compensation Committee based
on their relative market capitalization determined at the beginning of each
quarter.
Comparison Of Total Return To Shareholders
(12/31/88 - 12/31/93)
Among Tambrands, S&P 500, and Comparative Group
[CHART]
<TABLE>
<CAPTION>
Measurement period Comparative
(Fiscal year Covered) Tambrands S&P 500 Group
- --------------------- --------- ------- -----------
<S> <C> <C> <C>
December 31, 1988 $100.00 $100.00 $100.00
December 31, 1989 $122.21 $131.59 $146.73
December 31, 1990 $155.28 $127.49 $171.23
December 31, 1991 $244.64 $166.17 $246.65
December 31, 1992 $240.72 $178.81 $246.97
December 31, 1993 $171.78 $196.75 $250.71
</TABLE>
18
<PAGE>
SECURITY OWNERSHIP BY MANAGEMENT AND OTHERS
SECURITY OWNERSHIP OF MANAGEMENT
The following table gives information concerning the beneficial ownership of
the Corporation's Common Stock as of February 9, 1994 by all directors,
nominees for election as directors, the Named Executives and all directors,
Named Executives and other executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)
----------------------------------------------------
TOTAL SHARES
BENEFICIALLY DIRECT RIGHT TO PERCENT OF
BENEFICIAL OWNERS OWNED(2) OWNERSHIP(3) ACQUIRE(4) CLASS(5)
----------------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C>
Lilyan H. Affinito.......... 19,986 3,500 16,486 0.05
Charles J. Chapman.......... 155,363(6) 16,637(7) 137,963 0.41
Paul S. Doherty............. 12,335 7,935 4,400 0.03
Floyd Hall.................. 20,527 9,924 10,603 0.05
Brian Healey................ 13,175(8) 1,034 6,641 0.03
Robert P. Kiley............. 23,614(9) 12,538 10,406 0.06
John Loudon................. 8,539 0 8,539 0.02
Ruth M. Manton.............. 19,150(10) 5,197 11,953 0.05
John A. Meyers.............. 21,086 4,600 16,486 0.06
H.L. Tower.................. 23,741 9,199 14,542 0.06
Howard B. Wentz, Jr......... 11,560 9,360 2,200 0.03
Robert M. Williams.......... 510,430(11) 12,000 16,486 1.34
Martin F.C. Emmett.......... 118,555 0 118,555 0.31
Alain Strasser.............. 48,225(12) 5,239(13) 42,686 0.13
Raymond F. Wright........... 86,574(14) 28,416(15) 55,259 0.23
Helen G. Goodman............ 56,647(16) 5,975(17) 48,879 0.15
All directors, Named
Executives and other
executive officers as a
group...................... 1,278,311(18) 140,624(19) 634,519 3.30
</TABLE>
- ----------
(1) The information as to beneficial ownership is based on statements furnished
to the Corporation by the Named Executives, its other executive officers and
directors. The directors, nominees for election as directors and Named
Executives have sole voting and sole investment power with respect to all
shares listed above except as indicated in the footnotes which follow.
(2) Includes shares listed under the captions "Direct Ownership" and "Right to
Acquire."
(3) The information as to shares of the Corporation's Common Stock owned under
the Employee Stock Purchase Plan is as of December 31, 1993.
(4) Individuals currently have the right to acquire these shares within 60 days
of February 9, 1994, by the exercise of stock options.
(5) For the purposes of this table, the percent of the issued and outstanding
shares of Common Stock of the Corporation held by each individual or group
has been calculated on the basis of (i) 38,071,817 shares of Common Stock
issued and outstanding (excluding treasury shares) on February 9, 1994 and
(ii) all
(Footnotes continued on following page)
19
<PAGE>
(Footnotes continued from preceding page)
shares of Common Stock subject to stock options exercisable within 60 days
of February 9, 1994, held by that individual or group.
(6) Includes 396 shares vested in the Corporation's Savings Plan as of
December 31, 1993 with respect to which Mr. Chapman has sole voting but not
investment power.
(7) Includes 3,950 shares awarded under the 1989 Restricted Stock Plan (the
"1989 Plan") with respect to which Mr. Chapman has sole voting but not
investment power. Information for Mr. Chapman regarding stock issued under
the 1989 Plan is as of February 15, 1994.
(8) Includes 5,500 shares owned by Mr. Healey's wife.
(9) Includes 670 shares vested in the Corporation's Savings Plan as of
December 31, 1993 with respect to which Mr. Kiley has sole voting but not
investment power.
(10) Includes 2,000 shares owned by Aries Design Management, Inc. Pension
Trust, of which Ms. Manton is the trustee and sole beneficiary.
(11) Includes 466,404 shares held by a trust of which Mr. Williams is a trustee
and a beneficiary, 3,360 shares held by a trust of which Mr. Williams is
the beneficiary, 11,280 shares held by trusts of which Mr. Williams is a
trustee and 900 shares held by Mr. Williams's wife and child.
(12) Includes 300 shares owned by Mr. Strasser's children.
(13) Includes 2,419 shares owned jointly by Mr. Strasser and his wife. Includes
1,340 shares awarded under the 1989 Plan with respect to which Mr.
Strasser has sole voting but not investment power. Information for Mr.
Strasser regarding stock issued under the 1989 Plan is as of February 15,
1994.
(14) Includes 2,500 shares owned by Mr. Wright's wife as to which Mr. Wright
disclaims beneficial ownership and 237 shares vested in the Corporation's
Savings Plan as of December 31, 1993 with respect to which Mr. Wright has
sole voting but not investment power.
(15) Includes 1,340 shares awarded under the 1989 Plan with respect to which
Mr. Wright has sole voting but not investment power. Information for Mr.
Wright regarding stock issued under the 1989 Plan is as of February 15,
1994.
(16) Includes 1,085 shares vested in the Corporation's Savings Plan as of
December 31, 1993 with respect to which Ms. Goodman has sole voting but
not investment power.
(17) Includes 3,320 shares owned jointly by Ms. Goodman and her husband.
Includes 720 shares awarded under the 1989 Plan with respect to which Ms.
Goodman has sole voting but not investment power. Information for Ms.
Goodman regarding stock issued under the 1989 Plan is as of February 15,
1994.
(18) Includes 4,940 shares vested in the Corporation's Savings Plan as of
December 31, 1993 with respect to which this group has sole voting but not
investment power.
(19) Includes 10,770 shares awarded under the 1989 Plan with respect to which
this group has sole voting but not investment power. Information regarding
stock issued under the 1989 Plan is as of February 15, 1994.
SECURITY OWNERSHIP OF OTHERS
On February 7, 1994, Cooke & Bieler, Inc. ("Cooke & Bieler") reported
beneficial ownership of 3,203,668 shares of the Corporation's Common Stock,
which it reported to be 8.4% of the Common Stock
20
<PAGE>
outstanding. Cooke & Bieler stated that it possesses (i) sole voting power with
respect to 2,510,900 of such shares, (ii) shared voting power with respect to
none of such shares, (iii) sole dispositive power with respect to 3,021,368 of
such shares and (iv) shared dispositive power with respect to none of such
shares. The principal business office for Cooke & Bieler is 1700 Market, Suite
3222, Philadelphia, Pennsylvania 19103. Cooke & Bieler stated in its filing on
Schedule 13G under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), that these shares were acquired in the ordinary course of
business and not for the purpose of changing or influencing the control of the
Corporation. The Corporation has no knowledge that Cooke & Bieler has changed
its ownership of such shares.
On February 11, 1994, in a joint filing, Capital Research and Management
Company ("CRMC") reported beneficial ownership of 2,100,800 shares of the
Corporation's Common Stock, and The Capital Group, Inc. ("TCG") reported
beneficial ownership of 2,520,100 shares of the Corporation's Common Stock,
including the shares reported by CRMC. CRMC and TCG reported their shares to be
5.46% and 6.55%, respectively, of the Common Stock outstanding. CRMC stated in
its filing that it possesses (i) sole voting power with respect to none of such
shares, (ii) shared voting power with respect to none of such shares, (iii)
sole dispositive power with respect to 2,100,800 shares and (iv) shared
dispositive power with respect to none of such shares. TCG stated in its filing
that it possesses (i) sole voting power with respect to 259,600 of such shares,
(ii) shared voting power with respect to none of such shares, (iii) sole
dispositive power with respect to 2,520,100 shares and (iv) shared dispositive
power with respect to none of such shares. CRMC and Capital Guardian Trust
Company, both operating subsidiaries of TCG, exercised as of December 31, 1993
investment discretion with respect to 2,100,800 and 419,300 shares,
respectively, held in investment advisory accounts for the benefit of various
institutional investors. CRMC and TCG stated in their filing on Schedule 13G
that these shares were acquired in the ordinary course of business and not for
the purpose of changing or influencing the control of the Corporation. The
principal business office for each of CRMC and TCG is 333 South Hope Street,
Los Angeles, California 90071. The Corporation has no knowledge that either
CRMC or TCG has changed its ownership of such shares.
On February 10, 1994, Newbold's Asset Management, Inc. ("Newbold"), reported
beneficial ownership of 1,978,675 shares of the Corporation's Common Stock.
Newbold reported its shares to be 5.2% of the Common Stock outstanding. Newbold
stated in its filing that it possesses (i) sole voting power with respect to
1,978,675 shares, (ii) shared voting power with respect to 18,650 of such
shares, (iii) sole dispositive power with respect to 1,978,675 shares and (iv)
shared dispositive power with respect to 18,650 of such shares. Newbold stated
in its filing on Schedule 13G that these shares were acquired in the ordinary
course of business and not for the purpose of changing or influencing the
control of the Corporation. The principal business office for Newbold is 937
Haverford Road, Bryn Mawr, Pennsylvania 19010-3845. The Corporation has no
knowledge that Newbold has changed its ownership of such shares.
On January 26, 1994, in a joint filing, Putnam Investment Management, Inc.
("PIMI") reported beneficial ownership of 1,890,200 shares of the Corporation's
Common Stock, The Putnam Advisory Company, Inc. ("PAC") reported beneficial
ownership of 35,850 shares of the Corporation's Common Stock and Putnam
Investments, Inc. ("Putnam") reported beneficial ownership of 1,926,050 shares
of the Corporation's Common Stock, including the shares reported by PIMI and
PAC. PIMI, PAC and Putnam reported their shares to be 4.9%, 0.1% and 5.0%,
respectively, of the Common Stock outstanding. PIMI and PAC are subsidiaries of
Putnam. Putnam is a subsidiary of Marsh & McLennan Companies, Inc., which was
also a filing party on the Schedule 13G but reported beneficial ownership of no
shares of the Corporation's Common Stock. PIMI stated that it possesses (i)
sole voting power with respect to none of such shares, (ii)
21
<PAGE>
shared voting power with respect to none of such shares, (iii) sole dispositive
power with respect to none of such shares and (iv) shared dispositive power
with respect to 1,890,200 shares. PAC stated that it possesses (i) sole voting
power with respect to none of such shares, (ii) shared voting power with
respect to 23,000 of such shares, (iii) sole dispositive power with respect to
none of such shares and (iv) shared dispositive power with respect to 35,850
shares. Putnam stated that it possesses (i) sole voting power with respect to
none of such shares, (ii) shared voting power with respect to 23,000 of such
shares, (iii) sole dispositive power with respect to none of such shares and
(iv) shared dispositive power with respect to 1,926,050 shares. The 1,926,050
shares reported by Putnam are held in investment advisory accounts managed by
Putnam, PIMI and PAC. Putnam, PIMI and PAC have stated in their joint filing on
Schedule 13G that these shares were acquired in the ordinary course of business
and not for the purpose of changing or influencing the control of the
Corporation. The principal business office for each of Putnam, PIMI and PAC is
One Post Office Square, Boston, Massachusetts 02109. The Corporation has no
knowledge that any of Putnam, PIMI and PAC has changed its ownership of such
shares.
To the best knowledge of the Corporation's management, there is no other
beneficial owner of more than 5% of the single class of voting security of the
Corporation.
PROPOSAL TO APPROVE AMENDMENT TO THE
1992 DIRECTORS STOCK INCENTIVE PLAN
INTRODUCTION
The following proposal addresses the second postponement by the Securities
and Exchange Commission of the effective date of certain amendments to Rule
16b-3, as promulgated by the Securities and Exchange Commission under the
Exchange Act ("Rule 16b-3"). In order to reflect the postponed effective date,
the Board of Directors has adopted, and is seeking the approval of, an
amendment to the Tambrands Inc. 1992 Directors Stock Incentive Plan (the
"Directors Stock Plan") to modify the dates on which certain Exchange Options
may be granted thereunder, and by which elections to receive such Exchange
Options need to be made thereunder. (A similar amendment was presented to, and
approved by, shareholders at the last annual meeting following the initial
postponement of the effective date of the amendments to Rule 16b-3.) The
amendment will not increase the number of Exchange Options that may be granted
under the Directors Stock Plan.
To ensure that the Corporation's stock-based plans for its executive officers
and other key employees (the "Employee Plans") would continue to meet the
disinterested administration requirements of Rule 16b-3 until September 1,
1993, the date as of which the Employee Plans would have been required to
comply with the amended version of such Rule (the "New Rule Effective Date"),
certain Non-Employee Directors were excluded from participating in the elective
portions of the Directors Stock Plan until after September 1, 1993 (the
"Restricted Directors"). (As of February 28, 1994, there was only one
Restricted Director.) In 1993, the Securities and Exchange Commission again
delayed the New Rule Effective Date until September 1, 1994 (or such earlier
date as may be stated in any proposed rule). Consistent with the original
design of the Directors Stock Plan to operate under the current version of Rule
16b-3 whenever possible (due to the administrative advantages afforded under
that version of the Rule), the Board of Directors has amended the Directors
Stock Plan to change the date on which Exchange Options may be granted in 1994
to Non-Employee Directors who are not Restricted Directors ("Unrestricted
Directors") from November 15 to August 23.
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<PAGE>
To be approved, this proposal requires the affirmative vote of the holders of
a majority of the shares of Common Stock present in person or represented by
proxy at the Annual Meeting and entitled to vote thereon. Abstentions from
voting on this proposal will have the effect of votes against this proposal.
Broker non-votes will have no effect on the outcome of this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE AMENDMENT TO THE DIRECTORS STOCK PLAN.
DIRECTORS STOCK INCENTIVE PLAN
Stock Options. Under the Directors Stock Plan, each Non-Employee Director
then in office is automatically granted an annual option to purchase 1,100
shares of the Corporation's Common Stock (an "Annual Option") on or about
November 15 in each year until and including 1994. A Non-Employee Director who
is first elected to the Board of Directors after November 15 is entitled to
receive an initial pro rata grant.
An Unrestricted Director may make an irrevocable election in each of 1991
through 1994, inclusive, to receive Exchange Options on fixed grant dates set
forth in the Directors Stock Plan in lieu of the Annual Stock Award (as defined
below) or cash fees that otherwise would be received during the subsequent
calendar year. Elections must be made on or before certain fixed dates set
forth in the Directors Stock Plan (which date, for 1994, was changed in the
case of Unrestricted Directors from May 15 to August 16 by reason of the
amendment described above). The number of Exchange Options granted is
determined by dividing the value of the compensation forgone by the per share
value of an Exchange Option as determined by Morgan Stanley & Co., Inc. (or
another organization selected pursuant to the terms of the Directors Stock
Plan) as of a date determined by such organization which is not later than the
seventh day preceding the date on which an election to receive Exchange Options
is due. The value of the compensation forgone is equal to the sum of (i) the
amount of the cash fees forgone and (ii) the fair market value of the Common
Stock forgone on a fixed date prior to the election date.
Restricted Directors were not eligible to receive Exchange Options in 1991,
1992 and 1993 and may not receive Exchange Options in 1994 at the same time as
Unrestricted Directors. However, under the amended Directors Stock Plan, by
electing on or before September 8, 1994, Restricted Directors may receive
Exchange Options on September 15, 1994 in accordance with the provisions
generally applicable to such grants.
The per share exercise price of Annual Options and Exchange Options (the
"Options") granted under the Directors Stock Plan is the fair market value of a
share of Common Stock on the date of grant. Fair market value on any given date
is determined as the mean between the high and low sales prices of a share of
Common Stock on such date as reflected in the report of consolidated trading of
New York Stock Exchange issues. Annual Options are immediately exercisable.
Exchange Options generally become exercisable six months and one day after the
date of grant, but also become exercisable upon a change of control (as defined
in the Directors Stock Plan). Except as described below, each Option may be
exercised, in whole or in part, at any time before the tenth anniversary of the
date of grant. Annual Options expire if the holder ceases to be a member of the
Board of Directors, except that Options may be exercised by the former director
or his or her estate or legal representatives for a period of one year after
the recipient leaves the Board (but in any case not more than ten years after
the date of grant) if he or she ceases to be a director on account of
resignation, failure to stand for reelection, failure to be reelected,
disability or death.
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<PAGE>
Stock Awards. Unless he or she elects to exchange such shares for Exchange
Options (as described above), each Non-Employee Director will receive a stock
award of 400 shares of Common Stock (an "Annual Stock Award") at or about the
time of the annual meeting of shareholders in 1992, 1993, 1994 and 1995 for
each full year of service as a Non-Employee Director (measured from one annual
meeting to the next). Pro rata awards are made for partial years of service.
An Unrestricted Director may exchange cash fees payable for services to be
performed in the next calendar year for Exchange Shares (an "Exchange Share
Award") by making an irrevocable election on fixed dates set forth in the
Directors Stock Plan. Elections could have been made for fees payable in 1992,
1993 and 1994 and may be made for fees payable in 1995. Exchange Share Awards
will be made as of the first day of each calendar quarter in which the services
related to the forgone cash fees will be performed. The number of shares of
Common Stock covered by an Exchange Share Award is determined by dividing the
amount of cash fees forgone for each quarter by the fair market value of a
share of Common Stock on the first day of such calendar quarter. Restricted
Directors may only elect to receive Exchange Share Awards in the second, third
and fourth quarters of 1995 by so electing prior to September 30, 1994.
Miscellaneous. The Directors Stock Plan is generally administered by the
Board of Directors, except that the Administrative Committee will be
responsible for the administration of the provisions of the Directors Stock
Plan related to Exchange Options and Exchange Share Awards until September 1,
1994 (or such later date as may be required to comply with the requirements for
disinterested administration under Rule 16b-3). The Board may amend the
Directors Stock Plan, but may not, without shareholder approval, change the
various eligibility qualifications, vary the number of Annual Options to be
granted to each Non-Employee Director or change the formula for the grant of
Exchange Options or Exchange Share Awards.
AMENDED PLAN GRANT TABLE
It is not possible to determine the awards that will be made to eligible
directors under the Directors Stock Plan. The table below shows stock options
and shares of Common Stock actually granted under the Directors Stock Plan in
1993 to all current directors of the Corporation who are not executive officers
as a group. Employees of the Corporation, whether or not directors, are not
eligible to receive grants under the Directors Stock Plan.
<TABLE>
<CAPTION>
VALUE
NUMBER OF OF SHARE
OPTIONS AWARDS*
--------- --------
<S> <C> <C>
All current directors who are not executive
officers as a group................................... 43,538 $58,515
</TABLE>
- ----------
* The value of share awards is based on the fair market value of a share of the
Corporation's Common Stock on December 31, 1993, as determined in accordance
with the terms of the Directors Stock Plan.
During 1993 there were 11 Non-Employee Directors who received stock options
under the Directors Stock Plan. The number of Non-Employees Directors who will
participate in the Directors Stock Plan in the future will vary from year to
year. The fair market value of a share of the Corporation's Common Stock on
February 9, 1994 was $42.75 (the mean between the high and low reported sales
prices on such date as reflected in the report of consolidated trading of New
York Stock Exchange issues).
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<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal Federal income tax
consequences of stock options granted to Non-Employee Directors under the
Directors Stock Plan based on Federal income tax laws currently in effect.
A director will not recognize income under the Internal Revenue Code upon the
grant of an option. A director may recognize ordinary income upon the exercise
of such an option, in which event the Corporation will receive a tax deduction
equal to the amount of income recognized, provided that any applicable
withholding tax requirements are satisfied. Except as noted below, the amount
of such ordinary income and deduction is the excess, if any, of the fair market
value on the exercise date of the shares of Common Stock acquired over the
aggregate exercise price paid. Any ordinary income recognized by a director
upon the exercise of an option will increase the director's tax basis for the
shares received. Upon a subsequent sale or exchange of such shares, the
director will recognize capital gain or loss to the extent of the difference
between the selling price of such shares and the director's tax basis in such
shares. Such gain or loss will be long-term or short-term capital gain or loss,
depending on the director's holding period for such shares.
The recognition of ordinary income by a director and the determination of the
amount of such income, may be postponed if as of the date of exercise a
disposition of the acquired shares of Common Stock at a profit could subject
the director to liability under Section 16(b) of the Exchange Act. Ordinary
income will not be recognized or determined until such date as the Common Stock
may be sold free of potential liability under Section 16(b) unless the director
elects under Section 83(b) of the Internal Revenue Code to recognize such
income and make the relevant determination as of the exercise date.
CERTAIN LEGAL PROCEEDINGS
The Corporation is a nominal defendant in three purported shareholder
derivative lawsuits that have been filed in the Supreme Court of the State of
New York for Westchester County and that have been consolidated into a single
action. Named collectively in the consolidated complaint as individual
defendants are the Corporation's directors (and certain of its former
directors) and two of its former officers. The complaint alleges that the
officer-defendants exposed the Corporation to liability in certain purported
shareholder class actions that allege that disclosures made during the alleged
class period contained material misstatements and omissions concerning the
Corporation's anticipated future earnings and misappropriated corporate
opportunities by trading in the Corporation's Common Stock on the basis of
nonpublic information. One of the former officers is also alleged to have
received improper reimbursements from the Corporation for alleged personal
expenses. The director-defendants are alleged to have acquiesced in the
aforesaid alleged violations. The complaint seeks to recover on behalf of the
Corporation an unspecified amount of damages from the individual defendants. No
relief is sought against the Corporation. The defendants have moved to dismiss
the complaint.
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<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick, which served as the Corporation's independent public
accountants in 1993, have been designated by the Board of Directors as the
Corporation's independent public accountants for 1994. A representative of that
firm will be present at the Annual Meeting and will have an opportunity to make
a statement if he or she desires to do so. He or she also will be available to
respond to appropriate questions.
SHAREHOLDER PROPOSALS
In accordance with regulations issued by the Securities and Exchange
Commission, shareholder proposals intended for presentation at the 1995 Annual
Meeting of Shareholders must be received by the Secretary of the Corporation no
later than November 11, 1994 if such proposals are to be considered for
inclusion in the Corporation's Proxy Statement. In accordance with the
Corporation's By-Laws, shareholder proposals intended for presentation at the
1995 Annual Meeting of Shareholders that are not intended to be considered for
inclusion in the Corporation's Proxy Statement must be received by the
Secretary of the Corporation not earlier than January 27, 1995 and not later
than February 26, 1995.
OTHER MATTERS
Management knows of no matters that are to be presented for action at the
meeting other than those set forth above. If any other matters properly come
before the meeting, the persons named in the enclosed form of proxy will vote
the shares represented by proxies in accordance with their best judgment on
such matters.
Proxies will be solicited by mail and may also be solicited in person or by
telephone by some regular employees of the Corporation. The Corporation has
engaged D.F. King & Co., Inc. to assist in the solicitation of proxies for an
estimated fee of $7,000 plus expenses. All expenses in connection with the
preparation of proxy material and the solicitation of proxies will be borne by
the Corporation.
By Order of the Board of Directors
Raymond F. Wright,
Senior Vice President--
Chief Financial Officer
777 Westchester Avenue
White Plains, New York 10604
March 11, 1994
26
<PAGE>
TAMBRANDS INC.
1992 DIRECTORS STOCK INCENTIVE PLAN
(As amended through March 1, 1994)
1. Purposes
The purposes of this Tambrands Inc. 1992 Directors Stock Incentive Plan
(the "Plan") are to enable Tambrands Inc. ("Tambrands" or the "Company") to
attract, retain and motivate the best qualified directors and to enhance a long-
term mutuality of interest between the directors and stockholders of Tambrands
by providing them with direct stock ownership under the Plan and granting them
options to pur-chase Tambrands stock.
2. Definitions
Unless the context requires otherwise, the following words as used in the
Plan shall have the meanings ascribed to each below, it being understood that
masculine, feminine and neuter pronouns are used interchangeably, and that each
comprehends the others.
(a) "Award" shall mean any Option, Exchange Share, Share awarded under
Section 7 or any combination thereof.
(b) "Board" shall mean the Board of Directors of Tambrands.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Common Stock" shall mean the common stock of Tambrands, par value
twenty-five cents ($0.25), any common stock into which such common stock may be
changed, and any common stock resulting from any reclassification of such common
stock.
(e) "Committee" shall mean the Compensation Committee of the Board or such
other committee, whether or not consisting solely of directors, as may from
time to time be appointed by the Board to administer the Plan; provided,
however, that (i) no member of the Committee shall be eligi-ble to participate
-
in the Plan, (ii) the Committee shall always consist of at least two members,
--
(iii) each member of
- ----
<PAGE>
the Committee shall qualify as a disinterested administrator for purposes of
Rule 16b-3 (or any successor rule thereto), as promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended ("Rule
16b-3") and (iv) each member of the Committee shall be a member of the Board if
--
and to the extent necessary to satisfy the requirement of disinterested
administration under Rule 16b-3.
(f) "Eligible Director" shall mean a director of Tambrands who is not an
officer or employee of Tambrands or any of its subsidiaries and who is not a
Participating Director.
(g) "Exchange Option" shall mean an Option to purchase one Share at a
prescribed purchase price granted under the Exchange Option Program.
(h) "Exchange Option Program" shall mean the program for the grant of
Options pursuant to Section 8 hereof in exchange for a Participant's election to
forgo other forms of compensation.
(i) "Exchange Share" shall mean a Share granted under the Exchange Share
Program.
(j) "Exchange Share Program" shall mean the program for the grant of
Shares pursuant to Section 9 hereof in exchange for a Participant's election to
forgo receipt of all or a portion of his or her annual cash retainer fees.
(k) "Fair Market Value" shall mean the value of a Share on a particular
date, determined as follows:
(i) If the Common Stock is listed or admitted to trading on such a
date on the New York Stock Exchange, the mean between the high and low
sales price of a Share on such a date as reported in the principal con-
solidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange; or
(ii) If the Common Stock is not listed or admitted to trading on
the New York Stock Exchange but is listed or admitted to trading on another
national exchange, the mean between the high and low sales price of a Share
on such date as reported in the principal consolidated transaction
reporting system with regard
2
<PAGE>
to securities listed or admitted to trading on such national exchange; or
(iii) If the Common Stock is not listed or admitted to trading on
any national exchange, the mean between the high and low sales price of a
Share on such date in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automatic Quotation
System, the National Quotation Bureau or such other system then in use with
regard to the Common Stock or, if on such date the stock of the Company is
publicly traded but not quoted by any such system, the mean of the closing
bid and asked prices of a Share on such date as furnished by a professional
market maker making a market in the Common Stock; or
(iv) If in (i), (ii) or (iii) above, as applicable, there were no
sales on such date reported as provided above, the respective prices on the
most recent prior day on which a sale of a Share took place.
(l) "Non-Elective Option" shall mean the right to purchase one Share at a
prescribed purchase price on the terms specified in Section 6 of this Plan.
(m) "Option" shall mean an Exchange Option or Non-Elective Option. The
Options are nonstatutory stock options not intended to qualify under Section 422
of the Code.
(n) "Participant" shall mean either an Eligible Director or a
Participating Director.
(o) "Participating Director" shall mean a director of Tambrands who is not
an officer or employee of Tambrands or any of its subsidiaries and who is
eligible to receive Exchange Options under the Plan prior to September 1, 1994
(or such other date as the transition period related to the amended version of
Rule 16b-3, as adopted by the Securities and Exchange Commission by Release 34-
28869, expires with respect to the Plan).
(p) "Share" shall mean a share of Common Stock.
3. Effective Date
Subject to Section 13 hereof, the effective date of the Plan shall be June
26, 1990.
3
<PAGE>
4. Administration
(a) Except as otherwise set forth in (c) below, this Plan shall be
administered by the Board. The Board may delegate its powers and functions
hereunder to a duly appointed committee of the Board.
(b) Except as otherwise set forth in (c) below, the Board shall have full
authority to interpret this Plan, all Options and all Shares granted hereunder;
to establish, amend and rescind rules for carrying out this Plan; to administer
this Plan; to incorporate in any option agreement such terms and conditions, not
inconsistent with this Plan, as it deems appropriate; to construe the respective
option agreements and this Plan; and to make all other determinations and to
take such steps in connection with this Plan, the Options and Shares as the
Board, in its discretion, deems necessary or desirable for administering this
Plan.
(c) Notwithstanding the foregoing, prior to September 1, 1994 (or such
other date as the transition period related to the amended version of Rule 16b-
3, as adopted by the Securities and Exchange Commission by Release 34-28869,
expires with respect to the Plan), the Committee shall administer the Exchange
Option Program and the Exchange Share Program set forth in Sections 8 and 9,
respectively, of the Plan and shall have full authority to interpret the
provisions of such Sections and all Exchange Options and Exchange Shares granted
under the Plan; to establish, amend and rescind rules for carrying out the
Exchange Option Program and the Exchange Share Program; to administer the
Exchange Option Program and the Exchange Share Program; to incorporate in any
option agreement such terms and conditions, not inconsistent with the Plan, as
it deems appropriate; to construe the respective option agreements, the
Exchange Option Program and the Exchange Share Program; and to make all other
determinations and to take such steps as the Committee, in its discretion, deems
necessary or desirable for administering the Exchange Option Program and the
Exchange Share Program.
(d) Notwithstanding the foregoing, neither the Board, any committee
thereof nor any person designated pursuant to (e) below may take any action
which would cause any Eligible Director to cease to be a "disinterested person"
for purposes of Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as then in effect or any successor
provisions ("Rule 16b-3"),
4
<PAGE>
with regard to this Plan or any other stock option or other equity plan of
Tambrands. In particular, neither the Board nor any committee thereof shall
have any discretion as to
(i) the selection of Eligible Directors as eligible to receive
awards pursuant to the Plan; or
(ii) the number of Options granted to any Eligible Director pursuant
to Section 6 or the number of Shares awarded pursuant to Section 7.
(e) The Board or the Committee may designate the Secretary of Tambrands,
other employees of Tambrands or competent professional advisors to assist the
Board or the Committee in the administration of this Plan, the Exchange Option
Program or the Exchange Share Program, as the case may be, and may grant
authority to such persons to execute agreements or other documents on its
behalf.
(f) The Board or the Committee may employ such legal counsel, consultants
and agents as it may deem desirable for the administration of this Plan, the
Exchange Option Program or the Exchange Share Program, as the case may be, and
may rely upon any opinion received from any such counsel or consultant and any
computation received from any such consultant or agent. No member or former
member of the Board, the Committee or any other committee thereof or any person
designated pursuant to paragraph (e) above shall be liable for any action or
determination made in good faith with respect to this Plan, including the
Exchange Option Program and the Exchange Share Program, or any Option or Share
granted hereunder. To the maximum extent permitted by applicable law and the
Tambrands Certificate of Incorporation and By-Laws, each member or former
member of the Board, the Committee or any other committee thereof or any person
designated pursuant to (e) above shall be indemnified and held harmless by
Tambrands against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the approval of Tambrands)
arising out of any act or omission to act in connection with this Plan,
including the Exchange Option Program and the Exchange Share Program, unless
arising out of such person's own fraud or bad faith. Such indemnification
shall be in addition to any rights of indemnification the person may have as a
director, officer or employer or under the Certificate of Incorporation of
Tambrands or the By-Laws of Tambrands. Expenses incurred by the Board or the
5
<PAGE>
Committee in the engagement of any such counsel, consultant or agent shall be
paid by Tambrands.
5. Shares; Adjustment Upon Certain Events
(a) Shares to be issued under this Plan shall be made available, at the
discretion of the Board, either from authorized but unissued Shares or from
issued Shares reacquired by Tambrands.
(b) The aggregate number of Shares that may be issued under this Plan
shall not exceed 250,000 Shares, except as provided in this Section. Where
Options are for any reason cancelled, or expire or terminate unexercised, the
Shares covered by such Options shall again be available for the grant of
Options, within the limits provided by the preceding sentence.
(c) No fractional Shares will be issued or transferred in the exercise of
any Option or in the exchange of any Shares. In lieu thereof, Tambrands shall
pay a cash adjustment equal to the same fraction of the Fair Market Value of
one Share on the date of exercise.
(d) The existence of this Plan and the Options and Shares granted
hereunder shall not affect in any way the right or power of the Board or the
stockholders of Tambrands to make or authorize any adjustment, recapitalization,
reorganization or other change in Tambrands' capital structure or its business,
any merger or consolidation of Tambrands, any issue of bonds, debentures,
preferred or prior preference stocks ahead of or affecting Common Stock, the
dissolution or liquidation of Tambrands or any sale or transfer of all or part
of its assets or business, or any other corporate act or proceeding, in which
case the provisions of this Section 5 shall govern outstanding Options.
(e) The Shares awarded under Sections 7 and 9 and with respect to which
Options may be granted under Sections 6 and 8 are Shares of Common Stock as
presently constituted, but if and whenever Tambrands shall effect a subdivision,
recapitalization or consolidation of Shares or the payment of a stock dividend
on Shares without receipt of consideration, the purchase price per Share and the
number and kind of shares of capital stock with respect to which any previously
granted and unexpired Option may thereafter be exercised, the number and kind of
shares of capital stock covered by Options to be granted thereafter under
Sections 6 and 8 of
6
<PAGE>
this Plan, the number of Shares to be awarded under Sections 7 and 9 of this
Plan and the aggregate number and kind of shares of capital stock issuable under
the Plan shall be proportionately adjusted.
(f) If Tambrands merges or consolidates with one or more corporations,
then from and after the effective date of such merger or consolidation, upon
exercise of an Option theretofore granted, a Participant shall be entitled to
purchase under such Option, in lieu of the number of Shares as to which such
Option shall then be exercisable, but on the same terms and conditions of
exercise set forth in such Option, the number and class of Shares and/or other
securities or property (including cash) to which the Participant would have
been entitled pursuant to the terms of the agreement of merger or consolidation
if, immediately prior to such merger or consolidation, the Participant had been
the holder of record of the number of Shares as to which such Option was then
exercisable.
(g) If as a result of any adjustment made pursuant to the preceding
paragraphs of this Section 5, any Participant shall become entitled upon
exercise of an Option to receive any shares of capital stock other than Common
Stock, then the number and kind of shares of capital stock so receivable
thereafter shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock set forth in this Section 5.
(h) Except as hereinbefore expressly provided, the issuance by Tambrands
of shares of stock of any class or securities convertible into shares of stock
of any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or other securities, and in any case whether or not for fair value, shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number of Shares subject to Options theretofore granted, the number of
Shares to be awarded to a Participant pursuant to Sections 7 and 9 or the
purchase price per Share of an Option.
6. Awards and Terms of Non-Elective Options
(a) Grant. Without further action by the Board or stockholders of
Tambrands, each Participant on the date of an Annual Grant (as defined below)
shall be automatically
7
<PAGE>
granted in each of 1990, 1991, 1992, 1993 and 1994 ("Annual Grants") Non-
Elective Options to purchase eleven hundred (1,100) Shares, subject to the terms
of this Plan. In addition, without further action by the Board or stockholders
of Tambrands, each Participant following his or her initial election to the
Board, shall be automatically granted ("Initial Grant") a Non-Elective Option,
subject to the terms of this Plan, to purchase a number of Shares equal to
eleven hundred (1,100) multiplied by a fraction, the numerator of which is the
number of calendar months from, and including, the month during which the
Initial Grant is made until, but not including, the next succeeding November,
and the denominator of which is twelve (12); provided, however, that an Initial
Grant shall not be made if the date of such Initial Grant would coincide with
the date of an Annual Grant. An Initial Grant shall not include an option to
purchase fractional Shares. If an Initial Grant would otherwise include an
option to purchase a fractional Share, the fractional Share shall be rounded up
to one if the fraction is .5 or greater and rounded down to zero if the frac-
tion is less than .5.
(b) Date of Grant. The date of each Annual Grant shall be on November 15.
The date of each Initial Grant shall be on the fifteenth (15th) day of the
calendar month coinciding with or next following a Participant's election to the
Board. Notwithstanding the foregoing, if the date of grant in any year is a
date on which the New York Stock Exchange is not open for trading, the grant
shall be made on the first day thereafter on which the New York Stock Exchange
is open for trading.
(c) Option Agreement. Non-Elective Options shall be evidenced by a
written option agreement embodying the terms of this Section 6.
(d) Option Terms:
(i) Exercise Price. The purchase price per Share deliverable upon
the exercise of a Non-Elective Option shall be one hundred percent (100%)
of the Fair Market Value of such Share at the time of the grant of the Non-
Elective Option, or the par value of the Share, whichever is greater.
(ii) Period of Exercisability. Subject to Section 13(b) hereof,
each Non-Elective Option granted under this Plan shall be immediately
exercisable on the
8
<PAGE>
date of grant. Except as hereinafter provided, Non-Elective Options
granted to any Participant may be exercised only during the continuance of
that Participant's service as a director of Tambrands.
(iii) Procedure for Exercise. A Participant electing to exercise one
or more Non-Elective Options shall give written notice to the Secretary of
the Company of such election and of the number of Shares he has elected to
purchase. Shares purchased pursuant to the exercise of Non-Elective
Options shall be paid for at the time of exercise in cash or by delivery to
Tambrands of unencumbered Shares owned by the Participant for at least six
(6) months (or such longer period as is required by applicable accounting
standards to avoid a charge to earnings) or a combination thereof. Upon
receipt of payment and satisfaction of the requirements, if any, as to
withholding set forth in Section 19 hereof the Company shall deliver to the
Participant as soon as practicable a certificate or certificates for the
Shares then purchased.
(e) Death, Disability or Otherwise Ceasing to be a Director. In the event
that a Participant shall cease to be a director on account of disability (within
the meaning of section 105(d)(4) of the Code), death, resignation, failure to
stand for reelection or failure to be reelected, such Participant or, in the
case of death, the Participant's estate or the person given authority to
exercise such Options by his will or by operation of law, may exercise a Non-
Elective Option at any time within one (1) year from the date the Participant
ceased to be a director; provided, however, that no such Non-Elective Option
shall be exercisable more than ten years from the date of the grant thereof.
(f) Expiration. If not previously exercised each Non-Elective Option
shall expire upon the tenth (10th) anniversary of the date of the grant thereof
or, upon the earlier termination of the Participant's status as a director of
Tambrands (or, if applicable, on the day following the last day on which such
Non-Elective Option is exercisable under (e) above.
7. Share Awards
(a) Awards to Participants. Each Participant shall receive an award of
400 Shares for each full year during which he or she serves as a director. (For
this purpose, a
9
<PAGE>
full year of service as a director shall mean service as a director from the
date of one annual meeting of stockholders to the next annual meeting of
stockholders.) If a Participant serves less than a full-year term for any
reason other than removal for cause, such Participant shall receive a pro rata
award of Shares for such year. Such pro-rata award shall be equal to the number
of whole Shares equal to 400 times a fraction, the numerator of which is the
number of regular meetings of the Board occurring since the last annual meeting
of stockholders and while the Participant was a member of the Board and the
denominator of which is the total number of regular meetings of the Board
occurring from the date of such last annual meeting of stockholders to the date
of the annual meeting on which the award of Shares occurs. If a pro rata award
would result in the issuance of a fractional Share, the fractional Share shall
be rounded up to one if the fraction is .5 or greater and rounded down to zero
if the fraction is less than .5. Without limiting the foregoing, a
Participating Director and, on and after September 1, 1994 (or such other date
as the transition period related to the amended version of Rule 16b-3, as
adopted by the Securities and Exchange Commission by Release 34-28869, expires
with respect to the Plan), an Eligible Director may elect to exchange the award
of Shares to be granted at the time of the next annual meeting of stockholders
for an Exchange Option, pursuant to the procedures set forth in Section 8 of the
Plan.
(b) Distribution of Shares. On the dates of each annual meeting of
stockholders of Tambrands occurring in 1992, 1993, 1994 and 1995, Shares will be
distributed to each Participant entitled to receive such Shares for service
(including periods of partial service) as a director from the date of the last
annual meeting of stockholders, except that a Participant will not receive
Shares that such Participant has elected to exchange for a grant of an Exchange
Option under Section 8 below.
8. Awards and Terms of Exchange Options
(a) Grant. Without further action by the Board, the Committee or the
stockholders of Tambrands, each Participating Director may elect in each of
1991, 1992, 1993 and 1994 and each Eligible Director may elect in 1994 to
receive an Exchange Option for the number of Shares determined pursuant to the
formula set forth in (f) below by agreeing to forgo all or any portion of the
following elements of compensation: (i) any whole number of Shares that would
10
<PAGE>
otherwise have been granted to such Participant under Section 7 at the time of
the annual meeting of stockholders next following the Participant's election to
forgo receipt of such Shares and (ii) the Participant's annual cash retainer
fees payable for service as a director in the calendar year following the date
of such election (but based on the Participant's annual cash retainer fees
payable at the time of the election).
(b) Date of Grant. The date of each grant shall be November 15 for Awards
granted in 1991, August 15 for Awards granted in 1992 to Participating
Directors, August 24 for Awards granted in 1993 to Participating Directors,
August 23 for Awards granted in 1994 to Participating Directors and September 15
for Awards granted in 1994 to Eligible Directors (the "Date of Grant").
Notwithstanding the foregoing, if the Date of Grant in any year is a date on
which the New York Stock Exchange is not open for trading, the grant shall be
made on the first day thereafter on which the New York Stock Exchange is open
for trading.
(c) Exchange Option Agreement. Exchange Options shall be evidenced by
option agreements in substantially the form applicable with respect to Non-
Elective Options, but modified as required to reflect the provisions of this
Section 8.
(d) Method of Election. A Participant who wishes to elect to receive an
Exchange Option in accordance with Section 8(a) shall deliver to the Secretary
of the Company a written irrevocable election, in a form acceptable to the
General Counsel of the Company, not later than November 8, 1991 for grants to be
made in November 1991, August 10, 1992 for grants to be made in August 1992,
August 17, 1993 for grants to be made in August 1993, August 16, 1994 for grants
to be made in August 1994 and September 8 for grants to be made in September
1994, specifying the type and amount of compensation such Participant wishes to
forgo. (If the date an election is due is not a business day, such election
shall be due on the last business day immediately preceding such otherwise
applicable date.) In the event that a Participant elects to forgo less than
100% of his or her annual retainer fees for a relevant year, the portion of
retainer fees not foregone by the Participant shall be paid on a pro rata basis
in each calendar quarter. If a Participant elects to exchange any portion of
his or her annual cash retainer fees in a relevant year for an Exchange Option,
such Participant may not thereafter elect to exchange such
11
<PAGE>
Exchange Option (or the corresponding foregone annual cash retainer fees) for
Exchange Shares pursuant to Section 9 hereof.
(e) Valuation. For purposes of determining the number of Shares subject
to an Exchange Option:
(i) With respect to each Date of Grant hereunder, Morgan Stanley &
Co., Inc. or such other investment bank or other nationally recognized
organization experienced in the valuation of stock options as the Commit-
tee (or, after August 31, 1994 or such other date as the transition period
related to the amended version of Rule 16b-3, as adopted by the Securities
and Exchange Commission by Release 34-28869, expires with respect to the
Plan, the Board) shall designate shall, in its sole discretion, establish a
value for an Exchange Option (the "Option Value") as of a date not later
than the seventh day preceding the date on which an irrevocable election is
due under (d) above. The Option Value shall be based on the price at which
a similarly designed option to purchase shares would trade in the open
market, but taking into account (x) the Exchange Option's vesting schedule,
-
(y) the absence of a market for the Exchange Option and (z) the possibility
- -
of forced exercise due to the Participant ceasing to be a director for
cause;
(ii) Shares to be awarded under Section 7 shall be valued based on
the Fair Market Value of such Shares on the date which is the eighth day
preceding the date on which an irrevocable election is due under (d) above;
and
(iii) Compensation otherwise payable in cash will be valued at face
value.
(f) Number of Shares. The number of Shares subject to an Exchange Option
shall be equal to the quotient of (i) and (ii) below, where (i) and (ii) are:
(i) the value of any Shares and any fees being foregone pursuant to
an election to receive the Ex-change Option; and
(ii) the Option Value.
12
<PAGE>
Notwithstanding the foregoing, if an Exchange Option would otherwise include an
option to purchase a fractional Share, the fractional Share shall be rounded up
to one if the fraction is .5 or greater and rounded down to zero if the frac-
tion is less than .5.
(g) Option Terms:
(i) Exercise Price. The purchase price per Share deliverable upon
the exercise of an Exchange Option shall be one hundred percent (100%) of
the Fair Market Value of such Share at the Date of Grant of the Exchange
Option.
(ii) Period of Exercisability. Subject to paragraph (i) below and
Section 13(b) hereof, each Exchange Option granted under this Plan shall
become exercisable in full on the earlier to occur of (x) the date which is
-
six months and one day following the Date of Grant and (y) the date on
-
which a Change of Control occurs. For this purpose a "Change of Control"
shall be deemed to have occurred upon:
(1) An acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (A) the
then outstanding Shares or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company
Voting Securities"); excluding, however, the following: (A) any
acquisition directly from the Company, other than an acquisition by
virtue of the exercise of a conversion privilege unless the security
being so converted was itself acquired directly from the Company, (B)
any acquisition by the Company, (C) any acquisition by an employee
benefit plan (or related trust) sponsored or maintained by the Company
or (D) any acquisition by any corporation pursuant to a
reorganization, merger, consolidation or similar corporate
transaction (in each case, a "Corporate Transaction"), if, pursuant to
such Corporate Transaction, the conditions described in clauses (A),
(B) and (C) of paragraph (3) of this subsection 8(g)(ii) are
satisfied; or
13
<PAGE>
(2) A change in the composition of the Board such that the
individuals who, as of the date hereof, constitute the Board (the
Board as of the date hereof shall be hereinafter referred to as the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, for purposes of this
subsection that any individual who becomes a member of the Board
subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at
least a majority of those individuals who are members of the Board and
who were also members of the Incumbent Board (or deemed to be such
pursuant to this proviso) shall be considered as though such
individual were a member of the Incumbent Board; but, provided
further, that any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board
shall not be so considered as a member of the Incumbent Board; or
(3) The approval by the stockholders of the Company of a
Corporate Transaction or, if consummation of such Corporate
Transaction is subject, at the time of such approval by stockholders,
to the consent of any government or governmental agency, the obtaining
of such consent (either explicitly or implicitly by consummation);
excluding, however, such a Corporate Transaction pursuant to which
(A) all or substantially all of the individuals and entities who are
the beneficial owners, respectively, of the outstanding Shares and
Outstanding Company Voting Securities immediately prior to such
Corporate Transaction will beneficially own, directly or indirectly,
more than 60% of, respectively, the outstanding shares of common stock
of the corporation resulting from such Corporate Transaction and the
combined voting power of the outstanding voting securities of such
corporation entitled to vote generally in the election of directors,
in substantially the same proportions as their ownership, immediately
prior to such Corporate Transaction, of the outstanding
14
<PAGE>
Shares and Outstanding Company Voting Securities, as the case may be,
(B) no Person (other than the Company, any employee benefit plan (or
related trust) of the Company or the corporation resulting from such
Corporate Transaction and any Person beneficially owning, immediately
prior to such Corporate Transaction, directly or indirectly, 20% or
more of the outstanding Shares or Outstanding Company Voting
Securities, as the case may be) will beneficially own, directly or
indirectly, 20% or more of, respectively, the outstanding shares of
common stock of the corporation resulting from such Corporate
Transaction or the combined voting power of the then outstanding
securities of such corporation entitled to vote generally in the
election of directors and (C) individuals who were members of the
Incumbent Board will constitute at least a majority of the members of
the board of directors of the corporation resulting from such
Corporate Transaction; or
(4) The approval of the stockholders of the Company of (A) a
complete liquidation or dissolution of the Company or (B) the sale or
other disposition of all or substantially all of the assets of the
Company; excluding, however, such a sale or other disposition to a
corporation, with respect to which following such sale or other
disposition, (x) more than 60% of, respectively, the then outstanding
-
shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors will be then
beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the outstanding Shares and Outstanding Company
Voting Securities immediately prior to such sale or other dis-
position in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the
outstanding Shares and Outstanding Company Voting Securities, as the
case may be, (y) no Person (other than the Company and any employee
-
benefit plan (or related trust) of the Company or such corporation and
any Person beneficially owning, immediately prior to such sale or
other disposition, directly or indirectly,
15
<PAGE>
20% or more of the outstanding Shares or Outstanding Company Voting
Securities, as the case may be) will beneficially own, directly or
indirectly, 20% or more of, respectively, the then outstanding shares
of common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors and (z) individuals who
-
were members of the Incumbent Board will constitute at least a
majority of the members of the board of directors of such corpora-
tion.
(iii) Procedure for Exercise. A Participant electing to exercise one
or more Exchange Options shall give written notice to the Secretary of the
Company of such election and of the number of Shares he has elected to
purchase. Shares purchased pursuant to the exercise of Exchange Options
shall be paid for at the time of exercise in cash or by delivery to
Tambrands of unencumbered Shares owned by the Participant for at least six
(6) months (or such longer period as is required by applicable accounting
standards to avoid a charge to earnings) or a combination thereof. Upon
receipt of payment and satisfaction of the requirements, if any, as to
withholding set forth in Section 19 hereof, the Company shall deliver to
the Participant as soon as practicable a certificate or certificates for
the Shares then purchased.
(h) Ceasing to be a Director.
(i) Terminations Other Than for Cause. Except as provided in
paragraph (i) below, in the event that a Participant shall cease to be a
director for any reason other than for cause, an Exchange Option
theretofore granted to such Participant may be exercised by the Participant
or, in the case of the Participant's death, by the Participant's estate or
by the person given the authority to exercise such Exchange Options by his
will or by operation of law, at any time within ten (10) years from the
Date of Grant thereof.
(ii) For Cause. In the event that a Participant shall cease to be a
director for cause an Exchange Option theretofore granted to such
Participant shall be immediately forfeited, regardless of whether exercis-
able at such time.
16
<PAGE>
(i) Notwithstanding any other provision herein to the contrary, if a
Participant ceases to be a director prior to the date as of which an Exchange
Option becomes exercisable, such Participant shall forfeit that portion of such
Exchange Option, if any, (x) which corresponds to the portion of the
-
Participant's annual retainer fees foregone to receive such Exchange Option that
would not have been paid in cash as of the date the Participant ceases to be a
Director, and (y) granted in exchange for Shares which would have been awarded
-
pursuant to Section 7 which exceeds the portion of such Exchange Option that
corresponds to the number of Shares that would have been issued to such
Participant under Section 7 based on the number of regular meetings of the
Board occurring since the last annual meeting of stockholders and while the
Participant was a director. Any portion of any Exchange Option held by a
terminating Participant which is not forfeited pursuant to the preceding
sentence shall become exercisable as of the date of such cessation.
(j) Expiration. If not previously exercised, each Exchange Option shall
expire upon the tenth (10th) anniversary of the Date of Grant thereof or, except
as otherwise provided herein, upon the earlier termination of the Participant's
status as a director of Tambrands for cause.
9. Awards and Terms of Exchange Shares
(a) Grant. Without further action by the Board, the Committee or the
stockholders of Tambrands, each Participating Director may elect in each of
1991, 1992, 1993 and 1994 and each Eligible Director may elect in 1994 to
receive Exchange Shares pursuant to the formula set forth in (d) below by
agreeing to forgo all or any portion of the Participant's annual cash retainer
fees payable for the calendar year following the date of such election (but
subject, in the case of an Eligible Director, to the provisions of (c) below).
(b) Date of Issuance. Exchange Shares shall be issued as of the first day
of each calendar quarter with respect to which a Participant has elected to
forgo a portion of his or her annual retainer fees payable for services to be
performed during such calendar quarter (the "Date of Issuance"), but based on
the amount of such fees in effect at the time of the election described in (c)
below. Notwithstanding the foregoing, if the Date of Issuance in any calendar
quarter is a date on which the New York Stock
17
<PAGE>
Exchange is not open for trading, the grant shall be made on the first day
thereafter on which the New York Stock Exchange is open for trading.
(c) Method of Election. A Participant who wishes to elect to receive one
or more Exchange Shares in accordance with Section 9(a) shall deliver to the
Secretary of the Company a written irrevocable election, in a form acceptable to
the General Counsel of the Company, not later than November 8, 1991 with respect
to annual cash retainer fees payable in 1992 and June 30 of each of 1992, 1993
and 1994 with respect to the annual cash retainer fees payable for services in
1993, 1994 and 1995, respectively, specifying the amount of such Participant's
annual retainer fees which he or she wishes to forgo; provided, however, that in
1994, an Eligible Director shall make his or her election on or after September
1, 1994 and not later than September 30, 1994 and such election shall only be
applicable with respect to fees payable for services to be rendered as a
director after the first quarter of 1995. (If the date an election is due is
not a business day, such election shall be due on the last business day
immediately preceding such otherwise applicable date.) In the event that a
Participant elects to forego less than 100% of his or her annual retainer fees
for a relevant year, such Participant may provide in his or her election that
such foregone retainer fees be applied to the issuance of Exchange Shares pro
rata in each calendar quarter or from the full amount of fees otherwise payable
for each quarter until the full amount elected has been so applied. If a
Participant fails to specify the timing of the deductions, the amount of the
Participant's foregone retainer fees will be applied to the issuance of Exchange
Shares pro rata in each calendar quarter. If a Participant elects to exchange
any portion of his or her retainer fees payable for a relevant year for Exchange
Shares, such Participant may not thereafter elect to exchange such Exchange
Shares (or the corresponding foregone annual cash retainer fees) for an Exchange
Option pursuant to Section 8 hereof.
(d) Number of Shares. The number of Exchange Shares to be issued as of
each Date of Issuance shall be equal to the number of whole Shares determined by
the quotient of (i) and (ii) below, where (i) and (ii) are:
(i) the dollar amount of the annual cash retainer fees being foregone
with respect to services to be performed during the applicable quarter in
accordance
18
<PAGE>
with an election under this Section 9 to receive Exchange Shares; and
(ii) the Fair Market Value of the Exchange Shares on the Date of
Issuance.
If the above quotient produces a fractional Share, the Participant shall receive
the cash value of such fractional Share, based on the then Fair Market Value,
instead of receiving such fractional Share.
10. Nontransferability of Awards
No Award shall be transferable by the Participant otherwise than by will or
under the applicable laws of descent and distribution. In addition, no Award
shall be assigned, negotiated, pledged or hypothecated in any way (whether by
operation of law or otherwise), and no Award shall be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
negotiate, pledge or hypothecate any Award, or in the event of any levy upon any
Award by reason of any attachment or similar process contrary to the provisions
hereof, such Option shall immediately become null and void.
11. Rights as a Stockholder
A Participant (or a permitted transferee of an Option) shall have no rights
as a stockholder with respect to any Shares covered by his Option until he shall
have become the holder of record of such Share(s), and no adjustments shall be
made for dividends in cash or other property or distribution or other rights in
respect to any such Shares, except as otherwise specifically provided for in
this Plan.
12. Determinations
Each determination, interpretation or other action made or taken pursuant
to the provisions of this Plan by the Board or the Committee, as the case may
be, shall be final and binding for all purposes and upon all persons, includ-
ing, without limitation, Tambrands, the directors, officers and other employees
of Tambrands, the Participants and their respective heirs, executors,
administrators, personal representatives and other successors in interest.
19
<PAGE>
13. Termination, Amendment and Modification
(a) This Plan shall terminate at the close of business on June 30, 1995,
unless sooner terminated pursuant to paragraph (b) below or by action of the
stockholders of Tambrands, and no Awards shall be granted under this Plan
thereafter provided, however, that Exchange Shares may be awarded after June 30,
1995 to the extent that a Participant elected to receive such Exchange Shares
prior to June 30, 1995. The Board at any time or from time to time may amend
this Plan to effect (i) amendments necessary or desirable in order that this
Plan and the Awards shall conform to all applicable laws and regulations and
(ii) any other amendments deemed appropriate, provided that no such amendment
may be made if either the authority to make such amendment or the amendment
would cause the Eligible Directors to cease to be "disinterested persons" with
regard to this Plan or any other stock option or other equity plan of Tambrands
for purposes of Rule 16b-3 (or any successor thereto). Notwithstanding the
foregoing, (i) the provisions of the Plan may not be amended more than once
-
every six months other than to comport with changes in the Code and the rules
thereunder and (ii) the Board may not effect any amendment that would require
--
the approval of the stockholders of Tambrands under Rule 16b-3 or the listing
requirements of the New York Stock Exchange (if applicable to Tambrands at the
time such amendment is adopted or will be effective) unless such approval is
obtained. This Plan may be amended or terminated at any time by the
stockholders of Tambrands.
(b) Notwithstanding anything else in this Plan to the contrary, any Awards
granted under this Plan subject to approval of the stockholders of Tambrands
shall terminate and be rendered void and without effect if such approval is not
received by the next annual meeting of stockholders of Tambrands following the
date of the action giving rise to the need for such approval (or if such action
occurs after the date the proxy materials for the next annual meeting of
stockholders have been mailed to stockholders, by the second annual meeting of
stockholders next following such action). No Option granted subject to the
approval of the stockholders of Tambrands may be exercised prior to
satisfaction of the requirements in this paragraph (b).
(c) Except as provided in paragraph (b) above or as otherwise required by
law, no termination, amendment or modification of this Plan may, without the
consent of a Participant or the permitted transferee of an Award, alter
20
<PAGE>
or impair the rights and obligations arising under any then outstanding Award.
14. Non-Exclusivity
Neither the adoption of this Plan by the Board nor the submission of this
Plan to the stockholders of Tambrands for approval shall be construed as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting or issuance of stock options, Shares and/or other incentives otherwise
than under this Plan, and such arrangements may be either generally applicable
or applicable only in specific instances.
15. Use of Proceeds
The proceeds of the sale of Shares subject to Awards under this Plan are to
be added to the general funds of Tambrands and used for its general corporate
purposes.
16. General Provisions
(a) This Plan shall not impose any obligations on Tambrands to retain any
Participant as a director nor shall it impose any obligation on the part of any
Participant to remain as a director of Tambrands, provided that each Parti-
cipant by accepting each Award shall represent to Tambrands that it is his good
faith intention to continue to serve as a director of Tambrands until the next
annual meeting of stockholders and that he agrees to do so unless a change in
circumstances arises.
(b) If the Board determines that the law so requires, the holder of an
Option granted hereunder shall, upon any exercise or conversion thereof, execute
and deliver to Tambrands a written statement, in form satisfactory to Tambrands,
representing and warranting that he is purchasing or accepting the Shares then
acquired for his own account and not with a view to the resale or distribution
thereof, that any subsequent offer for sale or sale of any such Shares shall be
made either pursuant to (i) a Registration Statement on an appropriate form
under the Securities Act of 1933, as amended (the "Securities Act"), which
Registration Statement shall have become effective and shall be current with
respect to the Shares being offered and sold, or (ii) a specific exemption from
the registration requirements of the Securities Act, and that in claiming such
exemption the
21
<PAGE>
holder will, prior to any offer for sale or sale of such Shares, obtain a
favorable written opinion from counsel approved by Tambrands as to the
availability of such exemption.
(c) Nothing contained in this Plan and no action taken pursuant to this
Plan (including without limitation the grant of any Option hereunder) shall
create or be construed to create a trust of any kind or any fiduciary
relationship between Tambrands and any Participant, the executor, administrator
or other personal representative or designated beneficiary of such Participant,
or any other persons. Any reserves that may be established by Tambrands in
connection with this Plan shall continue to be part of the general funds of
Tambrands, and no individual or entity other than Tambrands shall have any
interest in such funds until paid to a Participant. To the extent that any
Participant or his executor, administrator, or other personal representative, as
the case may be, acquires a right to receive any payment from Tambrands pursuant
to this Plan, such right shall be no greater than the right of an unsecured
general creditor of Tambrands.
17. Issuance of Stock Certificates, Legends and Payment of Expenses
(a) Upon any exercise of an Option and payment of the exercise price
thereof and upon the issuance of Shares pursuant to Sections 7 and 9, a
certificate or certificates for the Shares shall be issued by Tambrands in the
name of the person or persons exercising such Option or receiving such Shares
and shall be delivered to or upon the order of such person or persons.
(b) Certificates for Shares issued upon exercise of an Option or pursuant
to Sections 7 and 9 shall bear such legend or legends as the Board, in its
discretion, determines to be necessary or appropriate to prevent a violation
of, or to perfect an exemption from, the registration requirements of the
Securities Act, or to implement the provisions of any agreements between
Tambrands and the Participant with respect to such Shares.
(c) Tambrands shall pay all issue or transfer taxes with respect to the
issuance of Shares hereunder, as well as all fees and expenses necessarily
incurred by Tambrands in connection with such issuance and with the
administration of this Plan.
22
<PAGE>
18. Listing of Shares and Related Matters
If at any time the Board shall determine in its discretion that the
listing, registration or qualification of the Shares covered by this Plan upon
any national securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the sale of Shares under
this Plan, no Shares will be delivered unless and until such listing,
registration, qualification, consent or approval shall have been effected or
obtained, or otherwise provided for, free of any conditions not acceptable to
the Board.
19. Withholding Taxes
The Company shall have the right to make such provisions as it deems
necessary or appropriate to satisfy any obligations it may have to withhold
federal, state or local income or other taxes incurred by reason of the issuance
of Shares under this Plan, including requiring a Participant to reimburse the
Company for any taxes required to be withheld or otherwise deducted and paid by
the Company in respect of the issuance of Shares. In lieu thereof, the Company
shall have the right to withhold the amount of such taxes from any other sums
due or to become due from the Company to the Participant upon such terms and
conditions as the Board may prescribe.
20. Notices
Each Participant shall be responsible for furnishing the Board with the
current and proper address for the mailing of notices and delivery of
agreements and Shares. Any notices required or permitted to be given shall be
deemed given if directed to the person to whom addressed at such address and
mailed by regular United States mail, first-class and prepaid. If any item
mailed to such address is returned as undeliverable to the addressee, mailing
will be suspended until the Participant furnishes the proper address.
23
<PAGE>
21. Severability of Provisions
If any provision of this Plan shall be held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provisions hereof, and
this Plan shall be construed and enforced as if such provision had not been
included.
22. Incapacity
Any benefit payable to or for the benefit of a minor, an incompetent person
or other person incapable of receipting therefor shall be deemed paid when paid
to such person's guardian or to the party providing or reasonably appearing to
provide for the care of such person, and such payment shall fully discharge the
Board, Tambrands and other parties with respect thereto.
23. Headings and Captions
The headings and captions herein are provided for reference and convenience
only, shall not be considered part of this Plan, and shall not be employed in
the construction of this Plan.
24. Controlling
This Plan shall be construed and enforced according to the laws of the
State of New York.
24
<PAGE>
ANNUAL MEETING OF SHAREHOLDERS, APRIL 26, 1994
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF TAMBRANDS INC.
P R O X Y
The undersigned hereby (a) appoints LILYAN H. AFFINITO, PAUL S. DOHERTY and
HOWARD B. WENTZ, JR., and each of them, the proxies of the undersigned, with
power of substitution to each, to vote all the shares of Common Stock of
Tambrands Inc. (the "Corporation") that the undersigned is entitled to vote at
the Annual Meeting of Shareholders of the Corporation to be held at The Rye Town
Hilton, 699 Westchester Avenue, Rye Brook, New York, on April 26, 1994 at 9:00
A.M., and at any adjournment thereof (the "Annual Meeting"), on all matters
coming before the Annual Meeting as indicated on the reverse side hereof, and
(b) if applicable, instructs Manufacturers Hanover Trust Company, as Trustee
(the "Trustee") of the Tambrands Savings Plan (the "Plan"), (i) to vote, in the
manner indicated in this Proxy, all shares of Common Stock of the Corporation
credited to the account of the undersigned as of February 28, 1994 under the
Plan which the Trustee is entitled to vote at the Annual Meeting on all matters
coming before the Annual Meeting as indicated on the reverse side hereof and
(ii) to appoint the foregoing proxies in accordance with clause (a) hereof to so
vote such shares.
Election of Directors, Nominees:
Lilyan H. Affinito, Charles J. Chapman, Paul S. Doherty, Floyd Hall, Robert P.
Kiley, John Loudon, Ruth M. Manton, John A. Meyers, H.L. Tower,
Howard B. Wentz, Jr. and Robert M. Williams
PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE
SIDE AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
(CONTINUED ON REVERSE SIDE)
<PAGE>
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. 1873
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no contrary instructions are indicated, this
Proxy will be voted FOR the election of the nominees listed and FOR the other
Proposal, except that any shares credited to the account of the undersigned
under the Plan will not be voted unless specific instructions are indicated
on this Proxy.
- --------------------------------------------------------------------------------
The Board of Directors favors a vote FOR election of the nominees listed on the
reverse side and FOR the other Proposal.
- --------------------------------------------------------------------------------
1. Election of Directors. (see reverse)
FOR WITHHELD
[_] [_]
FOR, except vote withheld from the following nominee(s):
- ---------------------------
- --------------------------------------------------------------------------------
2. Amendment to the 1992 Directors Stock Incentive Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
- --------------------------------------------------------------------------------
3. In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the Annual Meeting or any adjournment
therof.
- --------------------------------------------------------------------------------
Do you plan to attend the Annual Meeting?
[_] [_]
YES NO
Please sign name(s) exactly as printed hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, give
full title as such. If a corporation, sign in full corporate name by President
or other authorized officer. If a partnership, sign in partnership name by
authorized person.
- ---------------------------
- ---------------------------
SIGNATURE(S) DATE
PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
ADMISSION TICKET
TAMBRANDS INC.
ANNUAL MEETING
OF SHAREHOLDERS
TUESDAY, APRIL 26, 1994
9:00 A.M.
GRAND BALLROOM
RYE TOWN HILTON
699 WESTCHESTER AVENUE
RYE BROOK, NEW YORK
- --------------------------------------------------------------------------------
AGENDA
* CALL TO ORDER, DECLARATION OF QUORUM, ANNOUNCEMENTS AND INTRODUCTIONS
* VOTING ON ELECTION OF DIRECTORS
* VOTING ON THE AMENDMENT TO THE 1992 DIRECTORS STOCK INCENTIVE PLAN
* REMARKS BY HOWARD B. WENTZ, JR., CHAIRMAN OF THE BOARD
* RESULTS OF BALLOTING
* SHAREHOLDER QUESTION AND ANSWER PERIOD
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THIS MEETING, WHETHER OR
NOT YOU ATTEND THE MEETING IN PERSON. TO MAKE SURE YOUR SHARES ARE
REPRESENTED, WE URGE YOU TO COMPLETE AND MAIL THE PROXY CARD ABOVE.
- --------------------------------------------------------------------------------
IF YOU OR YOUR GUESTS PLAN ON ATTENDING THE ANNUAL MEETING, PLEASE MARK THE
---------------------------------------------------------------------------
APPROPRAITE BOX ABOVE. Present this ticket to the Tambrands representative at
----------------------
the entrance to the Grand Ballroom.
