<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14(a)-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14(a)-11(c) or
Rule 14a-12
Tambrands Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $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:
- --------------------------------------------------------------------------------
<PAGE>
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5) Total fee paid:
- --------------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
- --------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
3) Filing Party:
- --------------------------------------------------------------------------------
4) Date Filed:
- --------------------------------------------------------------------------------
SCHEDULE.14A
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAMBRANDS INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1996
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 23, 1996, at 9:30 A.M., for the following purposes:
(1) To elect directors for the ensuing year; and
(2) To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on February 27, 1996
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 12, 1996 to the date of the meeting 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
Susan J. Riley,
Senior Vice President --
Chief Financial Officer
777 Westchester Avenue
White Plains, New York 10604
March 11, 1996
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE COMPLETED AND RETURNED PROMPTLY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TAMBRANDS INC.
PROXY STATEMENT
March 11, 1996
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 23, 1996.
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. 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 1995, 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, 1996.
VOTING SECURITIES
The Corporation has only one class of voting securities, its Common Stock,
par value $.25 per share (the "Common Stock"). On February 27, 1996, 36,809,878
shares of Common Stock were outstanding. At the meeting, each shareholder of
record at the close of business on February 27, 1996 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 1991 to June 1991; director of Caterpillar
Inc., Chrysler Corporation, Jostens, Inc., Kmart Corp., Lillian Vernon
Corporation, New England Telephone & Telegraph Co. and New York Telephone
Co.; director of the Corporation since 1986; age 64.
Anne M. Busquet
President of American Express Relationship Services, a unit of American
Express Travel Related Services, New York, New York (diversified financial
services) since October 1995; Executive Vice President of Charge Card
Marketing, American Express, from October 1993 to October 1995; Senior Vice
President and General Manager--Merchandise Services Division, American
Express, from November 1991 to October 1993; Senior Vice President and
General Manager--Optima Card Division, American Express, from before
February 1991 to November 1991; director of the Corporation since February
1996; age 45.
Paul S. Doherty
Member of the law firm of Doherty, Wallace, Pillsbury & Murphy, P.C.,
Springfield, Massachusetts, from before February 1991; trustee of NWNL
Northstar Series Trust; director of the Corporation since 1979; age 61.
Edward T. Fogarty
President and Chief Executive Officer of the Corporation since May 1994;
President-- USA/Canada/Puerto Rico of Colgate-Palmolive Company, New York,
New York (consumer products) from before February 1991 to May 1994;
director of Avon Products; director of the Corporation since 1994; age 59.
Janet Hill
Vice President of Alexander & Associates, Inc., Washington, D.C.
(management consulting) from before February 1991 and President of Staubach
Alexander Hill, Washington, D.C. (real estate consulting) since January
1995; director of Progressive Corp. and Wendy's International; director of
the Corporation since February 1996; age 48.
Robert P. Kiley
President of Neal Ward Realty Inc., Damariscotta, Maine (land development
and real estate) from before February 1991; director of the Corporation
since 1981; age 60.
2
<PAGE>
John Loudon
Chairman of Caneminster Limited, London, United Kingdom (investment
company) from before February 1991; director of Exel, Ltd.; director of the
Corporation since 1991; age 60.
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 1991; director of the Corporation since 1981; age 70.
John A. Meyers
Chairman and President of J.A.M. Enterprises, Vero Beach, Florida
(marketing and publishing consulting) from before February 1991; director
of the Corporation since 1989; age 67.
H.L. Tower
Chairman of the Board of Stanhome Inc., Westfield, Massachusetts (direct
selling, giftware and direct response) from before February 1991; director
of the Corporation since 1985; age 63.
Howard B. Wentz, Jr.
Chairman of the Board of Directors of the Corporation since June 1993;
Chairman of the Board of ESSEX Inc., New Haven, Connecticut (manufacturing
of architectural hardware) from August 1995 to January 1996; Chairman of
the Board of ESSTAR Incorporated, New Haven, Connecticut (manufacturing of
portable electric tools and architectural hardware) from before February
1991 to July 1995; director of Colgate-Palmolive Company; director of the
Corporation since 1985; age 66.
Robert M. Williams
Chairman of the Board of RFE Management Corporation, New Canaan,
Connecticut (management corporation for five venture capital limited
partnerships of which Mr. Williams is also the managing partner) from
before February 1991; director of the Corporation since 1981; age 55.
Each of the nominees was elected to his or her present term of office at the
last Annual Meeting of Shareholders, except for Mrs. Busquet and Mrs. Hill, who
were appointed by the Board of Directors effective February 7, 1996. Floyd Hall
resigned from the Board as of June 12, 1995 and is not standing for reelection
this year.
3
<PAGE>
INFORMATION REGARDING THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD
The Board of Directors presently has standing Audit, Director Affairs
(formerly Nominating), Compensation, Executive and Investment Review
Committees, the membership and principal responsibilities of which are
described below:
Audit Committee
Members: Mr. Loudon (Chairman), 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.
Committee on Director Affairs
Members: Mr. Meyers (Chairman), Mr. Doherty, Mr. Loudon, Ms. Manton, Mr.
Tower and Mr. Wentz.
In January 1995, the Nominating Committee was renamed the Committee on
Director Affairs and its functions were expanded to include additional matters
of Board organization and corporate governance, including reviewing and making
recommendations to the Board concerning the Board's size, composition,
compensation and tenure and the creation and composition of Board committees
and reporting to the Board on its evaluation of the Board's performance.
The 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 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 or Assistant 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
or Assistant 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.
Compensation Committee
Members: Ms. Affinito (Chairperson), Mr. Doherty, Mr. Tower and Mr. Wentz.
The Compensation Committee's functions include reviewing and making proposals
to the Board of Directors with respect to matters having to do with the
compensation of senior executive officers of the Corporation and administering
all plans relating to the compensation of officers, including the 1981 Long
Term Incentive Program, the 1991 Stock Option Plan, the Annual Incentive Plan,
the Supplemental Executive Retirement Plan, the 1991 Employee Stock Purchase
Plan and the 1989 Restricted Stock Plan.
4
<PAGE>
Executive Committee
Members: Mr. Wentz (Chairman), Ms. Affinito, Mr. Doherty, Mr. Fogarty, 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. Kiley, Mr. Loudon and Mr. Wentz.
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.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During the 1995 fiscal year the Board of Directors held nine meetings. The
Audit Committee met three times, the Committee on Director Affairs met five
times, the Compensation Committee met nine times, the Executive Committee met
once and the Investment Review Committee met three times. During such fiscal
year each director other than Mr. Loudon attended at least 75% 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. Loudon, who resides in England,
attended 63% 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"). No
per-meeting fees are payable for attendance at Board or committee meetings.
Under the 1995 Directors Stock and Deferred Compensation Plan (the "Directors
Plan"), each Non-Employee Director receives 500 shares of the Corporation's
Common Stock ("Annual Share Award") at or about the time of the annual meeting
of shareholders 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 Plan to receive options to
purchase 1,100 shares of the Corporation's Common Stock on or about November 15
in each year from 1995 to 2004, 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 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.
5
<PAGE>
Non-Employee Directors are also eligible to elect at fixed dates established
under the Directors Plan to exchange cash fees payable for services to be
performed as a director in calendar years after 1995 for additional share
awards ("Exchange Shares"). The number of Exchange Shares 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.
On or before December 31 of any calendar year ending on or before December
31, 2004, a Non-Employee Director may elect to defer receipt of all or any
part of any fees payable in cash or the value of any Annual Share Award (the
"Share Value") payable in respect of the calendar year following the year in
which such election is made. Any person who first becomes a director during a
calendar year may elect to defer payment of all or any part of his or her cash
fees payable for the remainder of that year.
The amounts deferred are deemed invested, in whole or in part, at the
director's election, in an interest account or a stock account, provided that
the Share Value must be credited to the stock account. Any cash fees allocated
to the stock account and any Share Value deferred shall be deemed to be
invested in a number of notional shares of the Common Stock of the
Corporation. Amounts attributable to a director's deferrals will generally be
distributed immediately following the cessation of the director's service as a
member of the Board in one lump-sum payment or in such number of annual
installments (not to exceed ten) as the director may designate. Under certain
circumstances, each director may elect to receive a distribution of all or any
portion of the amounts standing to his credit while still a member of the
Board.
During 1995, the Corporation maintained the Pension Plan for Non-Employee
Directors (the "Directors Pension Plan"), pursuant to which each Non-Employee
Director was entitled to receive an annual retirement benefit equal to the
annual cash fee payable for the year in which the director ceased to perform
services as a member of the Board. Benefits under the Directors Pension Plan
were to commence at the later of the Non-Employee Director's retirement from
the Board or attainment of age 65, and would have continued for the lesser of
the number of full years of the Non-Employee Director's service as a member of
the Board or 10 years.
In early 1996, the Board decided to eliminate the Directors Pension Plan
with respect to the Non-Employee Directors then in office and for any new Non-
Employee Directors and to convert the benefits accrued under such Plan into an
economic interest in the Corporation's stock under a phantom stock program
(the "Phantom Plan"). Under the Phantom Plan, each current Non-Employee
Director will receive a nonforfeitable contractual right to receive the value
of that number of shares of the Corporation's Common Stock determined by
dividing (1) the present value of the benefit that would have been payable to
such Non-Employee Director under the Directors Pension Plan assuming that such
Director had completed at least ten years of service as a member of the Board
by (2) the closing price of a share of Common Stock on the date of the Annual
Meeting. (Such present value is determined using the same actuarial
assumptions as are applicable to the payment of benefits under the
Corporation's Pension Plan for Employees.) Each Non-Employee Director elected
for the first time on or after January 1, 1996 will receive a contractual
right to receive the value of 1,000 shares of the Corporation's Common Stock,
subject to the requirement that such Non-Employee Director complete five years
of service as a member of the Board (unless such Director ceases to be a
director on account of death, permanent and complete disability, retirement at
the Corporation's mandatory retirement age, or a change of control of the
Corporation).
The value of each Non-Employee Director's interest under the Phantom Plan
will be paid to such Director following his or her cessation of service as a
member of the Board in either a single lump sum or in a series of annual
installments, not to exceed ten, as elected by the Non-Employee Director.
Distributions
6
<PAGE>
will be made either in cash or in shares of Common Stock as elected by the Non-
Employee Director, except that no shares of Common Stock may be delivered to
such a Non-Employee Director earlier than six months following the date on
which he or she ceases to be a member of the Board.
Any director who is also an officer receives no additional compensation for
services as a director of the Corporation.
For his additional services as Chairman of the Board during 1995, Mr. Wentz
was paid a per diem fee of $2,500 for the period from January 1 through April
30, 1995 and a monthly fee of $10,000 for the period from May 1 through
December 31, 1995. The total amount paid to Mr. Wentz for such additional
services was $200,000.
7
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid to the Chief Executive
Officer of the Corporation and each of the Corporation's four other most
highly compensated executive officers serving as executive officers on
December 31, 1995 (who, together with the Chief Executive Officer, are the
"Named Executives") for services to the Corporation and its subsidiaries
during 1995 and, where required, with respect to the previous two fiscal
years.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
- ----------------------------------------------------------------------- ---------------------------
(a) (b) (c) (d) (e) (f) (g) (h)
SECURITIES
RESTRICTED UNDERLYING
NAME AND OTHER ANNUAL STOCK OPTIONS/SARS ALL OTHER
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(1) COMPENSATION($) AWARD(S)($)(2) (# OF SHARES) COMPENSATION($)(3)
------------------ ---- ------------ ----------- --------------- -------------- ------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Edward T. Fogarty....... 1995 533,333 339,247 N/A 0 50,000 4,429
President and Chief 1994 306,250 0 N/A 480,938 199,097 1,342
Executive Officer
Michael K. Lorelli...... 1995 375,000 202,024 N/A 66,300 21,320 3,465
Executive Vice Presi- 1994 81,025 199,395 N/A 0 90,000 N/A
dent and President,
North America/Latin
America
Thomas J. Mason......... 1995 304,167 166,934 N/A 35,100 21,320 67,868
Group Vice President-- 1994 56,923 100,000 N/A 0 50,000 N/A
International
Raymond F. Wright....... 1995 264,000 120,298 N/A 0 0 4,620
Senior Vice President-- 1994 255,000 0 N/A 0 39,902 4,620
Chief Financial Officer 1993 238,000 0 N/A 0 19,955 7,243
(4)
Thomas Soper, III....... 1995 250,000 111,316 N/A 23,400 10,180 4,620
Senior Vice President-- 1994 57,292 101,500 N/A 0 35,000 N/A
Corporate Human Re-
sources and Communica-
tions
</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 stock options. The number of options granted in exchange for
such amounts is included in column (g).
(2) On December 31, 1995, the Named Executives held the following number of
shares of restricted stock, which had the following aggregate values on
such date: Mr. Fogarty, 13,500 shares worth $644,625; Mr. Lorelli, 1,700
shares worth $81,175; Mr. Mason, 900 shares worth $42,975; Mr. Wright, 0
shares worth $0; and Mr. Soper, 600 shares worth $28,650. 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) 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). In the case of Mr. Mason, $63,785 of
the amount shown reflects a cash incentive paid to him to induce him to
accept an overseas assignment. The amount shown does not include amounts
payable to him as reimbursement of or compensation for certain moving and
other expenses related to such assignment pursuant to the terms of the
Corporation's International Assignment Policy, which is generally
applicable to all salaried employees of the Corporation who accept an
overseas assignment.
(4) Mr. Wright retired from the Corporation effective December 31, 1995.
8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the stock options granted during the 1995
fiscal year to the Named Executives.
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE (1)
- -------------------------------------------------------------------- ----------
(a) (b) (c) (d) (e) (f)
% OF
TOTAL OPTIONS
GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN OR BASE EXPIRATION PRESENT
NAME GRANTED (2) FISCAL YEAR PRICE ($) DATE VALUE ($)
---- ----------- ------------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Edward T. Fogarty.... 50,000 16.91 47.75 11/15/05 548,000
Michael K. Lorelli... 21,320 7.21 47.75 11/15/05 233,667
Thomas J. Mason...... 21,320 7.21 47.75 11/15/05 233,667
Raymond F. Wright.... 0 0 N/A N/A N/A
Thomas Soper, III.... 10,180 3.44 47.75 11/15/05 111,573
</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 these grants were estimated based upon the
following assumptions: a future volatility in the value of the
Corporation's Common stock of 20.54 percent, a risk-free rate of return of
5.93 percent and a dividend yield on the Corporation's Common Stock of 3.85
percent, and that the option is exercised on the tenth anniversary of the
date of grant. No discount has been taken to reflect the risk of
termination of employment, either before or after vesting. Because two of
the variables in the value of these options are the future volatility in
the value of the Corporation's Common Stock and the time at which the
options may be exercised, the actual present value of such grants cannot be
determined.
(2) The options 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
options for five years following termination of employment. The options
generally become exercisable in approximately equal installments on each of
November 15, 1996, November 15, 1997 and November 15, 1998, although they
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.
9
<PAGE>
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 1995 fiscal year,
and the aggregate stock options held as of December 31, 1995.
<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 ($)(1)
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edward T. Fogarty....... 0 0 115,763 133,334 990,045 488,888
Michael K. Lorelli...... 0 0 30,000 81,320 166,250 332,500
Thomas J. Mason......... 0 0 16,665 54,655 65,970 131,948
Raymond F. Wright....... 0 0 113,375 49,786 368,127 153,090
Thomas Soper, III....... 0 0 11,665 33,515 72,303 144,628
</TABLE>
- ----------
(1) Based on the fair market value of the Corporation's Common Stock on
December 31, 1995, minus the exercise price. A substantial percentage of
these options granted to Messrs. Fogarty, Lorelli, Mason and Soper were
granted at exercise prices in excess of the fair market value at the date
of grant.
PENSION PLAN AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Corporation maintains 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 "Mid-
Career Benefits") to select employees, including the Named Executives other
than Mr. Fogarty.
The Mid-Career Benefits are calculated under a formula that 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 Mid-Career 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 any Mid-Career Benefits. 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, 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 in all benefits accrued under the SERP and receive an additional
two years of credited service thereunder.
10
<PAGE>
The first table that follows shows, for the compensation and years-of-service
categories indicated, 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 SERP. The second table shows
the amounts payable under the SERP's Mid-Career Benefit formula, inclusive of
the benefits shown in the first table. The benefits are assumed to be payable
at retirement at normal retirement age under the Pension Plan.
<TABLE>
<CAPTION>
PENSION PLAN BENEFITS TABLE--PENSION PLAN AND SERP EXCESS 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
150,000................ 21,870 32,805 43,740 54,675 65,610 76,545 87,480
200,000................ 29,370 44,055 58,740 73,425 88,110 102,795 117,480
250,000................ 36,870 55,305 73,740 92,175 110,610 129,045 147,480
300,000................ 44,370 66,555 88,740 110,925 133,110 155,295 177,480
350,000................ 51,870 77,805 103,740 129,675 155,610 181,545 207,480
400,000................ 59,370 89,055 118,740 148,425 178,110 207,795 237,480
450,000................ 66,870 100,305 133,740 167,175 200,610 234,045 267,480
500,000................ 74,370 111,555 148,740 185,925 223,110 260,295 297,480
550,000................ 81,870 122,805 163,740 204,675 245,610 286,545 327,480
600,000................ 89,370 134,055 178,740 233,425 268,110 312,795 357,480
650,000................ 96,870 145,305 193,740 242,175 290,610 339,045 387,480
700,000................ 104,370 156,555 208,740 260,925 313,110 365,295 417,480
750,000................ 111,870 167,805 223,740 279,675 335,610 391,545 447,480
800,000................ 119,370 179,055 238,740 298,425 358,110 417,795 477,480
850,000................ 126,870 190,305 253,740 317,175 380,610 444,045 507,480
<CAPTION>
PENSION PLAN BENEFITS TABLE--PENSION PLAN, SERP EXCESS BENEFITS AND
SERP MID-CAREER FORMULA BENEFITS
----------------------------------------------------------------------------
HIGHEST
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................ $ 25,680 $ 38,520 $ 38,520 $ 38,520 $ 43,110 $ 50,295 $ 57,480
150,000................ 40,680 61,020 61,020 61,020 65,610 76,545 87,480
200,000................ 55,680 83,520 83,520 83,520 88,110 102,795 117,480
250,000................ 70,680 106,020 106,020 106,020 110,610 129,045 147,480
300,000................ 85,680 128,520 128,520 128,520 133,110 155,295 177,480
350,000................ 100,680 151,020 151,020 151,020 155,610 181,545 207,480
400,000................ 115,680 173,520 173,520 173,520 178,110 207,795 237,480
450,000................ 130,680 196,020 196,020 196,020 200,610 234,045 267,480
500,000................ 145,680 218,520 218,520 218,520 223,110 260,295 297,480
550,000................ 160,680 241,020 241,020 241,020 245,610 286,545 327,480
600,000................ 175,680 263,520 263,520 263,520 268,110 312,795 357,480
650,000................ 190,680 286,020 286,020 286,020 290,610 339,045 387,480
700,000................ 205,680 308,520 308,520 308,520 313,110 365,295 417,480
750,000................ 220,680 331,020 331,020 331,020 335,610 391,545 447,480
800,000................ 235,680 353,520 353,520 353,520 358,110 417,795 477,480
850,000................ 250,680 376,020 376,020 376,020 380,610 444,045 507,480
</TABLE>
11
<PAGE>
As of December 31, 1995, the credited Years of Service and the compensation
covered under the Pension Plan and the SERP of each of the Named Executives
eligible to participate therein are as follows: Mr. Fogarty, two years,
$709,000; Mr. Lorelli, two years, $412,000; Mr. Mason, two years, $404,167; Mr.
Wright, seven years, $311,115; and Mr. Soper, two years, $351,500. In August
1995, Mr. Wright indicated his intention to retire from the Corporation. In
order to induce Mr. Wright to remain in the Corporation's employ through
December 31, 1995 until a smooth transition of his responsibilities could be
effected, he was granted three additional Years of Service under the SERP
solely for the purpose of allowing him to qualify to commence, on an
actuarially reduced basis, immediate receipt of his otherwise vested and
accrued benefits under the SERP. The amounts shown in the above tables 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.
OTHER INFORMATION
The Corporation has entered into employment agreements with each of Messrs.
Fogarty, Lorelli, Mason and Soper. Under his agreement, Mr. Fogarty is to
receive an annual base salary of $575,000 and an annual bonus opportunity at
target levels of performance equal to 60% of his annual base salary. In the
event the Corporation terminates Mr. Fogarty's employment for any reason other
than Cause (defined to include serious misconduct, conviction of a felony or
breach of his covenant not to disclose confidential information) or his
disability, or in the event Mr. Fogarty terminates his employment with the
Corporation for Good Reason (e.g., due to a diminution in his duties as Chief
Executive Officer or a material reduction in his annual base salary), the
Corporation will pay Mr. Fogarty severance benefits equal to three times his
then current annual base salary and shall deem Mr. Fogarty to be vested in his
benefits accrued under the Corporation's Pension Plan and SERP, if not
previously vested. The amount of the severance benefits will be paid in two
lump sum payments over two years, unless Mr. Fogarty and the Corporation agree
to pay all or a portion of the second payment in the first year.
Under his agreement, Mr. Lorelli is to receive an annual base salary of
$400,000 and an annual bonus opportunity at target levels of performance equal
to 54% of his annual base salary. Mr. Lorelli is eligible to accrue benefits
under the Mid-Career Formula of the SERP. However, if his employment terminates
before such benefits vest, the Corporation will provide him a special
retirement benefit. This benefit will be equal to the amount necessary, after
taking into account the amounts payable to Mr. Lorelli under his prior
employer's pension plans, to provide him aggregate retirement benefits equal to
those that would have been payable to him, based on the assumptions set forth
in his agreement, had he worked for his prior employer for up to five more
years. This special benefit vests in five equal annual installments over his
first five years of employment with the Corporation. In the event the
Corporation terminates Mr. Lorelli's employment for any reason other than Cause
(defined to include serious misconduct, conviction of a felony or breach of his
covenant not to disclose confidential information) or his disability, or in the
event Mr. Lorelli terminates his employment with the Corporation for Good
Reason (e.g., due to a diminution in his duties or a reduction in his annual
base salary), the Corporation will pay Mr. Lorelli severance benefits equal to
a prorated target bonus (adjusted for corporate performance) for the year of
termination and two times his then current annual base salary. The amount of
the severance benefits will generally be paid in a lump sum, unless Mr. Lorelli
and the Corporation agree to pay all or a portion of this amount over a period
not to exceed two years.
The agreement between the Corporation and Mr. Mason is substantially similar
to the agreement between the Corporation and Mr. Lorelli, except in the
following respects. Under his agreement, Mr. Mason is to receive an annual base
salary of $325,000 and an annual bonus opportunity at target levels of
12
<PAGE>
performance equal to 50% of his annual base salary. The agreement provides that
Mr. Mason will be covered under the Corporation's International Assignment
Policy in connection with his expatriate assignment. In the event Mr. Mason is
entitled to severance benefits under his agreement, he will receive a prorated
target bonus (adjusted for corporate performance) for the year of termination
and one and one-half times his then current annual base salary. The amount of
the severance benefits will generally be paid in a lump sum, unless Mr. Mason
and the Corporation agree to pay all or a portion of this amount over a period
not to exceed 18 months.
The agreement between the Corporation and Mr. Soper is substantially similar
to the agreement between the Corporation and Mr. Lorelli, except in the
following respects. Under his agreement, Mr. Soper is to receive an annual base
salary of $270,000 and an annual bonus opportunity at target levels of
performance equal to 42% of his annual base salary. In the event Mr. Soper is
entitled to severance benefits under his agreement, he will receive a prorated
target bonus (adjusted for corporate performance) for the year of termination
and one and one-half times his then current annual base salary. The amount of
the severance benefits will generally be paid in a lump sum, unless Mr. Soper
and the Corporation agree to pay all or a portion of this amount over a period
not to exceed 18 months.
The Corporation has contracts with each of the Named Executives (other than
Mr. Wright, who has retired) that provide certain rights in the event of a
change of control of the Corporation. 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. Fogarty and Lorelli, or two times, in the
case of Messrs. Mason and Soper, 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 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.
The Corporation provides a number of benefits which require that a
participant perform a minimum period of service to receive some or all of such
benefits. Under the terms of the governing plans--the Supplemental Executive
Retirement Plan, the 1989 Restricted Stock Plan and the 1991 Stock Option
Plan--the requirement for additional service is waived upon the occurrence of a
"Change of Control" and the rights of participants to the previously accrued or
awarded benefits are accelerated. Additionally, as is described in greater
detail above, the Corporation has agreements with the current Named Executives
that provide them with additional severance benefits in the event that their
employment is involuntarily or constructively terminated following a Change of
Control. For purposes of these various plans and agreements, a Change of
Control will generally be deemed to occur if (i) any third party acquires 20%
of the Corporation's Common
13
<PAGE>
Stock; (ii) the Corporation's shareholders approve (1) a merger or other
consolidation of the Corporation with another corporation as a result of which
the Corporation ceases to be a publicly traded company or (2) a sale of
substantially all of the Corporation's assets; or (iii) the persons who
constitute a majority of the members of the Board of Directors at the beginning
of any 24-month period (or successors to such directors elected or nominated
for election by such incumbent Board members) cease to be a majority of the
Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During all or a portion of 1995, the following current or former directors
served as members of the Compensation Committee: Lilyan H. Affinito, Paul S.
Doherty, Floyd Hall, H.L. Tower and Howard B. Wentz, Jr.
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.
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, 1995.
14
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report provides an explanation of the philosophy underlying the
Corporation's executive compensation programs and details on how decisions were
implemented during 1995 regarding the compensation paid to Edward T. Fogarty,
who served as Chief Executive Officer of the Corporation (the "CEO"). 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 1995, a committee (the "Administrative
Committee") appointed by the Board, which was comprised of three individuals
each of whom was 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. In 1995, after
due consideration, the Administrative Committee approved the recommendations of
the Compensation Committee. These committees made recommendations to the Board
of Directors with regard to the compensation of the Chief Executive Officer.
Pursuant to the Corporation's normal practices, in 1995 the Board of Directors
reviewed the committees' recommendations for Mr. Fogarty, 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.
15
<PAGE>
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.
CCH Incorporated
Church & Dwight Co. Inc.
The Clorox Company
Colgate-Palmolive Company
General Mills, Inc.
The Gillette Company
Helene Curtis Industries, Inc.
Hillenbrand Industries Inc.
International Flavors & Fragrances Inc.
Johnson & Johnson
Kimberly-Clark Corporation
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. Thus, the
relationship between the Corporation's total pay package and that of the
members of the Comparative Group will vary based on year-to-year performance.
The total pay of the Corporation's executive officers for 1995 approximated the
fiftieth percentile of the Comparative Group.
16
<PAGE>
IMPLEMENTATION OF THE PHILOSOPHY IN 1995
Consistent with the above-stated philosophy, the Corporation's executive
compensation programs were administered in 1995 in accordance with the
following guidelines:
. Base salaries for executive officers were targeted at the median of
competitive practices with respect to base salaries.
. Target bonus opportunities for executive officers for 1995 services were
generally designed to provide such officers with total cash compensation
(inclusive of base salary) at the median of competitive practice, if the
requisite performance objectives were attained.
. Long-term performance pay opportunities for 1995 were intended to provide
compensation at the median of competitive practice, if the Corporation
were to achieve its projected performance over the long term.
. Benefits were consistent with competitive practice.
In 1995, the Corporation's executive officers participated in the
Corporation's Annual Incentive Plan. The plan was funded by an award pool of
money that was determined based on the achievement by the Corporation against
an earnings per share target for 1995. The plan was structured so that the
Corporation's executive officers were eligible to participate in the award pool
only upon the achievement by the Corporation of at least 95% of the target
level of earnings per share. The amount of the award pool allocated to each
executive officer is determined using a formula based primarily on earnings per
share, secondarily on unit shipment volume and to a lesser extent on
performance against objectives relating to some or all of product innovation,
increased productivity and organizational excellence.
In the second quarter of 1995, the Corporation took an $8.7 million (after-
tax) special litigation charge against earnings to cover expenses related to
several legal proceedings related to various earlier-divested non-tampon
businesses and to a securities class action described under the caption
"Certain Legal Proceedings," which now has been settled. Section 5 of the
Annual Incentive Plan provides that appropriate adjustments in the performance
objectives under the Plan may be made by the Committee in its discretion to
avoid undue windfalls or hardships due to external conditions outside the
control of management and non-recurring or abnormal items. After consideration,
the Committee determined under Section 5 to adjust the 1995 earnings per share
target to exclude as a hardship the effect of the litigation charge.
The Corporation slightly exceeded its earnings per share target for 1995 and
accordingly the amount of the award pool was proportionately above target.
Individual awards to executive officers were based on achievement against the
objectives described above.
During 1995, the Corporation continued to place a substantial emphasis on
long-term performance pay. Under the Corporation's general compensation
practices, in 1995, the substantial majority of such long-term performance pay
opportunities was reflected in stock option grants, with the remainder awarded
through restricted stock grants.
The number of stock options granted to executive officers in 1995 was
determined by initially establishing a target award for each grade level by
dividing a percentage of the salary midpoint for the level by a per share value
for each option share granted, as determined by the Corporation's independent
compensation consultants. The target awards were established using the Black-
Scholes valuation methodology to determine
17
<PAGE>
the assumed value for each option share. Target awards were then adjusted for
each recipient to reflect an assessment of the recipient's individual
performance as well as future potential. Prior stock option awards were not
taken into account in determining the size of any stock option award made in
1995.
The number of shares of restricted stock granted to executive officers in
1995 was initially determined by dividing each executive officer's targeted
long-term performance pay opportunity attributable to restricted stock by an
estimated discounted present value of 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. Target awards
were then adjusted for each recipient to reflect an assessment of the
recipient's individual performance as well as future potential. Prior
restricted stock awards were not taken into account in determining the size of
any restricted stock award made in 1995. Restricted stock vests after four
years of service with the Corporation after the date of grant.
CEO COMPENSATION
The Corporation's Board of Directors must approve decisions regarding the
following elements of CEO compensation: (i) salary; (ii) target bonus and bonus
awards under the Annual Incentive Plan; (iii) stock option awards; and (iv)
restricted stock awards. The Compensation Committee and the Special
Administrative Committee recommended the following actions with respect to the
CEO's compensation for 1995, which were approved by action of the Board.
Base Salary. For the period from January 1 until October 31, 1995, Mr.
Fogarty received a base salary at the rate of $525,000 per year pursuant to the
terms of his employment agreement. Effective November 1, 1995, Mr. Fogarty
received an increase in base salary to $575,000 per year. This increase was
effective 17 months after Mr. Fogarty's date of hire and represented a 6.7%
annualized increase. The increase was consistent with the Corporation's salary
administration practices and reflected an assessment by the Committee of Mr.
Fogarty's performance in several quantitative areas including growth in sales
volume, market share, tampon category, earnings per share and shareholder value
and achievement of several balance sheet measures and his performance in
several qualitative areas including leadership, corporate strategy, new
products, management organization, succession planning, teamwork, shareholder
relations and globalization.
Annual Incentive Plan. In early 1996, the Compensation Committee awarded the
CEO a bonus for 1995 of $339,247. This bonus equaled 106% of the target award
of $320,000 (60% of the CEO's base salary for 1995). The award was determined
in a manner consistent with the methodology described above under the caption
"Implementation of the Philosophy in 1995" and was calculated according to a
formula based primarily on earnings per share, secondarily on unit shipment
volume and to a lesser extent on performance against objectives relating to
product innovation, increased productivity and organizational excellence.
Stock Options. The CEO received an award of 50,000 stock options during 1995,
which was equal to 120% of the target award for the CEO position. The award was
determined using the methodology described earlier under the caption
"Implementation of the Philosophy in 1995" and was based on the subjective
evaluation of Mr. Fogarty's individual performance and the Corporation's
performance described above under the caption "Base Salary."
Other. No other actions were taken concerning the CEO's compensation for
services rendered in 1995.
18
<PAGE>
OTHER
Section 162(m) of the Internal Revenue Code prohibits the Corporation from
deducting any compensation in excess of $1 million paid to certain of its
executive officers, except to the extent that such compensation is paid
pursuant to a shareholder approved plan upon the attainment of specified
performance objectives. The Corporation has not paid any compensation to any
executive officer that was not deductible by reason of the prohibition in
Section 162(m). The Committee believes that tax deductibility is an important
factor, but not the sole factor, to be considered in setting executive
compensation policy. Accordingly, the Committee generally intends to take such
reasonable steps as are required to avoid the loss of a tax deduction due to
Section 162(m), but reserves the right, in appropriate circumstances, to pay
amounts which are not deductible.
The Compensation Committee
of the Board of Directors
Lilyan H. Affinito, Chairperson
Paul S. Doherty
H.L. Tower
Howard B. Wentz, Jr.
19
<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, 1990 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 based on their relative market capitalization determined at
the beginning of each quarter.
The companies that comprise the Comparative Group are:
American Home Products Corporation
Brown-Forman Corporation
Carter-Wallace, Inc.
CCH Incorporated
Church & Dwight Co. Inc.
The Clorox Company
Colgate-Palmolive Company
General Mills, Inc.
The Gillette Company
Helene Curtis Industries, Inc.
Hillenbrand Industries Inc.
International Flavors & Fragrances Inc.
Johnson & Johnson
Kimberly-Clark Corporation
Lance, Inc.
The Procter & Gamble Company
Schering-Plough Corporation
The J.M. Smucker Company
UST Inc.
Warner-Lambert Company
Wm. Wrigley Jr. Company
20
<PAGE>
Comparison of Total Return to Shareholders
(12/31/90 - 12/31/95)
[CHART APPEARS HERE]
- --------------------------------------------------------------------------------
Tambrands S&P 500 Comparative
Group
- --------------------------------------------------------------------------------
December 31, 1990 $100.00 $100.00 $100.00
December 31, 1991 157.54 130.34 144.05
December 31, 1992 155.02 140.25 144.23
December 31, 1993 110.63 154.32 146.42
December 31, 1994 100.98 156.42 162.91
December 31, 1995 129.89 214.99 231.13
- --------------------------------------------------------------------------------
21
<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 15, 1996 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........... 29,523(6) 3,602(7) 25,621 0.08
Anne M. Busquet.............. 825 0 825 0.00
Paul S. Doherty.............. 16,173 9,573 6,600 0.04
Edward T. Fogarty............ 137,820(8) 18,767(9) 115,763 0.37
Janet Hill................... 825 0 825 0.00
Robert P. Kiley.............. 28,038(10) 11,738 15,572 0.08
John Loudon.................. 13,705 0 13,705 0.04
Ruth M. Manton............... 28,754(11) 5,666 21,088 0.08
John A. Meyers............... 30,323 4,702(12) 25,621 0.08
H.L. Tower................... 33,259 9,582 23,677 0.09
Howard B. Wentz, Jr.......... 20,322 19,222 1,100 0.06
Robert M. Williams........... 154,263(13) 12,102(14) 25,621 0.42
Michael K. Lorelli........... 37,704(15) 7,688(16) 30,000 0.10
Thomas J. Mason.............. 18,793(17) 2,110(18) 16,665 0.05
Thomas Soper, III............ 13,910(19) 1,300(20) 11,665 0.04
Raymond F. Wright............ 146,434(21) 29,602 113,375 0.40
All directors, Named
Executives and other
executive officers as a
group....................... 865,058(22) 140,605(23) 588,476 2.36
</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, 1995.
(4) Individuals currently have the right to acquire these shares within 60 days
of February 15, 1996 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 36,783,863 shares of Common Stock
issued and outstanding (excluding treasury shares) on February 15, 1996 and
assuming that all shares of Common Stock subject to stock options
exercisable within 60 days of February 15, 1996 held by that individual or
group are owned thereby.
(Footnotes continued on following page)
22
<PAGE>
(Footnotes continued from preceding page)
(6) Includes 300 shares held by a self-directed SEP established by Ms.
Affinito.
(7) Includes 102 shares credited to the benefit of Ms. Affinito under the
deferred compensation component of the Directors Plan and held in a grantor
trust, as to which Ms. Affinito has the right to direct the trustee as to
how to vote such shares, but no investment power.
(8) Includes 3,290 shares vested in the Corporation's Savings Plan as of
December 31, 1995 with respect to which Mr. Fogarty has sole voting but, as
to 28 shares, has no investment power.
(9) Includes 16,700 shares awarded under the 1989 Restricted Stock Plan (the
"1989 Plan") with respect to which Mr. Fogarty has sole voting but no
investment power.
(10) Includes 728 shares vested in the Corporation's Savings Plan as of
December 31, 1995 with respect to which Mr. Kiley has sole voting but no
investment power.
(11) Includes 2,000 shares owned by Aries Design Management, Inc. Pension
Trust, of which Ms. Manton is the trustee and sole beneficiary.
(12) Includes 102 shares credited to the benefit of Mr. Meyers under the
deferred compensation component of the Directors Plan and held in a
grantor trust, as to which Mr. Meyers has the right to direct the trustee
as to how to vote such shares, but no investment power.
(13) Includes 101,000 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.
(14) Includes 102 shares credited to the benefit of Mr. Williams under the
deferred compensation component of the Directors Plan and held in a
grantor trust, as to which Mr. Williams has the right to direct the
trustee as to how to vote such shares, but no investment power.
(15) Includes 16 shares vested in the Corporation's Savings Plan as of December
31, 1995 with respect to which Mr. Lorelli has sole voting but no
investment power.
(16) Includes 3,570 shares awarded under the 1989 Plan with respect to which
Mr. Lorelli has sole voting but no investment power.
(17) Includes 18 shares vested in the Corporation's Savings Plan as of December
31, 1995 with respect to which Mr. Mason has sole voting but no investment
power.
(18) Includes 1,980 shares awarded under the 1989 Plan with respect to which
Mr. Mason has sole voting but no investment power.
(19) Includes 945 shares vested in the Corporation's Savings Plan as of
December 31, 1995 with respect to which Mr. Soper has sole voting but, as
to 21 shares, has no investment power.
(20) Represents shares awarded under the 1989 Plan with respect to which Mr.
Soper has sole voting but no investment power.
(21) Includes 2,500 shares owned by Mr. Wright's wife as to which Mr. Wright
disclaims beneficial ownership and 957 shares vested in the Corporation's
Savings Plan as of December 31, 1995 with respect to which Mr. Wright has
sole voting but, as to 560 shares, has no investment power.
(22) Includes 9,138 shares vested in the Corporation's Savings Plan as of
December 31, 1995 with respect to which this group has sole voting but, as
to 3,660 shares, has no investment power.
(23) Includes 25,348 shares awarded under the 1989 Plan with respect to which
this group has sole voting but no investment power.
23
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Set forth below is certain information concerning those persons who, to the
Corporation's knowledge, are beneficial owners of more than 5% of the Common
Stock.
<TABLE>
<CAPTION>
SHARES OF
NAME AND ADDRESS COMMON STOCK PERCENT OF CLASS
- ---------------- ------------ ----------------
<S> <C> <C>
The Capital Group Companies, Inc. 2,806,600(1) 7.7
333 South Hope Street
Los Angeles, CA 90071
Travelers Group Inc. 2,563,645(2) 7.0
388 Greenwich Street
New York, NY 10013
Scudder, Stevens & Clark, Inc. 2,286,928(3) 6.2
345 Park Avenue
New York, NY 10154
</TABLE>
- ----------
(1) Based on a Schedule 13G dated February 9, 1996 filed with the Securities
and Exchange Commission ("SEC") jointly by The Capital Group Companies,
Inc. ("Capital Group") and Capital Research and Management Company
("Research"). Capital Group reported sole voting power with respect to
332,200 shares and sole dispositive power with respect to 2,806,600 shares
of Common Stock. Research reported sole dispositive power with respect to
2,325,400 shares or 6.3% of the Common Stock. Capital Group also indicated,
in a letter to the Corporation dated February 9, 1996 accompanying its
Schedule 13G, that Capital Guardian Trust Company and Research are each
operating subsidiaries of Capital Group, and exercised as of December 29,
1995 investment discretion with respect to 481,200 and 2,325,400 shares,
respectively, or a combined total of 7.7%, of Common Stock on behalf of
various institutional investors.
(2) Based solely on a Schedule 13G dated February 5, 1996 filed with the SEC
jointly by Travelers Group Inc. ("Travelers"), Smith Barney Holdings Inc.
("Holdings") and Smith Barney Inc. ("Smith Barney"). According to the
Schedule 13G, Holdings is the sole common stockholder of Smith Barney and
Travelers is the sole stockholder of Holdings. Each of Travelers and
Holdings reported shared voting and dispositive power with respect to
2,563,645 shares of Common Stock and Smith Barney reported shared voting
and dispositive power with respect to 2,259,445 shares, or 6.2%, of Common
Stock.
(3) Based solely on a Schedule 13G dated February 7, 1996 filed with the SEC by
Scudder, Stevens & Clark, Inc. ("Scudder"). Scudder reported sole voting
power with respect to 501,700 shares, shared voting power with respect to
1,555,800 shares and sole dispositive power with respect to 2,286,928
shares of Common Stock.
Each of the above beneficial owners stated in its 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.
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.
24
<PAGE>
CERTAIN LEGAL PROCEEDINGS
The Corporation was a nominal defendant in three purported shareholder
derivative lawsuits filed in the Supreme Court of the State of New York for
Westchester County in June 1993 and consolidated into a single action. Named
collectively in the consolidated complaint as individual defendants were the
Corporation's directors (other than Mr. Fogarty), certain former directors and
three of its former officers. The complaint alleged that the officer-defendants
exposed the Corporation to liability in certain shareholder class actions that
alleged that disclosures made during the 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. These class
actions have been settled and dismissed against all defendants. One of the
former officers was also alleged to have received improper reimbursements from
the Corporation for alleged personal expenses. The director-defendants were
alleged to have acquiesced in the aforesaid alleged violations and to have
received excessive compensation. The complaint sought to recover on behalf of
the Corporation an unspecified amount of damages from the individual
defendants. No relief was sought against the Corporation. In September 1994,
the Court granted the defendants' motion to dismiss the complaint for failure
to make a demand upon the Board of Directors. Plaintiffs have appealed the
dismissal.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP, which served as the Corporation's independent public
accountants in 1995, have been designated by the Board of Directors as the
Corporation's independent public accountants for 1996. 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 1997 Annual
Meeting of Shareholders must be received by the Secretary of the Corporation no
later than November 11, 1996 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
1997 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 26, 1997 and not later
than February 25, 1997.
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.
25
<PAGE>
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 $8,000 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
Susan J. Riley,
Senior Vice President--
Chief Financial Officer
777 Westchester Avenue
White Plains, New York 10604
March 11, 1996
26
<PAGE>
P
R
O
X
Y
[LOGO OF TAMBRANDS]
T A M B R A N D S
Annual Meeting of Shareholders, April 23, 1996
Proxy Solicited on Behalf of the Board of Directors
of Tambrands Inc.
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 23, 1996 at
9:30 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 Putnam Fiduciary 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 27, 1996 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, Anne M. Busquet, Paul S. Doherty, Edward T. Fogarty, Janet
Hill, 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 | 1873
vote as in this |______
example.
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, except that any
shares credited to the account of the undersigned under the Plan as to which no
specific instructions are indicated on this Proxy will be voted in the same
proportion as all other shares held under the Plan as to which timely
instructions have been received are voted.
- --------------------------------------------------------------------------------
The Board of Directors favors a vote FOR election of the nominees
listed on the reverse side.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of
Directors. [_] [_]
(see reverse)
FOR, except vote withheld from the following nominee(s):
- -------------------------------------------------------
2. In their discretion, the proxies are authorized to vote upon
such other matters as may properly come before the
Annual Meeting or any adjournment thereof.
- --------------------------------------------------------------------------------
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.
