UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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[ ] Soliciting Material Pursuant to Rule 14a-12
Kimberly-Clark Corporation
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(Name of Registrant as Specified In Its Charter)
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March 12, 2002
[KIMBERLY-CLARK LOGO]
WAYNE R. SANDERS
Chairman of the Board and
Chief Executive Officer
TO OUR STOCKHOLDERS:
On behalf of the Board of Directors and management of Kimberly-Clark
Corporation, I cordially invite you to the Annual Meeting of Stockholders to be
held on Thursday, April 25, 2002, at 11:00 a.m. at our World Headquarters which
is located at 351 Phelps Drive, Irving, Texas.
At the Annual Meeting, stockholders will be asked to elect three directors
for a three-year term, approve the Corporation's Executive Officer Achievement
Award Program, approve the selection of the Corporation's independent auditors
and vote on a stockholder proposal. These matters are fully described in the
accompanying Notice of Annual Meeting and proxy statement.
It is important that your stock be represented at the meeting regardless
of the number of shares you hold. You are encouraged to specify your voting
preferences by marking and dating the enclosed proxy card, voting electronically
using the Internet or using the telephone voting procedures.
If you plan to attend the meeting, please check the card in the space
provided or so indicate electronically or by telephone. This will assist us with
meeting preparations, and will enable us to expedite your admittance. If your
shares are not registered in your own name and you would like to attend the
meeting, please ask the broker, trust, bank or other nominee which holds your
shares to provide you with evidence of your share ownership, which will enable
you to gain admission to the meeting.
Sincerely,
/s/ WAYNE R. SANDERS
Wayne R. Sanders
KIMBERLY-CLARK CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 2002
The Annual Meeting of Stockholders of KIMBERLY-CLARK CORPORATION will be
held at the Corporation's World Headquarters, 351 Phelps Drive, Irving, Texas,
on Thursday, April 25, 2002, at 11:00 a.m. for the following purposes:
1. To elect three directors for a three-year term to expire at the 2005
Annual Meeting of Stockholders;
2. To approve the Corporation's Executive Officer Achievement Award
Program;
3. To approve the selection of Deloitte & Touche LLP as independent
auditors;
4. To act upon a stockholder's proposal which may be presented at the
meeting; and
5. To take action upon any other business which properly may come before
the meeting or any adjournment thereof.
Stockholders of record at the close of business on February 25, 2002 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
It is important that your shares be represented at the meeting. I urge you
to sign, date and promptly return the enclosed proxy card in the enclosed
business reply envelope, or vote using the Internet or telephone.
The accompanying proxy statement also is being used to solicit voting
instructions for the shares of the Corporation's common stock which are held by
the trustee of the Corporation's Salaried and Hourly Employees Incentive
Investment Plans and Retirement Contribution Plan for the benefit of the
participants in the plans. It is important that each participant in the plans
signs, dates and returns the voting instruction card which is enclosed with the
proxy statement in the business reply envelope provided or indicate his or her
preference using the Internet or telephone.
By order of the Board of Directors.
/s/ RONALD D. MCCRAY
Ronald D. Mc Cray
Vice President, Associate General
Counsel and Secretary
P. O. Box 619100
Dallas, Texas 75261-9100
March 12, 2002
TABLE OF CONTENTS
Introduction.......................................................... 1
Electronic Delivery of Proxy Materials and Annual Report............ 1
Who May Vote........................................................ 1
How You May Vote.................................................... 1
How You May Revoke or Change Your Vote.............................. 1
Confidential Voting................................................. 2
Costs of Solicitation............................................... 2
Votes Required/Voting Procedures.................................... 2
Dividend Reinvestment and Stock Purchase Plan....................... 2
Employee Benefit Plans.............................................. 2
Delivery of One Proxy Statement and Annual Report to a Single
Household to Reduce Duplicate Mailings........................... 2
Proposal 1. Election of Directors..................................... 3
General Information................................................. 3
Certain Information Regarding Directors and Nominees................ 4
Security Ownership of Management.................................... 8
Certain Transactions and Business Relationships..................... 9
Board of Directors and Committees................................... 9
Stockholder Nominations for Directors............................... 9
Executive Compensation.............................................. 10
Summary Compensation Table....................................... 10
Option Grants in 2001............................................ 11
Aggregated Option Exercises in 2001 and Option Values as of
December 31, 2001............................................... 12
Compensation Committee Report on Executive Compensation.......... 12
Salaries for 2001.............................................. 13
Cash Bonus Awards for 2001..................................... 13
Equity Plans................................................... 14
2001 Compensation of the Chief Executive Officer............... 14
Alignment of Executive Compensation with Corporate
Performance................................................... 15
Tax Deduction for Executive Compensation....................... 15
Executive Stock Ownership........................................ 16
Performance Graph................................................ 16
Compensation Committee Interlocks and Insider Participation...... 16
Defined Benefit Retirement Plan.................................. 17
Executive Severance Plan......................................... 18
Corporation's Severance Pay Plan................................. 18
Compensation of Directors........................................ 18
Proposal 2. Approval of the Corporation's Executive Officer
Achievement Award Program........................................... 20
Introduction........................................................ 20
Awards.............................................................. 20
Eligibility......................................................... 21
Administration of the EOAAP Plan.................................... 21
Amendment of the EOAAP Plan......................................... 21
U.S. Federal Income Tax Consequences................................ 21
Proposal 3. Approval of Auditors...................................... 22
Principal Accounting Firm Fees...................................... 22
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Proposal 4. Stockholder Proposal Regarding the Corporation's Amended
and Restated Rights Agreement....................................... 22
Stockholder Proposal................................................ 23
Response of the Corporation to Stockholder Proposal................. 24
Section 16(a) Beneficial Ownership Reporting Compliance............... 25
2003 Stockholder Proposals............................................ 25
Annual Meeting Advance Notice Requirements............................ 25
Audit Committee Report................................................ 26
Other Matters......................................................... 27
Exhibit A -- Executive Officer Achievement Award Program.............. A-1
ii
March 12, 2002
(KIMBERLY-CLARK LOGO)
PROXY STATEMENT
INTRODUCTION
The accompanying proxy is solicited on behalf of the Board of Directors of
Kimberly-Clark Corporation for use at the Annual Meeting of Stockholders to be
held on April 25, 2002 and at any adjournment thereof. We are first mailing this
proxy statement and the accompanying proxy to holders of the Corporation's
common stock on March 12, 2002.
Electronic Delivery of Proxy Materials and Annual Report
The Notice of Annual Meeting and proxy statement and the Corporation's 2001
Annual Report are available on our Internet site at www.kimberly-clark.com.
Instead of receiving paper copies of the proxy statement and annual report in
the mail, in the future stockholders may elect to receive an e-mail that will
provide a link to these documents on the Internet. Opting to receive your proxy
materials online saves the Corporation the cost of producing and mailing bulky
documents to your home or business, and gives you an automatic link to the proxy
voting site.
Stockholders of Record: If your shares are registered in your own name, to
enroll in the electronic proxy delivery service to receive Kimberly-Clark's
future proxy statements and annual reports, you may go directly to
http://www.econsent.com/kmb anytime and follow the instructions.
Beneficial Stockholders: If your shares are not registered in your name,
to enroll in the electronic delivery service to receive Kimberly-Clark's future
proxy statements and annual reports, check the information provided to you by
your bank or broker or contact your bank or broker for information on electronic
delivery service.
Who May Vote
Each stockholder of record at the close of business on February 25, 2002
will be entitled to one vote for each share registered in the stockholder's
name. As of that date, there were outstanding 520,279,985 shares of common stock
of the Corporation.
How You May Vote
You may vote in person by attending the meeting or by completing and
returning a proxy by mail, or vote using the Internet or the telephone. To vote
your proxy by mail, mark your vote on the enclosed proxy card, then follow the
instructions on the card. To vote your proxy using the Internet or by telephone,
see the instructions on the proxy form and have the proxy form available when
you access the Internet website or place your telephone call.
The named proxies will vote your shares according to your directions. If
you sign and return your proxy but do not make any of the selections, the named
proxies will vote your shares for the election of directors, the approval of the
Corporation's Executive Officer Achievement Award Program, the approval of the
selection of the Corporation's independent auditors and against approval of the
stockholder proposal.
How You May Revoke or Change Your Vote
You may revoke your proxy before the time of voting at the meeting in the
following ways:
- by mailing a revised proxy to the Secretary of the Corporation
- by changing your vote on the Internet website
- by using the telephone voting procedures
- by voting in person at the meeting
Confidential Voting
Stockholders' proxies and plan participant voting instruction cards are
received by the Corporation's independent proxy processing agent, and the vote
is certified by independent Inspectors of Election. Proxies, ballots and voting
instruction cards that identify the vote of stockholders and participants will
be kept confidential, except as necessary to meet legal requirements, in cases
where stockholders and participants request disclosure or write comments on
their cards, or in a contested matter involving an opposing proxy solicitation.
During the proxy solicitation period, the Corporation will receive daily
tabulation reports from the independent proxy processing agent, but these
reports provide only aggregate data. In addition, the agent will identify if a
stockholder has failed to vote so that the Corporation may contact the
stockholder and request he or she do so.
Costs of Solicitation
The Corporation will bear the cost of preparing, printing and mailing
materials in connection with this solicitation of proxies including the cost of
the proxy solicitation, and the expenses of brokers, fiduciaries and other
nominees in forwarding proxy material to beneficial owners. In addition to the
use of the mail, solicitation may be made by telephone or otherwise by regular
employees of the Corporation. The Corporation has retained W.F. Doring & Co.,
Inc. and Georgeson Shareholder Communications Inc. to aid in the solicitation at
an aggregate cost of up to $24,000, plus reimbursement of out-of-pocket
expenses.
Votes Required/Voting Procedures
A majority of the shares of the Corporation's common stock, present in
person or represented by proxy, shall constitute a quorum for purposes of the
Annual Meeting. Directors shall be elected by a plurality of the votes present
in person or represented by proxy at the Annual Meeting and entitled to vote on
the election of directors. In all matters other than the election of directors,
the affirmative vote of a majority of shares present in person or represented by
proxy at the Annual Meeting and entitled to vote on the subject matter shall be
the act of the stockholders. Abstentions are treated as votes against a proposal
and broker non-votes will not be considered present and entitled to vote.
Dividend Reinvestment and Stock Purchase Plan
If a stockholder is a participant in the Corporation's Automatic Dividend
Reinvestment and Stock Purchase Plan, the proxy card represents the number of
full shares in the stockholder's account in the plan, as well as shares
registered in the stockholder's name.
Employee Benefit Plans
The Corporation also is mailing this proxy statement and voting materials
to participants in the Corporation's Salaried and Hourly Employees Incentive
Investment Plans and Retirement Contribution Plan. The trustee of the
Corporation's plans, U.S. Bank, as the stockholder of record of shares of the
common stock of the Corporation held in the plans, will vote whole shares of
stock attributable to each participant's interest in the plans in accordance
with the directions the participant gives, or, if no directions are given by the
participant, in accordance with the directions of the respective plan committee.
Delivery of One Proxy Statement and Annual Report to a Single Household to
Reduce Duplicate Mailings
Each year in connection with the Corporation's Annual Meeting of
Stockholders, the Corporation is required to mail to each stockholder of record
a proxy statement and annual report, and to arrange for a proxy statement and
annual report to be sent to each beneficial stockholder whose
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shares are held by or in the name of a broker, bank, trust or other nominee.
Because many stockholders hold shares of the Corporation's common stock in
multiple accounts, this process results in duplicate mailings of proxy
statements and annual reports to stockholders who share the same address.
Stockholders may avoid receiving duplicate mailings and save the Corporation the
cost of producing and mailing duplicate documents as follows:
Stockholders of Record: If your shares are registered in your own name and
you are interested in consenting to the delivery of a single proxy statement or
annual report, you may contact Stockholder Services, P.O. Box 612606, Dallas,
Texas 75201-2606 or call 972-281-1521.
Beneficial Stockholders: If your shares are not registered in your own
name, your broker, bank, trust or other nominee that holds your shares may have
asked you to consent to the delivery of a single proxy statement or annual
report if there are other Kimberly-Clark stockholders who share an address with
you. If you currently receive more than one proxy statement or annual report at
your household, and would like to receive only one copy of each in the future,
you should contact your nominee.
Right to Request Separate Copies: If you consent to the delivery of a
single proxy statement and annual report but later decide that you would prefer
to receive a separate copy of the proxy statement or annual report, as
applicable, for each stockholder sharing your address, then please notify us or
your nominee, as applicable, and we or they will promptly deliver such
additional proxy statements or annual reports. You may also contact us at the
address and phone number listed on page 27 if you wish to receive a separate
copy of the proxy statement or annual report for each stockholder sharing your
address in the future.
PROPOSAL 1. ELECTION OF DIRECTORS
GENERAL INFORMATION
The Restated Certificate of Incorporation of the Corporation provides that
the Board of Directors shall consist of not less than 11 nor more than 25
members, as determined from time to time by the affirmative vote of a majority
of the entire Board of Directors, and that the Board shall be divided into three
classes. Directors of one class are elected each year for a term of three years.
On April 29, 2001, Mr. Frank A. McPherson (a director of the Class of 2002)
retired as a member of the Board of Directors. As of the date of this proxy
statement, the Board of Directors consists of 12 members, three of whom have
terms which expire at this year's Annual Meeting (Class of 2002), five of whom
have terms which expire at the 2003 Annual Meeting (Class of 2003), and four of
whom have terms which expire at the 2004 Annual Meeting (Class of 2004).
The three nominees for director set forth on the following pages are
proposed to be elected at this year's Annual Meeting to serve for a term to
expire at the 2005 Annual Meeting of Stockholders (Class of 2005) and until
their successors are elected and have qualified. Should any nominee become
unable to serve, proxies may be voted for another person designated by
management. All nominees have advised the Corporation that they will serve if
elected. The remaining nine directors will continue to serve as directors for
the terms set forth on the following pages.
The nominees for director are such that immediately after the election of
the nominees to the Board of Directors, a majority of all directors holding
office shall be "Independent Directors" as that term is defined in By-Law 24 of
the Corporation's By-Laws. Generally, By-Law 24 provides that individuals are
Independent Directors if they are not employed by the Corporation or its
subsidiaries or equity companies and do not have, and are not affiliated with an
entity that has, business transactions or relationships with the Corporation or
its subsidiaries that are required to be disclosed in the Corporation's proxy
statement. The By-Law authorizes the Audit Committee of the Board of Directors
to determine that an individual who has a transaction or relationship disclosed
in the proxy statement is nevertheless an Independent Director if it determines
by resolution that the person is independent of management and free from any
relationship that would interfere with the person's independent judgment as a
Board member.
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CERTAIN INFORMATION REGARDING DIRECTORS AND NOMINEES
The names of the nominees for the Class of 2005 and of the other directors
continuing in office, their ages as of the date of the Annual Meeting, the year
each first became a director, their principal occupations during at least the
past five years, other directorships held by each as of the date hereof and
certain other biographical information are set forth on the following pages by
Class, in the order of the next Class to stand for election.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
FOR A THREE-YEAR TERM EXPIRING AT THE
2005 ANNUAL MEETING OF STOCKHOLDERS
(CLASS OF 2005)
JOHN F. BERGSTROM
Chairman and Chief Executive Officer, Bergstrom Corporation
Mr. Bergstrom, age 55, has served as Chairman and Chief Executive Officer of
Bergstrom Corporation, Neenah, Wisconsin, for more than the past five years.
Bergstrom Corporation owns and operates automobile sales and leasing businesses
and a credit life insurance company in Wisconsin. Mr. Bergstrom is a director of
the Wisconsin Energy Corporation, Wisconsin Electric Power Company, Sensient
Technologies Corp., Banta Corporation, The Catholic Diocese of Green Bay,
Midwest Express Holdings, Inc. and the Green Bay Packers, Inc. He also is a
member of the Board of Trustees of Marquette University and the Medical College
of Wisconsin. He has been a director of the Corporation since 1987.
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PAUL J. COLLINS
Retired Vice Chairman, Citigroup Inc.
Mr. Collins, age 65, retired in October 2000 as Vice Chairman of Citigroup Inc.
He had been Vice Chairman of Citigroup Inc. since its inception in October of
1998 as a result of the merger of Citicorp and Travelers Group Inc. Prior to the
merger, Mr. Collins was a Vice Chairman of Citicorp and its principal
subsidiary, Citibank N.A., since 1988. He was a director of Citicorp, Inc. and
Citibank, N.A., from 1985-2000, and is currently a director of BG Group plc,
Genuity Inc. and Nokia Corporation. Mr. Collins is a trustee of the University
of Wisconsin Foundation, the American University of Beirut and the Glyndebourne
Arts Trust. He has been a director of the Corporation since 1983.
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ROBERT W. DECHERD
Chairman of the Board, President, and Chief Executive Officer, Belo Corp.
Mr. Decherd, age 51, has served as Chairman of the Board and Chief Executive
Officer of Belo Corp., a broadcasting and publishing company, since January
1987. Mr. Decherd became President of that company in January 1994, and
previously served as President from January 1985 through December 1986. He has
been a director of that company since 1976. He has been a director of the
Corporation since 1996.
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MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING AT THE
2003 ANNUAL MEETING OF STOCKHOLDERS
(CLASS OF 2003)
THOMAS J. FALK
President and Chief Operating Officer
Mr. Falk, age 43, has served as President and Chief Operating Officer of the
Corporation since his election in 1999. He previously had been elected Group
President-Global Tissue, Pulp and Paper in 1998, where he was responsible for
the Corporation's global tissue businesses. He also was responsible for the Wet
Wipes and Neenah Paper sectors, Pulp Operations and Consumer Business Services,
Environment and Energy and Human Resources organizations. Mr. Falk joined the
Corporation in 1983 and has held other senior management positions in the
Corporation. Mr. Falk is a member of the University of Wisconsin-Madison School
of Business Dean's Advisory Board. He has been a director of the Corporation
since 1999.
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WILLIAM O. FIFIELD
Partner, Sidley Austin Brown & Wood
Mr. Fifield, age 55, has served as a partner in the law firm of Sidley Austin
Brown & Wood since 1977. He is the managing partner in the firm's Dallas, Texas
office, a member of the firm's executive committee, and a member of the firm's
space, staff, practice development and new business committees. He has served
the firm in a number of other administrative capacities, including co-chair of
the firm's committee on computers and legal technology, co-chair of the firm's
committee on practice development, and a member of the firm's committees on
accounting and finance, assignment and compensation of associates, firm
functions and international operations. He has been a director of the
Corporation since 1995.
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WAYNE R. SANDERS
Chairman of the Board and Chief Executive Officer
Mr. Sanders, age 54, has served as Chief Executive Officer of the Corporation
since 1991 and Chairman of the Board of the Corporation since 1992. He
previously had been elected President and Chief Operating Officer in 1990.
Employed by the Corporation since 1975, Mr. Sanders also has held various other
senior management positions in the Corporation. Mr. Sanders is a director of
Adolph Coors Company, Coors Brewing Company and Texas Instruments Incorporated.
He also is Chairman of the Marquette University Board of Trustees and is
Chairman of the Southwest Region and a member of the National Board of Governors
of the Boys and Girls Clubs of America. He has been a director of the
Corporation since 1989.
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WOLFGANG R. SCHMITT
Chief Executive Officer, Trends 2 Innovation
Mr. Schmitt, age 58, is Chief Executive Officer of Trends 2 Innovation. He
previously served as Chairman of the Board of Value America, Inc. from November
1999 until May 2000, and as Vice Chairman of the Board of Newell Rubbermaid Inc.
as a result of the merger of Newell Co. and Rubbermaid Incorporated from March
24, 1999 until August 1999. Prior to the merger, he had served as Chairman of
the Board of Rubbermaid Incorporated since 1993, and as Chief Executive Officer
since 1992. Mr. Schmitt is a director of Parker-Hannifin Corporation, serves as
a trustee of Otterbein College and is Chairman of the Secrest Arboretum Board.
He has been a director of the Corporation since 1994.
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RANDALL L. TOBIAS
Chairman Emeritus, Eli Lilly and Company
Mr. Tobias, age 60, served as Chairman of the Board and Chief Executive Officer
of Eli Lilly and Company from June 1993 until he stepped down as Chief Executive
Officer on June 30, 1998, and retired as Chairman on December 31, 1998. He
previously had been Vice Chairman of the Board of AT&T since 1986, and had been
employed by AT&T since 1964. Mr. Tobias is a director of Phillips Petroleum
Company and Knight-Ridder, Inc., and he is a member of the Business Council. He
is a trustee of the Colonial Williamsburg Foundation. He has been a director of
the Corporation since 1994.
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TERM EXPIRING AT THE
2004 ANNUAL MEETING OF STOCKHOLDERS
(CLASS OF 2004)
PASTORA SAN JUAN CAFFERTY
Professor, University of Chicago
Mrs. Cafferty, age 61, has been a Professor since 1985 at the University of
Chicago's School of Social Service Administration where she has been a member of
the faculty since 1971. Mrs. Cafferty is a director of Bankmont Financial Corp.
and its subsidiaries Harris Bankcorp, Inc. and Harris Trust Savings Bank, Waste
Management, Inc. and the Peoples Energy Corporation and its subsidiaries, and a
Trustee of the Lyric Opera Association and Rush-Presbyterian-St. Luke's Medical
Center in Chicago. She has been a director of the Corporation since 1976.
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CLAUDIO X. GONZALEZ
Chairman of the Board and Managing Director, Kimberly-Clark de Mexico, S.A. de
C.V.
Mr. Gonzalez, age 67, has served as Chairman of the Board and Managing Director
of Kimberly-Clark de Mexico, S.A. de C.V., an equity company of the Corporation,
since 1973. He was employed by the Corporation in 1956 and by Kimberly-Clark de
Mexico, S.A., the predecessor of Kimberly-Clark de Mexico, S.A. de C.V., in
1957. He is a director of Kellogg Company, General Electric Company, The
Investment Company of America, Home Depot Inc., Unilever N.V., Unilever PLC, The
Mexico Fund, Grupo Industrial ALFA, Grupo Modelo, Grupo Carso, America Movil and
is a member of the International Advisory Council of J.P. Morgan Chase & Co. He
has been a director of the Corporation since 1976.
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LINDA JOHNSON RICE
President and Chief Operating Officer, Johnson Publishing Company, Inc.
Mrs. Johnson Rice, age 44, has been President and Chief Operating Officer of
Johnson Publishing Company, Inc., a multi-media company, since 1987. She joined
that company in 1980, and became Vice President in 1985. Mrs. Johnson Rice is a
director of Bausch & Lomb Incorporated, Viad Corporation and Omnicom Group, Inc.
She has been a director of the Corporation since 1995.
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MARC J. SHAPIRO
Vice Chairman, J.P. Morgan Chase & Co.
Mr. Shapiro, age 54, is responsible for finance, risk management and
administration at J.P. Morgan Chase & Co. and is a member of that firm's
executive committee. Before assuming his current position in 1997, Mr. Shapiro
was Chairman, President and Chief Executive Officer of Chase Bank of Texas, a
wholly owned subsidiary of J.P. Morgan Chase & Co., from 1989 until 1997. Mr.
Shapiro is a member of the board of directors of Burlington Northern Sante Fe
Corporation and a trustee of Weingarten Realty Investors. He also serves on the
boards of M.D. Anderson Hospital, Weill Medical College of Cornell University,
United Way of New York City, Local Initiatives Support Corporation and Baylor
College of Medicine. He has been a director of the Corporation since January
2001.
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SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of December 31, 2001,
regarding the number of shares of the common stock of the Corporation
beneficially owned by all directors and nominees, by each of the executive
officers named in "Executive Compensation" below, and by all directors, nominees
and executive officers as a group.
NAME OF INDIVIDUAL OR AMOUNT AND NATURE OF
IDENTITY OF GROUP BENEFICIAL OWNERSHIP(1)(2)(3)
--------------------- -----------------------------
John F. Bergstrom........................................... 20,300(4)(5)(6)
Pastora San Juan Cafferty................................... 8,609(5)(6)
Paul J. Collins............................................. 13,800(5)(6)
Robert W. Decherd........................................... 12,500(5)(6)
John W. Donehower........................................... 353,766(6)
O. George Everbach.......................................... 466,132(6)
Thomas J. Falk.............................................. 602,049(6)
William O. Fifield.......................................... 9,500(5)(6)
Claudio X. Gonzalez......................................... 148,891
Linda Johnson Rice.......................................... 7,800(5)(6)(7)
Wayne R. Sanders............................................ 1,544,099(6)
Wolfgang R. Schmitt......................................... 6,500(5)(6)
Kathi P. Seifert............................................ 469,946(6)
Marc J. Shapiro............................................. 5,743(6)
Randall L. Tobias........................................... 12,800(5)(6)
All directors, nominees and executive officers as a group... 4,050,237(6)(8)
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(1) Except as otherwise noted, the directors, nominees and named executive
officers, and the directors, nominees and executive officers as a group,
have sole voting and investment power with respect to the shares listed.
(2) Each director, nominee and named executive officer, and all directors,
nominees and executive officers as a group, own less than one percent of
the outstanding shares of the Corporation's common stock.
(3) For each director who is not an officer or employee of the Corporation or
any of its subsidiaries or equity companies, share amounts include shares
issued pursuant to the Outside Directors' Stock Compensation Plan, which is
described below under the heading "Compensation of Directors."
(4) Includes 1,600 shares held by trusts for the benefit of Mr. Bergstrom's son
and daughter and for which Mr. Bergstrom serves as trustee. Also includes
5,000 shares held by Bergstrom Investments L.P., a partnership of which Mr.
Bergstrom and his brother are general partners and their respective
children are limited partners, and of which Mr. Bergstrom shares voting
control.
(5) In addition to the shares listed in the table which are beneficially owned,
the following directors have stock credits allocated to their deferred
compensation accounts as of December 31, 2001 under the Corporation's
deferred compensation plan for directors: Mr. Bergstrom, 3,000.00 credits;
Mrs. Cafferty, 25,730.50 credits; Mr. Collins, 52,748.34 credits; Mr.
Decherd, 3,000.00 credits; Mr. Fifield, 8,798.78 credits; Mrs. Johnson
Rice, 3,000.00 credits; Mr. Schmitt, 11,244.47 credits; and Mr. Tobias,
12,397.99 credits. The accounts reflect the election of the directors to
defer into stock credits compensation previously earned by them as
directors of the Corporation. Although these directors are fully at risk as
to the price of the Corporation's common stock represented by stock
credits, the stock credits are not shares of stock and the directors do not
have any rights as holders of common stock with respect to the stock
credits. See "Executive Compensation -- Compensation of Directors" for
additional information concerning the deferred stock accounts.
(6) Includes the following shares which could be acquired within 60 days of
December 31, 2001 by: Mr. Bergstrom, 2,700 shares; Mrs. Cafferty, 2,500
shares; Mr. Collins, 2,800 shares; Mr. Decherd, 2,500 shares; Mr.
Donehower, 290,000 shares; Mr. Everbach, 378,586 shares; Mr. Falk, 487,500
shares; Mr. Fifield, 2,500 shares; Mrs. Johnson Rice, 2,500 shares; Mr.
Sanders, 1,190,000 shares; Mr. Schmitt, 2,500 shares; Mrs. Seifert, 416,624
shares; Mr. Shapiro, 4,743 shares; Mr. Tobias, 2,800 shares; and all
directors, nominees and executive officers as a group, 3,108,835 shares.
Also, shares of common stock held by the trustee of the Corporation's
Salaried Employees Incentive Investment Plan for the benefit of, and which
are attributable to the accounts in the plan of, the executive officers
above are included in this table.
(7) Includes 300 shares held by a trust for the benefit of Mrs. Johnson Rice's
daughter and for which Mrs. Johnson Rice serves as a co-trustee and shares
voting and investment power.
(8) Voting and investment power with respect to 55,286 of the shares is shared.
8
CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS
In 2001, the Corporation and certain of its subsidiaries paid Sidley Austin
Brown & Wood $4,063,267 for legal services. William O. Fifield, a director of
the Corporation, is a partner in that firm.
The Corporation paid $207,000 to Bergstrom Corporation in 2001 for
automobile rental and purchasing costs. John F. Bergstrom and Richard A.
Bergstrom, his brother, own 75 percent and 25 percent, respectively, of
Bergstrom Corporation. In addition, the Corporation leases office space in
Neenah, Wisconsin from Neenah Downtown Redevelopment Associates Limited
Partnership, a partnership engaged in the redevelopment of downtown real estate.
John F. Bergstrom owns a 14 percent limited partner interest in the partnership.
During 2001, rental payments made by the Corporation to the partnership were
$1,051,000.
Management believes that the amounts charged and paid in connection with
the foregoing arrangements were reasonable compared with the amounts which would
be charged and paid for similar services or products from other third parties.
The Corporation expects to engage in similar transactions with those entities in
2002.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors met five times in 2001. All of the incumbent
directors attended at least 75 percent of the total number of meetings of the
Board and committees of the Board on which they served.
The standing committees of the Board include, among others, the Audit
Committee, the Compensation Committee, the Corporate Governance Committee and
the Nominating Committee.
The Audit Committee, currently composed of Mr. Collins, Chairman, Mr.
Decherd, Mrs. Johnson Rice, and Mr. Schmitt, met four times during 2001. The
Committee selects, subject to stockholder approval, and engages the independent
auditors to audit the books, records and accounts of the Corporation, reviews
the scope of the audits, and establishes policy in connection with internal
audit programs of the Corporation. The Audit Committee members satisfy the
independence, financial literacy and expertise requirements of the New York
Stock Exchange. See "Audit Committee Report" below for further information.
The Compensation Committee, currently composed of Mr. Tobias, Chairman,
Mrs. Cafferty and Mr. Shapiro met three times during 2001. The nature and scope
of the Committee's responsibilities are set forth below under "Executive
Compensation -- Compensation Committee Report on Executive Compensation."
The Corporate Governance Committee, currently composed of Mr. Bergstrom,
Chairman, Mr. Fifield, Mrs. Johnson Rice, Mr. Schmitt and Mr. Tobias, met twice
during 2001. The Committee monitors and recommends improvements to the practices
and procedures of the Board, recommends the nature and duties of Committees of
the Board, and reviews stockholder proposals and other proxy materials relating
to corporate governance and considers responses or actions with respect to such
proposals.
The Nominating Committee, currently composed of Mrs. Cafferty, Chairperson,
Mr. Decherd and Mr. Shapiro, met once during 2001. The Committee proposes and
considers suggestions for candidates for membership on the Board, and recommends
candidates to the Board to fill Board vacancies. It also proposes to the Board a
slate of directors for submission to the stockholders at the Annual Meeting.
STOCKHOLDER NOMINATIONS FOR DIRECTORS
The Nominating Committee of the Board of Directors considers nominees
recommended by stockholders as candidates for election to the Board of Directors
at the Annual Meeting of
9
Stockholders. A stockholder wishing to nominate a candidate for election to the
Board at the Annual Meeting is required to give written notice to the Secretary
of the Corporation of his or her intention to make a nomination. The notice of
nomination must be received by the Corporation not less than 50 days nor more
than 75 days prior to the stockholders' meeting, or if the Corporation gives
less than 60 days notice of the meeting date, the notice of nomination must be
received within 10 days after the meeting date is announced. The notice of
nomination is required to contain certain information about both the nominee and
the stockholder making the nomination. The Corporation may require that the
proposed nominee furnish other information to determine that person's
eligibility to serve as a director. A nomination which does not comply with the
above procedure will be disregarded.
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation for each
of 1999, 2000 and 2001 awarded to, earned by, or paid to the Chief Executive
Officer and the four most highly compensated executive officers of the
Corporation, other than the Chief Executive Officer, whose total annual salary
and bonus exceeded $100,000:
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------- ----------------------- ---------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP ALL OTHER
COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(2) ($)(3) (#) ($)(4) ($)(5)
--------------------------- ---- --------- --------- ------------ ---------- ---------- --------- ------------
Wayne R. Sanders 2001 950,000 0 10,963 0 500,000 8,517,441 5,100
Chairman of the Board 2000 950,000 1,110,304(1) 14,477 0 400,000 0 5,100
and Chief Executive Officer 1999 950,000 1,900,800(1) 2,339 0 400,000 0 4,800
John W. Donehower 2001 440,000 0 857 0 60,000 1,422,137 5,100
Senior Vice President 2000 425,000 299,792 0 0 60,000 0 7,984
and Chief Financial Officer 1999 410,000 512,400(1) 0 0 60,000 334,341 4,800
O. George Everbach 2001 455,000 0 705 0 60,000 1,682,541 5,100
Senior Vice President 2000 440,000 299,792 785 0 70,000 0 5,100
- Law and Government Affairs 1999 420,000 512,400 396 0 70,000 0 4,800
Thomas J. Falk 2001 675,000 0 3,213 0 225,000 2,885,112 3,376
President and 2000 600,000 599,584(1) 3,607 407,750 200,000 0 5,100
Chief Operating Officer 1999 465,000 673,440(1) 3,400 338,188 100,000 0 4,800
Kathi P. Seifert 2001 480,000 0 0 0 80,000 1,711,178 5,100
Executive Vice President 2000 450,000 394,012(1) 139 349,500 90,000 0 5,100
1999 410,000 585,600 0 289,875 70,000 200,604 4,800
---------------
(1) Includes amounts voluntarily deferred by the executive officer under the
Corporation's Deferred Compensation Plan. The Deferred Compensation Plan
allows executive officers to defer portions of current base salary and bonus
compensation otherwise payable during the year. See "Compensation Committee
Report on Executive Compensation-Tax Deduction for Executive Compensation"
below for a more complete description of the plan.
(2) Amounts shown consist of amounts reimbursed for federal and state income
taxes on certain personal and spousal travel required for company purposes.
(3) Restricted stock awards were granted pursuant to the Corporation's 1999
Restricted Stock Plan and were valued at the closing price of the
Corporation's stock on the date of grant. The shares granted in 1999 were
granted on February 24, 1999, and the closing price of the Corporation's
stock on that date was $48.3125. The shares granted in 2000 were granted on
June 8, 2000, and the closing price of the Corporation's stock on that date
was $58.25 per share. The shares granted in 1999 vest 100 percent on
February 24, 2004. The shares granted in 2000 to Mr. Falk vest on June 8,
2005, and the shares granted in 2000 to Mrs. Seifert vest on June 8, 2004.
As of December 31, 2001, the number and value (based on the December 31,
2001 stock price of $59.80 per share) of total shares of restricted stock
held by the executive officers are: Mr. Falk (14,000 shares; $837,200) and
Mrs. Seifert (12,000 shares; $717,600). Dividends are paid on restricted
stock at the same rate paid to all stockholders of the Corporation. See
"Compensation Committee Report on Executive Compensation-Equity Plans" below
for a more complete description of the plan.
(4) Amounts shown consist of participation share payments made pursuant to the
1992 Equity Participation Plan for awards that were granted to executive
officers of the Corporation on February 11, 1993 and February 16, 1995 that
matured on December 31, 2000 and were paid according to their terms in the
first quarter of 2001. No awards of participation shares have been granted
to executive officers since 1998. Each participation share is assigned a
base value equal to the book value of one share of the Corporation's common
stock as of the close of the fiscal year immediately prior to the award. The
value is adjusted each quarter based on multiplying dividends declared per
share of the Corporation's common stock during the quarter by the total
number of participation shares and dividend shares in the participant's
account. The
10
normal maturity date of a participation share award is the close of the
fiscal year in which the fifth or seventh anniversary of the date of the
award occurs. The participant is entitled to receive a cash payment equal to
the sum of (i) the increase (if any) in book value of the participation
shares on the maturity date of the award over the base value of the shares,
and (ii) the book value of the dividend shares on the maturity date (equal
to the book value of an equivalent number of shares of the Corporation's
common stock).
(5) Amounts shown consist solely of the Corporation's matching contributions
under the Corporation's Salaried Employees Incentive Investment Plan and, in
the case of Mr. Donehower, payment in 2000 of unused vacation earned prior
to 1983 under the Corporation's former vacation policies.
The policies and practices of the Corporation pursuant to which the
compensation set forth in the Summary Compensation Table was paid or awarded are
described under "Compensation Committee Report on Executive Compensation" below.
The following table sets forth information concerning grants of stock
options during 2001 to each of the executive officers named in the Summary
Compensation Table and the potential realizable value of the options at assumed
annual rates of stock price appreciation for the option term.
OPTION GRANTS IN 2001(1)
INDIVIDUAL GRANTS
----------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL POTENTIAL REALIZABLE VALUE AT
UNDERLYING OPTIONS ASSUMED ANNUAL RATES OF STOCK
OPTIONS GRANTED TO EXERCISE OR PRICE APPRECIATION FOR OPTION TERM(2)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION -------------------------------------
NAME (#) FISCAL YEAR ($/SH) DATE 0%($) 5%($) 10%($)
---- ---------- ------------ ----------- ---------- ------- ------------ ------------
Wayne R. Sanders.............. 500,000 8.6 69.75000 2/21/11 0 21,932,700 55,581,768
John W. Donehower............. 60,000 1.0 69.75000 2/21/11 0 2,631,924 6,669,812
O. George Everbach............ 60,000 1.0 69.75000 2/21/11 0 2,631,924 6,669,812
Thomas J. Falk................ 225,000 3.9 69.75000 2/21/11 0 9,869,715 25,011,796
Kathi P. Seifert.............. 80,000 1.4 69.75000 2/21/11 0 3,509,232 8,893,083
---------------
(1) The plans governing stock option grants provide that the option price per
share shall be no less than 100 percent of the market value per share of the
Corporation's common stock at the date of grant. The term of any option is
no more than 10 years from the date of grant. Options granted in 2001 become
exercisable 30 percent after the first year following the grant thereof, an
additional 30 percent after the second year and the remaining 40 percent
after the third year; provided however, that all of the options become
exercisable for three years upon death or total or permanent disability, and
for five years upon the retirement of the officer. In addition, options
generally become exercisable upon a termination of employment without cause
following a change in control and options granted to the officers named in
this table are subject to the Corporation's Executive Severance Plan
described later in this proxy statement (see "Executive
Compensation -- Executive Severance Plan"). The options may be transferred
by the officers to family members or certain entities in which family
members have interests.
(2) The dollar amounts under these columns are the result of calculations
assuming annual rates of stock price appreciation over the option term at
the 5 percent and 10 percent rates set by, and the 0 percent rate permitted
by, Securities and Exchange Commission rules and are not intended to
forecast possible future appreciation, if any, in the Corporation's common
stock price.
11
The following table sets forth information concerning exercises of stock
options during 2001 by each of the executive officers named in the Summary
Compensation Table and the value of each officer's unexercised options as of
December 31, 2001 based on a closing stock price of $59.80 per share of the
Corporation's common stock on that date:
AGGREGATED OPTION EXERCISES IN 2001
AND OPTION VALUES AS OF DECEMBER 31, 2001
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES DECEMBER 31, DECEMBER 31,
ACQUIRED VALUE 2001(#) 2001($)
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- --------- ------------- -------------
Wayne R. Sanders............................... 122,440 5,284,510 960,000 10,334,250
940,000 3,777,000
John W. Donehower.............................. 41,360 1,668,462 230,000 2,783,000
126,000 566,550
O. George Everbach............................. 10,132 346,464 311,586 5,271,323
137,000 660,975
Thomas J. Falk................................. 65,008 2,705,267 320,000 3,513,500
405,000 1,429,000
Kathi P. Seifert............................... 13,632 641,454 337,624 6,383,724
171,000 757,925
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Corporation is
composed entirely of Independent Directors. See "Proposal 1. Election of
Directors -- General Information." The Board designates the members and the
Chairman of the Committee. The Compensation Committee also constitutes the stock
option committee for the stock option plans of the Corporation disclosed in this
proxy statement. In addition, the Compensation Committee is responsible for
establishing and administering the policies governing annual compensation,
restricted stock awards and long-term incentive awards. The Compensation
Committee periodically evaluates the Corporation's compensation programs, and
compares them with those of other companies, both within the Corporation's peer
industry group and other large industrial companies.
The companies the Compensation Committee uses for making base salary
comparisons include some, but not all, of the companies appearing in the indexes
of the performance graph below. The first group used for comparison is composed
of 22 companies which have significant consumer businesses (the "Consumer
Company Group"), of which the Corporation is about median in terms of annual
sales and with which the Corporation competes in its businesses and/or for
executive talent. The second group used for comparison is composed of 73
industrial companies with annual sales exceeding $5 billion (the "Industrial
Company Group"). Written salary information concerning the compensation
practices of these two groups of companies was provided to the Corporation by
two independent consultants.
In determining the compensation to be paid to executive officers in 2001,
the Compensation Committee employed compensation policies designed to align
compensation with the Corporation's overall business strategy, values and
management initiatives. These policies are intended to (1) reward executives for
long-term strategic management and the enhancement of stockholder value through
stock option, restricted stock and long-term incentive awards, (2) support a
performance-oriented environment that rewards achievement of internal company
goals and recognizes company performance compared to the performance of
similarly situated companies and of other large industrial companies through the
annual payment of cash bonuses, and (3) attract and
12
retain executives whose abilities are considered essential to the long-term
success and competitiveness of the Corporation through the Corporation's salary
administration program.
Salaries for 2001
In determining base salaries of executive officers, the Compensation
Committee compares the executive officers' salaries to those for similar
positions in the two groups of companies referred to above, with primary
emphasis placed upon the Consumer Company Group so that the Committee may
compare data on specific salary levels for comparable positions. The
Compensation Committee's policy is to set executive officers' salaries at or
near the median salary level of these companies, with the salary of the Chief
Executive Officer set at or near the median salary level for chief executive
officers of the Consumer Company Group (see "2001 Compensation of the Chief
Executive Officer" below). In implementing the policy, the Compensation
Committee also considers the individual performance of the officer, the
performance of the unit over which the officer has responsibility (primarily
based upon growth in the operating profit of the unit), the performance of the
Corporation (primarily based upon growth in earnings per share and shareholder
return), and the officer's tenure. No specific weight is assigned to any
individual factor. Salary actions taken by the Compensation Committee with
respect to the executive officers in 2001 were consistent with the policies and
practices described above.
Cash Bonus Awards for 2001
The cash bonus awards for 2001 set forth in the Summary Compensation Table
were based on the Corporation's Management Achievement Award Program. The
Compensation Committee's policy is to provide opportunities to an executive
officer for cash bonuses under the program which, together with his or her base
salary, are within the third quartile (that quartile between the 50th and 75th
percentiles) of compensation for the Industrial Company Group if the officer's
goals have been fully met during the year. In determining the target cash bonus
awards, the Compensation Committee considers data for the Industrial Company
Group and periodically reviews data for the Consumer Company Group.
Actual annual cash bonus awards are determined by measuring performance
against specific goals established at the beginning of each year. The goals for
2001 took into account, depending on the responsibility of the individual, the
performance of the group or unit with which the individual is associated
(primarily based upon growth in the operating profit of the unit) and the
overall performance of the Corporation (based upon the Corporation's long-term
goal of maintaining growth in earnings per share from operations (the "EPS
Goal") and its long-term goal of exceeding the S&P 500 index for total
shareholder return (the "Shareholder Return Goal")). Because the performance of
the Corporation was below the minimum level established with respect to the EPS
Goal for 2001, no cash bonuses were paid to the named executive officers for
2001. An executive officer's goals are designed to reflect the relationship of
his or her responsibilities to the Corporation's EPS Goal and Shareholder Return
Goal. The goals described above may or may not be equally weighted and will vary
from one executive officer to another. The opportunities for cash bonus awards
for the executive officers in 2001 were consistent with the policies and
practices described above.
Based upon comparison of the most recent data provided by the independent
consultants described above, because no cash bonuses were paid for 2001 to the
named executive officers, the annual cash compensation of each of the named
executive officers was in the fourth quartile (i.e., below the 25th percentile)
of compensation for comparable officers in the Industrial Company Group.
13
Equity Plans
The Corporation adopted the 2001 Equity Participation Plan (the "2001
Plan") pursuant to which future stock option grants can be made to executive
officers. The stockholders of the Corporation approved the 2001 Plan at the 2001
Annual Meeting. Prior to the adoption of the 2001 Plan, the Corporation also
maintained the 1992 Equity Participation Plan (the "1992 Plan") pursuant to
which stock option grants were made to executive officers in 2001. The 2001 Plan
and the 1992 Plan are collectively referred to as (the "Equity Plans"). The
Equity Plans are intended to provide a means of encouraging the acquisition of
an ownership interest in the Corporation by employees, including executive
officers, who contribute materially by managerial, scientific or other
innovative means to the success of the Corporation, thereby increasing their
motivation for and interest in the Corporation's long-term success.
The 1992 Plan permitted grants of long-term incentive awards in the form of
participation shares in addition to stock options. No grants of participation
shares have been made since 1998 and the 1992 Plan is no longer in effect for
future grants of participation shares or stock options. The 1992 Plan employed
book value through the use of participation shares and dividend shares, each of
which, when awarded, is credited to a participant's memorandum account. For a
description of the material terms of participation share awards pursuant to the
1992 Plan, see note 4 to the table above entitled "Summary Compensation Table."
Each named executive officer received payment in 2001 for participation share
awards that were granted by the Corporation on February 11, 1993 and February
16, 1995.
The number of stock option awards granted to an executive officer is based
principally on the officer's position and the compensation practices of the
Consumer Company Group. The Compensation Committee's policy is for the value of
the awards, on an annualized basis, to be within the third quartile with respect
to similar awards made by the companies comprising the group. In implementing
the policy, the Compensation Committee also considers the individual performance
of the officer. The Committee does not determine the size of the grants by
reference to the amount and value of awards currently held by an executive
officer. However, the Compensation Committee takes into account the timing and
nature of prior grants to an executive officer. The payout resulting from any
stock option award is based on growth in the market value of the Corporation's
common stock subsequent to the grant of the awards.
The Equity Plans also employ market value as a basis for rewarding past
performance and as a motivation for future performance through the use of
tax-qualified and nonqualified stock options. For a description of the material
terms of stock option grants pursuant to the Equity Plans, see note 1 to the
table above entitled "Option Grants in 2001."
Under the 2001 Plan, selected key employees, including the executive
officers, may be granted awards of restricted stock and restricted stock units.
Prior to the adoption of the 2001 Plan, the Corporation also maintained the 1999
Restricted Stock Plan (the "Restricted Stock Plan") pursuant to which restricted
stock grants were made to executive officers in 1999 and 2000. No further grants
will be awarded under the Restricted Stock Plan. Participants have the right to
vote with respect to the restricted shares and receive dividends. The restricted
stock awards under the plans vest three to ten years from the date of grant at
the discretion of the Compensation Committee. The plans provide that restricted
stock units may be paid in cash or shares of the Corporation's stock, or a
combination of both, at the maturity of the award. It is the policy of the
Compensation Committee that restricted stock awards are to be granted less
frequently than stock option awards.
2001 Compensation of the Chief Executive Officer
The Committee last increased the salary of the Chief Executive Officer in
1997 based on the policies and practices described above. The Compensation
Committee granted additional stock options to the Chief Executive Officer in
lieu of an increase in his salary in 2001. Based upon comparison of the data
provided by the independent consultants described above, Mr. Sanders'
14
salary in 2001 was in the second quartile (below the median) of salary levels of
the chief executive officers of the Consumer Company Group. Mr. Sanders' salary
is below the target level because of the Compensation Committee's decision to
award additional stock options instead of increasing Mr. Sanders' salary.
No cash bonus was paid to Mr. Sanders for 2001 because the performance of
the Corporation with respect to the 2001 EPS Goal was below the minimum level.
The Compensation Committee believes that, based upon comparison of the most
recent data, Mr. Sanders' compensation in 2001 (his salary which has not been
increased since 1997, his option awards and no bonus payment), meets the
Compensation Committee's policy of compensating the Corporation's Chief
Executive Officer at or near the median level of compensation for chief
executive officers of comparable companies when the Corporation's performance
goals are fully achieved.
Alignment of Executive Compensation with Corporate Performance
The Compensation Committee believes that executive compensation for 2001
adequately reflects its policy to align the compensation with overall business
strategy, values and management initiatives, and to ensure that the
Corporation's goals and performance are consistent with the interests of its
stockholders.
Tax Deduction for Executive Compensation
In order to ensure that future annual bonus payments to executive officers
are deductible by the Corporation, the Corporation is recommending approval of
the Executive Officer Achievement Award Program for approval by the
Corporation's stockholders. See Proposal 2 -- Approval of the Executive Officer
Achievement Award Program.
The Corporation has adopted a deferred compensation plan in response to
limitations on executive compensation deductibility which allows each executive
officer to defer all salary in excess of $1 million for any fiscal year. In
addition, the deferred compensation plan allows each executive officer to defer
all or a portion of his or her bonus for any fiscal year. While the deferred
compensation plan remains unfunded, in 1994 the Board of Directors approved the
establishment of a trust and authorized the Corporation to make contributions to
the trust in order to provide a source of funds to assist the Corporation in
meeting its liabilities under the deferred compensation plan. The plan permits
the officers to limit their annual cash compensation to the $1 million
limitation which may be deducted by the Corporation for federal income tax
purposes. A deferral will result in the possible deduction by the Corporation of
compensation when paid; however, there is no obligation on any executive officer
to defer any amounts during any fiscal year. The Corporation has determined that
the impact to the Corporation of being unable to deduct that portion of the cash
bonus paid to officers which, together with their annual salary, exceeds $1
million will be minimal in 2001.
Furthermore, in order to maximize the deductibility of the compensation
paid to the Corporation's executive officers, the 1992 Plan, as amended, and the
2001 Plan ensure that compensation resulting from the exercise of stock options
and payments made in connection with participation share awards will be fully
deductible.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Randall L. Tobias, Chairman
Pastora San Juan Cafferty
Marc J. Shapiro
15
EXECUTIVE STOCK OWNERSHIP
To further align management's financial interests with those of the
stockholders, the Corporation announced in 1999 the implementation of new stock
ownership guidelines for approximately 400 key managers, including the executive
officers. Most officers, and all executive officers, are expected to own the
Corporation's stock in an amount equivalent to three times their annual salary.
The Chief Executive Officer is expected to own an amount of the Corporation's
stock which is six times his annual salary. These guidelines have been met or
exceeded by each of the executive officers.
PERFORMANCE GRAPH
Comparison of
Five Year Cumulative Total Return Among
Kimberly-Clark, S&P 500, & Peer Group(1)
The stock price performance shown on the graph below may not be indicative
of future price performance.
TOTAL SHAREHOLDER RETURN
[PERFORMANCE GRAPH]
DEC96 DEC97 DEC98 DEC99 DEC00 DEC01
------ ------ ------ ------ ------ ------
Kimberly-Clark Corp. ................. 100.00 105.57 119.17 145.80 160.39 138.19
S&P 500 Index......................... 100.00 133.36 171.48 207.56 188.66 166.24
Peer Group............................ 100.00 141.19 169.49 182.49 170.89 178.28
(1) The companies included in the Peer Group are The Clorox Co.,
Colgate-Palmolive Company, Johnson & Johnson, The Procter & Gamble Company,
Unilever Group, Georgia-Pacific Corp. and The Gillette Company. The Peer
Group used in this proxy statement includes the same companies as those
included in the Peer Group used in the proxy statement for the Corporation's
prior fiscal year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2001, the following directors served, and currently are serving, as
members of the Compensation Committee of the Board of Directors of the
Corporation: Randall L. Tobias, Chairman; Pastora San Juan Cafferty and Marc J.
Shapiro.
Wayne R. Sanders, Chairman of the Board and Chief Executive Officer of the
Corporation, serves as a member of the compensation committee of the Board of
Directors of Kimberly-Clark de Mexico, S.A. de C.V. Claudio X. Gonzalez,
Chairman of the Board and Managing Director of
16
Kimberly-Clark de Mexico, S.A. de C.V., serves as a member of the Board of
Directors of the Corporation.
DEFINED BENEFIT RETIREMENT PLAN
The table below illustrates the estimated annual standard pension benefit
payable upon retirement in 2001 at specified compensation levels and years of
service classifications.
PENSION PLAN TABLE
YEARS OF BENEFIT SERVICE
------------------------------------------------------------------------------------
15 20 25 30 35 40 45
REMUNERATION YEARS YEARS YEARS YEARS YEARS YEARS YEARS
------------ -------- -------- ---------- ---------- ---------- ---------- ----------
$ 200,000............ $ 45,000 $ 60,000 $ 75,000 $ 90,000 $ 105,000 $ 120,000 $ 135,000
400,000........... 90,000 120,000 150,000 180,000 210,000 240,000 270,000
600,000........... 135,000 180,000 225,000 270,000 315,000 360,000 405,000
800,000........... 180,000 240,000 300,000 360,000 420,000 480,000 540,000
1,000,000........... 225,000 300,000 375,000 450,000 525,000 600,000 675,000
1,200,000........... 270,000 360,000 450,000 540,000 630,000 720,000 810,000
1,400,000........... 315,000 420,000 525,000 630,000 735,000 840,000 945,000
1,600,000........... 360,000 480,000 600,000 720,000 840,000 960,000 1,080,000
1,800,000........... 405,000 540,000 675,000 810,000 945,000 1,080,000 1,215,000
2,000,000........... 450,000 600,000 750,000 900,000 1,050,000 1,200,000 1,350,000
2,200,000........... 495,000 660,000 825,000 990,000 1,155,000 1,320,000 1,485,000
2,400,000........... 540,000 720,000 900,000 1,080,000 1,260,000 1,440,000 1,620,000
2,600,000........... 585,000 780,000 975,000 1,170,000 1,365,000 1,560,000 1,755,000
2,800,000........... 630,000 840,000 1,050,000 1,260,000 1,470,000 1,680,000 1,890,000
3,000,000........... 675,000 900,000 1,125,000 1,350,000 1,575,000 1,800,000 2,025,000
The compensation covered by the Corporation's defined benefit plan for
which the above table is provided includes the salary and bonus information set
forth in the Summary Compensation Table. The estimated years of benefit service,
as of normal retirement at age 65, for the executive officers named in the
Summary Compensation Table are: John W. Donehower, 37.0 years; O. George
Everbach, 19.7 years; Thomas J. Falk, 40.0 years; Wayne R. Sanders, 37.1 years;
and Kathi P. Seifert, 36.2 years. Under the plan, an employee is entitled to
receive an annual standard benefit based on years of benefit service and
integrated with social security benefits. Benefits under the plan will be
limited to the extent required by the Internal Revenue Code of 1986, as amended,
with excess benefits over this limitation being paid pursuant to supplemental
plans. While these supplemental plans remain unfunded, in 1994 the Board of
Directors approved the establishment of a trust and authorized the Corporation
to make contributions to this trust in order to provide a source of funds to
assist the Corporation in meeting its liabilities under the plans. Each of the
executive officers named in the Summary Compensation Table is a participant in
these supplemental plans.
Retirement benefits for participants who have at least five years of
vesting service may begin on a reduced basis at age 55, or on an unreduced basis
at normal retirement age. Unreduced benefits also are available for participants
with 10 years of vesting service at age 62 or as early as age 60 with 30 years
of vesting service. The normal form of benefit is a single-life annuity payable
monthly.
Benefits will be actuarially adjusted if the employee receives one of the
available forms of joint and survivor or other optional forms of benefit. In
addition, each participant in the supplemental
17
plans has the option of receiving an actuarially determined lump sum payment
upon retirement after age 55 in lieu of the monthly payments which otherwise
would be payable to the participant under the plans. Further, in the event of a
change of control of the Corporation or a reduction in the Corporation's
long-term credit rating below investment grade, each participant would have the
option of receiving the present value of his or her accrued benefits in the
supplemental plans at that time in a lump sum, reduced by 10 percent and 5
percent for active and former employees, respectively.
EXECUTIVE SEVERANCE PLAN
The Corporation's Executive Severance Plan (the "Executive Severance Plan")
provides that in the event of termination of a participant's employment with the
Corporation for any reason (other than death or disability) within two years
after a change of control of the Corporation, as defined in the plan, the
participant will receive a cash payment in an amount equal to the sum of (1)
three times base salary and the maximum bonus award which would be payable as if
the performance goals were met, (2) the value, based on the Corporation's stock
price on the date of the change of control or the participant's termination,
whichever is greater, of unmatured or unexercised awards or grants under the
Corporation's Equity Plans and the Restricted Stock Plan, and (3) the value of
nonvested benefits under the Salaried Employees Incentive Investment Plan and
successor plans. The plan also provides for monthly supplemental retirement
benefits equal to those that would have accrued had employment continued for an
additional three years, for certain relocation costs, and for the continuation
of certain other benefits for varying periods of up to three years. The plan
also provides for a reduction in its benefits otherwise payable if, due to the
application of Section 280G of the Internal Revenue Code of 1986, the reduction
would result in equal, or greater net after tax benefits to the participant. The
Board has determined the eligibility criteria for participation in the plan. A
participant ceases to be a participant in the plan when notified by the Board
that it has determined that the participant has ceased to be a key executive for
purposes of the plan. The Corporation has agreements under the plan with each
executive officer who is named in the Summary Compensation Table.
CORPORATION'S SEVERANCE PAY PLAN
The Corporation's Severance Pay Plan generally provides eligible employees
(including the executive officers) a lump sum severance payment of one week's
pay for each year of employment in the event of involuntary termination without
cause. The minimum severance payment is six week's pay and the maximum is 26
week's pay. Benefits under this plan will not be paid to an executive officer in
the event benefits are payable under the Executive Severance Plan.
COMPENSATION OF DIRECTORS
Directors who were not officers or employees of the Corporation or any of
its subsidiaries, affiliates or equity companies received an annual retainer of
(1) stock options to acquire 2,500 shares of common stock of the Corporation and
(2) a cash payment of $50,000 payable pro rata quarterly in advance. These
directors can elect to receive the cash portion of the retainer in the form of
additional stock options. Directors who are also the chairpersons of the Audit
Committee and the Compensation Committee each received an annual retainer of
stock options to acquire 300 shares of the common stock of the Corporation, and
the chairpersons of the Nominating Committee and the Corporate Governance
Committee each received an annual retainer of stock options to acquire 200
shares of the common stock of the Corporation. The option price per share
18
for all options granted to outside directors will be no less than 100 percent of
the market value per share of the Corporation's common stock on the date of
grant. These directors also received a daily attendance fee of $1,200 per
meeting for each day or fraction thereof spent in attendance at a meeting of the
Board or any committee, subject to a maximum of $3,600 for any day on which more
than one meeting is held. In addition, the Corporation reimburses these
directors for expenses incurred as a result of attending Board or committee
meetings.
Prior to the termination of the Outside Directors' Stock Compensation Plan
on December 31, 2000, directors who were not officers or employees of the
Corporation or any of its subsidiaries, affiliates or equity companies received
600 shares of common stock of the Corporation on December 31 of each year, and
cash dividends and accrued interest thereon were credited to an account
maintained by the Corporation pursuant to such plan. All of the shares which
were granted under this plan, together with all cash dividends and accrued
interest, are restricted and nontransferable until, and will be delivered to a
director free of restrictions upon, his or her termination as a member of the
Board. The last grants were made under the plan on December 31, 2000.
A director who is an officer or an employee of the Corporation or any of
its subsidiaries, affiliates or equity companies does not receive any fees for
services as a member of the Board or any committee, but is reimbursed for
expenses incurred as a result of the service.
Under the deferred compensation plan for directors of the Corporation,
directors who are not officers or employees of the Corporation or any of its
subsidiaries, affiliates or equity companies may make an irrevocable election to
defer receipt of all or a portion of their annual cash retainer and meeting fees
for any year. Compensation of a director that is deferred under the plan is
credited either to a cash account or a stock account, as provided in the
election. Amounts allocated to a cash account are converted into cash credits
and will earn additional cash credits quarterly at a rate of one-fourth of the
per annum rate of either six percent or the rate paid from time to time on
six-month U.S. Treasury Bills, whichever is higher. Amounts allocated to a stock
account are converted into stock credits equal to the number of shares of common
stock of the Corporation which could have been purchased with the amounts. A
participant's stock account also is credited with additional stock credits based
on the amount of any dividends paid on the Corporation's common stock. Cash
credits and stock credits are converted to and paid in cash at the time of
distribution on the date elected by a participant, and with respect to stock
credits, based on the price of a share of common stock of the Corporation. Stock
credits are not shares of stock; no shares of the Corporation's common stock are
ever distributed to a participant under the plan; and no participant acquires
any rights as a holder of common stock under the plan. Upon retirement as a
director, all accounts are distributed in one to 20 annual installments, as
elected by the participant, or upon death.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF
THE THREE NOMINEES FOR DIRECTOR.
19
PROPOSAL 2. APPROVAL OF THE CORPORATION'S EXECUTIVE OFFICER ACHIEVEMENT AWARD
PROGRAM
INTRODUCTION
The Board of Directors of the Corporation has approved, and recommends to
the stockholders for their approval, the Corporation's Executive Officer
Achievement Award Program ("EOAAP Plan"). The purpose of the EOAAP Plan is to
further unite the interests of the stockholders of the Corporation and its
executive officers through the annual payment of performance-based incentive
compensation. Additionally, the EOAAP Plan would allow the annual
performance-based compensation paid to the Corporation's executive officers to
be tax deductible by the Corporation.
Section 162(m) of the Internal Revenue Code (the "Code") limits the
deductibility for tax purposes of certain compensation paid by the Corporation
to the chief executive officer and each of the next four most highly paid
executive officers in excess of $1 million. The Corporation's Management
Achievement Award Program ("MAAP Plan") does not meet the requirements for tax
deductibility under this section to the extent compensation exceeds $1 million.
No deduction has been lost under Section 162(m) of the Code in prior years
because executive officers have voluntarily deferred salary and bonuses in
excess of $1 million. There is no assurance that executive officers will
voluntarily continue to defer such compensation in the future.
If the EOAAP Plan is approved by the stockholders of the Corporation, no
further bonuses will be awarded to the Executive Officers under the MAAP Plan.
However, other officers and employees of the Corporation would continue to
participate in the MAAP Plan. Accordingly, the Board of Directors has approved
the EOAAP Plan to become effective subject to, and as of the date of, approval
of the EOAAP Plan by the stockholders at the Annual Meeting.
The full text of the proposed EOAAP Plan is shown on Exhibit A to this
proxy statement. The principal features of the EOAAP Plan are summarized below.
Any defined terms used and not defined below are defined in "Executive
Compensation" above.
AWARDS
It is expected that the EOAAP Plan will be administered in a manner
consistent with the Corporation's existing compensation practices taking into
account changes in the Corporation's business and competitive practices. The
Compensation Committee's intent is to provide opportunities to an Executive
Officer (as defined in "Eligibility" below) for cash bonuses under the EOAAP
Plan which, together with his or her base salary, are within the third quartile
(that quartile between the 50th and 75th percentiles) of compensation for the
Industrial Company Group if such officer's goals have been fully met during the
year. The Compensation Committee intends to consider data for the Industrial
Company Group and the Consumer Company Group. Since it is expected that awards
under the EOAAP Plan will be administered consistent with awards under the MAAP
Plan, for information concerning bonuses awarded under the MAAP Plan, see
"Executive Compensation -- Summary Compensation Table" and "Executive
Compensation -- Compensation Committee Report on Executive Compensation -- Cash
Bonus Awards for 2001" above.
The Compensation Committee intends to determine actual annual cash bonus
awards under the EOAAP Plan by measuring performance against specific goals
established at the beginning of each year. The goals may take into account,
depending on the responsibility of the individual, the performance of the group
or unit with which the individual is associated (primarily based upon growth in
the operating profit of the unit) and the overall performance of the Corporation
(based upon the Corporation's long-term goal of maintaining growth in earnings
per share before unusual items (the "EPS Goal") and its long-term goal of
exceeding the S&P 500 index for total shareholder return (the "Shareholder
Return Goal")). An Executive Officer's goals are intended to be designed to
reflect the relationship of his or her responsibilities to the Corporation's EPS
Goal and
20
Shareholder Return Goal. The goals described above may or may not be equally
weighted and may vary from one Executive Officer to another.
The EOAAP Plan will be administered by the Compensation Committee, and each
Executive Officer will be paid an annual award for each performance year under
the Plan from a bonus pool equal to 0.3 percent of the Corporation's earnings
before unusual items ("Earnings Amount") for each such officer. It is not now
possible to indicate the amounts which will be received, or would have been
received, by the persons identified in the Summary Compensation Table or all
current executive officers as a group. Administration of the awards earned in
2002 will be consistent with the administration of the awards under the MAAP
Plan and will be mainly based on the EPS Goal.
After the end of each performance year, the Corporation's independent
auditors will review the Corporation's calculation of the Earnings Amount and
confirm its mathematical accuracy to the Compensation Committee, and the
Compensation Committee will determine and certify the amount of each award for
that year under the EOAAP Plan. The Compensation Committee, based on such
factors as it deems appropriate, may reduce (including a reduction to zero), but
may not increase, the maximum amount of any award payable under the EOAAP Plan.
All awards under the EOAAP Plan will be paid in cash. The Compensation
Committee may prescribe any other terms and conditions of payment as it deems
appropriate.
ELIGIBILITY
Employees covered under the EOAAP Plan are the executive officers of the
Corporation, as defined in Rule 3b-7 of the Securities Exchange Act of 1934 (the
"Executive Officers"). There are currently seven executives eligible for awards
under the EOAAP Plan for 2002.
ADMINISTRATION OF THE EOAAP PLAN
The EOAAP Plan, if approved, will be administered by the Compensation
Committee of the Board of Directors, so long as all members of that committee
are Disinterested Directors (as defined under the EOAAP Plan). If all members of
the Compensation Committee are not Disinterested Directors, the EOAAP Plan will
be administered by a committee of two or more directors, all of whom are
Disinterested Directors. The term "Compensation Committee" as used in this
Proposal shall mean any one of these two bodies which may administer the EOAAP
Plan from time to time. The Compensation Committee may from time to time, based
on such factors as it deems appropriate, reduce but not increase, the amount of
any award under the EOAAP Plan, and make all other necessary decisions and
interpretations under the EOAAP Plan.
AMENDMENT OF THE EOAAP PLAN
The EOAAP Plan provides that the Compensation Committee may amend, suspend,
or discontinue the EOAAP Plan or amend any or all awards under the EOAAP Plan to
the extent permitted by law, provided that no action may be taken if it would
result in the disallowance of a deduction by the Corporation under Section
162(m) of the Code. Except as provided in the EOAAP Plan, no amendment,
suspension or discontinuance of the EOAAP Plan shall adversely alter any rights
under any award previously granted a participant under the EOAAP Plan. However,
if an amendment must be approved by the stockholders pursuant to law or to
maintain deductibility under Section 162(m) of the Code, any such proposed
amendment must be submitted to the stockholders for approval.
U.S. FEDERAL INCOME TAX CONSEQUENCES
When an award is paid, the full amount of the payment will be taxable to
the participant as ordinary income subject to applicable withholding taxes, and
the Corporation will be allowed a tax deduction equal to that amount. These tax
consequences apply only with respect to an employee
21
whose income is subject to United States federal income tax. Different or
additional rules may apply to individuals who are subject to income tax in a
foreign jurisdiction and/or are subject to state or local income tax in the
United States.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
EXECUTIVE OFFICER ACHIEVEMENT AWARD PROGRAM.
PROPOSAL 3. APPROVAL OF AUDITORS
The Audit Committee of the Board of Directors has recommended, and the
Board of Directors has approved, Deloitte & Touche LLP as the principal
independent auditors to audit the financial statements of the Corporation for
2002, subject to ratification by the stockholders. If the stockholders do not
approve the selection of Deloitte & Touche LLP, the selection of other
independent auditors will be considered by the Audit Committee. Deloitte &
Touche LLP have been the independent auditors for the Corporation since its
incorporation in 1928.
PRINCIPAL ACCOUNTING FIRM FEES
Aggregate fees billed to the Corporation and its subsidiaries for the
fiscal year ending December 31, 2001 by the Corporation's principal accounting
firm, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu and
the respective affiliates (collectively, "Deloitte"):
Audit Fees......................................... $2,318,000
Financial Information
Systems Design and Implementation Fees........... $ 0
All Other Fees..................................... $2,995,000(a)(b)
---------------
(a) The Audit Committee has considered whether the provision of these services
by Deloitte is compatible with maintaining the principal accountant's
independence.
(b) All Other Fees include expatriate tax planning services ($894,000), other
tax advisory services ($874,000), statutory audits ($814,000), audits of
employee benefit plans ($220,000), acquisition due diligence services
($89,000) and other services unrelated to the audit ($104,000).
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting with the opportunity to make a statement if they desire to do so,
and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THIS
SELECTION.
PROPOSAL 4. STOCKHOLDER PROPOSAL REGARDING THE CORPORATION'S AMENDED AND
RESTATED RIGHTS AGREEMENT
Mr. Nick Rossi, who was the holder of record of 3,120 shares of the
Corporation's common stock as of February 25, 2002, has submitted a letter to
the Corporation's Chairman and Chief Executive Officer requesting that the
proposal set forth below be submitted to our stockholders for consideration at
the Annual Meeting. Mr. Rossi has stated that he or someone acting on his behalf
intends to introduce the following proposal at the Annual Meeting. Mr. Rossi's
address is P.O. Box 249, Boonville, CA 95415. Mr. Rossi's proposal uses the term
"poison pill" to refer to the Corporation's stockholder rights plan. The Board
of Directors opposes such stockholder proposal for the reasons set forth below
the proposal.
Proxies solicited by management will be voted against the stockholder
proposal below unless stockholders specify a contrary choice in their proxies.
22
STOCKHOLDER PROPOSAL
In accordance with applicable rules of the Securities and Exchange
Commission, we have set forth Mr. Rossi's proposal below:
"SHAREHOLDER VOTE ON POISON PILLS
Shareholders request that our Board of Directors seek
shareholder approval prior to adopting any poison pill and also
redeem or terminate any pill now in effect unless it has been
approved by a shareholder vote at the next shareholder meeting.
The poison pill is an important issue for shareholder vote.
Currently our board can adopt a poison pill and/or redeem a
current poison pill and adopt a new poison pill:
1) At any time
2) In a short period of time
3) Without shareholder approval
NEGATIVE EFFECTS OF POISON PILLS ON SHAREHOLDER VALUE
A study by the Securities and Exchange Commission found evidence
that the negative effect of poison pills to deter profitable
takeover bids outweigh benefits.
Source: Office of the Chief Economist, Securities and
Exchange
Commission, The Effect of Poison Pills on the Wealth of Target
Shareholders,
October 23, 1986
Additional Support for this Proposal Topic
- The Council of Institutional Investors www.cii.org
recommends shareholder approval of all poison pills
INSTITUTIONAL INVESTOR SUPPORT FOR SHAREHOLDER VOTE
Many institutional investors believe poison pills should be
voted on by shareholders. Supporters include institutional
investor leaders such as the Teachers Insurance and Annuity
Association, College Retirement Equities Fund (TIAA-CREF) and
the California Public Employees Retirement System (CalPERS).
Source: TIAA-CREF Policy Statement on Corporate Governance and
CalPERS U.S. Corporate Governance Principles, IV. Governance
Guidelines, D. Shareholder Rights.
I believe a poison pill can insulate management at the
expense of shareholders. I believe a poison pill is such a
powerful tool that shareholders should be able to vote on
whether it is appropriate. I believe a shareholder vote on
poison pills will avoid an unbalanced concentration of power in
our directors who could focus on narrow interests at the expense
of the vast majority of shareholders.
INSTITUTIONAL INVESTOR SUPPORT IS HIGH-CALIBER SUPPORT
This proposal topic has significant institutional support as
evidenced by the sponsorship of institutional investors such as
TIAA-CREF, Gamco Investors and the New York State Retirement
Fund of their own proposals to other companies on this same
topic. Source: IRRC Corporate Governance Bulletin, May-July
2001. Shareholder right to vote on poison pill resolutions
achieved a 57% average yes-vote from shareholders at 26 major
companies in 2000 (Percentage based on yes-no votes). Source:
Delphi Automotive Systems Annual Meeting Report, IRRC, April
2001.
23
Institutional investor support is high-caliber support.
Institutional investors have the advantage of a specialized
staff and resources, long-term focus, fiduciary duty and
independent perspective to thoroughly study the issues involved
in this proposal topic.
68% VOTE AT A MAJOR COMPANY
This proposal topic won 68% of the yes-no vote at the Burlington
Northern Santa Fe (BNI) 2001 annual meeting. The text of the BNI
proposal, which has further information on poison pills, is
available at The Corporate Library website under Proposals.
SHAREHOLDER VOTE PRECEDENT SET BY OTHER COMPANIES
In recent years, various companies have been willing to redeem
poison pills or at least allow shareholders to have a meaningful
vote on whether a poison pill should remain in force. I believe
that our company should do so as well.
In the interest of shareholder value vote yes:
SHAREHOLDER VOTE ON POISON PILLS
YES ON 4"
RESPONSE OF THE CORPORATION TO STOCKHOLDER PROPOSAL
The Board of Directors unanimously recommends a vote against this proposal
for the reasons set forth below.
In 1988, after carefully considering its fiduciary duties to stockholders
and after receiving reports from its outside corporate law firm and a prominent
Wall Street investment banking firm, the Board of Directors adopted the
Corporation's stockholder rights plan (the "Rights Plan"). In 1995, again after
carefully considering its fiduciary duties to stockholders and after receiving
reports from its legal and financial advisors, the Board of Directors adopted
the Corporation's amended and restated stockholder rights plan (the "Amended
Rights Plan").
The Board adopted the Rights Plan and the Amended Rights Plan because it
believed that a rights plan (1) helps to maximize stockholder value by
protecting stockholders against unfair or coercive takeover tactics that do not
provide fair value to all stockholders, (2) provides the Board with an important
corporate governance tool that allows the Board more time to evaluate an
acquisition offer and bargain with a potential bidder on behalf of stockholders
and (3) is in the best interest of the Corporation's stockholders. In reaching
these conclusions, the Board reviewed (a) the arguments for and against rights
plans, (b) the available studies and literature on the effect that rights plans
have on stock prices and hostile takeover attempts (including the study relied
upon by Mr. Rossi in his proposal), and (c) relevant court decisions regarding
rights plans and the rights of directors to implement and maintain stockholder
rights plans.
The Board of Directors believes that the Corporation's Amended Rights Plan
will not prevent unsolicited takeover proposals. Rather, the Amended Rights Plan
is intended to encourage bidders to negotiate with the Board of Directors to
develop an offer that the Board, in the exercise of its fiduciary duties,
believes treats all stockholders fairly and is otherwise in the best interests
of the Corporation and its stockholders. Because the Board has the ability to
redeem the rights issued under the Amended Rights Plan, that plan will not
prevent any takeover proposal that the Board of Directors determines to be in
the best interests of the Corporation and its stockholders.
24
The Board of Directors also believes that the Amended Rights Plan does not
have a negative effect on stockholder value, contrary to the claims made by Mr.
Rossi in his proposal. The Board's belief is supported by numerous studies and
reports including the following:
- 1994 study by University of Rochester economists Robert Comment and G.
William Schwert who, after replicating the analysis of the 1986 SEC study
relied upon by Mr. Rossi in his proposal, but using a database of
companies with rights plans that was four times the size of the database
of the 1986 SEC study, concluded that the adoption of rights plans has no
meaningful price effect. Significantly, they concluded that rights plans
"are reliably associated with higher premiums for selling shareholders."
This study was published in the Journal of Financial Economics, volume
39, pages 3-43 (1995).
- 1997 study by Georgeson & Company, a nationally recognized proxy
solicitation and investor relations firm, which studied 319 merger and
acquisition transactions completed between 1992 and 1996, found that
companies with rights plans receive higher takeover premiums in both
hostile and friendly transactions. This study also concluded that rights
plans do not diminish stockholder value by preventing takeovers, but were
actually associated with higher overall stockholder value. This study is
available at Georgeson's website (www.georgeson.com).
Because the Board of Directors believes that the Amended Rights Plan was
adopted, and continues to be, in the best interests of the Corporation and its
stockholders, it does not believe that the Amended Rights Plan should be
rescinded. Rescinding the Amended Rights Plan would limit the Board's
flexibility and could seriously undermine the Board's ability to use a rights
plan to maximize shareholder value in the future.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE AGAINST MR.
ROSSI'S PROPOSAL REGARDING THE AMENDED RIGHTS PLAN. A proxy granted to
management will be voted against this proposal unless the applicable box on the
proxy card is specifically marked in favor or to abstain.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors, executive officers and any persons owning more than 10
percent of a class of the Corporation's stock to file reports with the
Securities and Exchange Commission and The New York Stock Exchange regarding
their ownership of the Corporation's stock and any changes in ownership. We
believe that the Corporation's executive officers and directors complied with
their filing requirements for 2001.
2003 STOCKHOLDER PROPOSALS
Proposals by stockholders for inclusion in the Corporation's 2003 proxy
statement and form of proxy for the Annual Meeting of Stockholders to be held in
2003 should be addressed to the Secretary, Kimberly-Clark Corporation, P.O. Box
619100, Dallas, Texas 75261-9100, and must be received at this address no later
than November 12, 2002. Upon receipt of a proposal, the Corporation will
determine whether or not to include the proposal in the proxy statement and
proxy in accordance with applicable law. It is suggested that proposals be
forwarded by certified mail -- return receipt requested.
ANNUAL MEETING ADVANCE NOTICE REQUIREMENTS
The Corporation's By-Laws require advance notice for any business to be
brought before a meeting of stockholders. In general, for business to properly
be brought before an Annual Meeting by a stockholder (other than in connection
with the election of directors; see "Proposal 1. Election of
Directors -- Stockholder Nominations for Directors"), written notice of the
stockholder proposal
25
must be received by the Secretary of the Corporation not less than 75 days nor
more than 100 days prior to the first anniversary of the preceding year's Annual
Meeting. Certain other notice periods are provided if the date of the Annual
Meeting is advanced by more than 30 days or delayed by more than 60 days from
the anniversary date. The stockholder's notice to the Secretary must contain a
brief description of the business to be brought before the meeting and the
reasons for conducting such business at the meeting, as well as certain other
information. Additional information concerning the advance notice requirement
and a copy of the Corporation's By-Laws may be obtained from the Secretary of
the Corporation at the address provided below.
AUDIT COMMITTEE REPORT
In accordance with its written charter adopted by the Board of Directors,
the Audit Committee of the Board assists the Board in fulfilling its
responsibility for oversight of the quality and integrity of the accounting,
auditing and financial reporting practices of the Corporation.
In discharging its oversight responsibility as to the audit process, the
Audit Committee obtained from the independent auditors a formal written
statement describing all relationships between the auditors and the Corporation
that might bear on the auditors' independence consistent with Independence
Standards Board Standard No. 1, "Independence Discussions with Audit
Committees," discussed with the auditors any relationships that may impact their
objectivity and independence and satisfied itself as to the auditors'
independence. The Audit Committee also discussed with management, the internal
auditors and the independent auditors the quality and adequacy of the
Corporation's internal controls and the internal audit function's organization,
responsibilities and budget and staffing. The Audit Committee reviewed with both
the independent and the internal auditors their audit plans, audit scope and
identification of audit risks.
The Audit Committee discussed and reviewed with the independent auditors
all communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and, with and without management present,
discussed and reviewed the results of the independent auditors' examination of
the financial statements. The Committee also discussed the results of the
internal audit examinations.
The Audit Committee reviewed the audited financial statements of the
Corporation as of and for the fiscal year ended December 31, 2001, with
management and the independent auditors. Management has the responsibility for
the preparation of the Corporation's financial statements and the independent
auditors have the responsibility for the examination of those statements.
Based on the above-mentioned review and discussions with management and the
independent auditors, the Audit Committee recommended to the Board that the
Corporation's audited financial statements be included in its Annual Report on
Form 10-K for the fiscal year ended December 31, 2001, for filing with the
Securities and Exchange Commission. The Audit Committee also recommended the
reappointment, subject to stockholder approval, of the independent auditors and
the Board concurred in such recommendation.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Paul J. Collins, Chairman
Robert W. Decherd
Linda Johnson Rice
Wolfgang R. Schmitt
26
OTHER MATTERS
The management of the Corporation knows of no other matters to be presented
at the meeting. Should any other matter requiring a vote of the stockholders
arise at the meeting, the persons named in the proxy will vote the proxies in
accordance with their best judgment.
By order of the Board of Directors.
/s/ RONALD D MCCRAY
Ronald D. Mc Cray
Vice President, Associate General
Counsel and Secretary
KIMBERLY-CLARK CORPORATION
P. O. Box 619100
Dallas, Texas 75261-9100
Telephone (972) 281-1200
March 12, 2002
27
EXHIBIT A
KIMBERLY-CLARK CORPORATION
EXECUTIVE OFFICER ACHIEVEMENT AWARD PROGRAM
(AS ADOPTED EFFECTIVE APRIL 25, 2002)
1. PURPOSE
This Executive Officer Achievement Award Program ("EOAAP" or the "Plan") is
adopted effective April 25, 2002. The purpose of EOAAP is to further unite
the interests of the stockholders of Kimberly-Clark Corporation (the
"Company") and its executive officers through the annual payment of
performance-based incentive compensation to each participating executive in
the form of a cash award.
2. ELIGIBILITY
Employees eligible to participate in EOAAP (the "Participants") shall be
limited to the Chief Executive Officer and other executive officers of the
Company (within the meaning of Rule 3b-7 of the Securities Exchange Act of
1934 as amended from time to time) as of March 30 of each calendar year
("performance year") who shall receive awards under the Plan for such
performance year. An individual who becomes an executive officer after
March 30 and on or before October 1 of a calendar year shall receive an
award as provided in Section 3.
3. AWARDS
Subject to the Compensation Committee's discretion to reduce such awards,
each Participant shall be entitled to an award for each performance year
equal to 0.3 percent of the Company's earnings before unusual items. The
Company's independent auditors will review the Company's calculation of the
award amount and confirm its mathematical accuracy to the Compensation
Committee.
An individual who becomes a Participant after March 30 and on or before
October 1 of a performance year shall receive an award for that performance
year based on the earnings before unusual items of the Company for each
calendar quarter following the quarter in which the individual becomes an
executive officer.
4. PAYMENT OF AWARDS; COMPENSATION COMMITTEE DISCRETION TO REDUCE
As soon as practicable after the end of each performance year, the
Company's independent auditors shall report to the Compensation Committee
the Company's earnings before unusual items and the Compensation Committee
shall certify the amount of each award for that year under the provisions
of this Plan.
The Compensation Committee, in its sole discretion, based on any factors
the Compensation Committee deems appropriate, may reduce the award to a
Participant in any year (including reduction to zero if the Compensation
Committee so determines). The Compensation Committee shall make a
determination of whether and to what extent to reduce awards under the Plan
for each year at such time or times as the Compensation Committee shall
deem appropriate. The reduction in the amount of an award to a Participant
for a performance year shall have no effect on the amount of the award to
any other Participant for such year.
Payments of awards to Participants who are employees of subsidiaries of the
Company shall be paid directly by such subsidiaries.
Termination of employment for any reason may result in a pro rata or other
adjustment to the amount of the award on such basis as shall be determined
fair and equitable by the Compensation Committee.
A-1
Notwithstanding any provision of EOAAP, no award shall be paid to a
Participant who, in any calendar year, has discharged his principal
accountabilities in a manner deemed unacceptable by the Chief Executive
Officer. Participants under the EOAAP will be ineligible for awards
relating to the same calendar quarter under the Company's Management
Achievement Award Program.
Awards shall be paid in cash as of a date or dates determined by the
Compensation Committee or, if the Compensation Committee makes no
determination, as soon as practicable after the amount of the award has
been determined.
Prior to becoming entitled to receive an award, a Participant may elect to
defer the receipt thereof to some future date or dates. Except as otherwise
provided under the Company's Deferred Compensation Plan, deferred EOAAP
awards shall not bear interest.
5. GENERAL PROVISIONS
The Plan shall be administered by the Compensation Committee. The
Compensation Committee, in its sole discretion, shall have the power to
interpret and construe the Plan; provided, however, that no such action or
determination may increase the amount of compensation payable that would
otherwise be due in a manner that would result in the disallowance of a
deduction to the Company under Section 162(m) of the Code or any successor
section. Any interpretation or construction of any provisions of the Plan
by the Compensation Committee shall be final and conclusive upon all
persons. No member of the Board or the Compensation Committee shall be
liable for any action or determination made in good faith.
"Compensation Committee" means the Compensation Committee of the Board of
Directors of the Company, provided that if the requisite number of members
of the Compensation Committee are not Disinterested Persons, the Plan shall
be administered by a committee, all of whom are Disinterested Persons,
appointed by the Board and consisting of two or more directors with full
authority to act in the matter.
Except as provided in this Plan, no right of any Participant shall be
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, attachment, garnishment,
execution, levy, bankruptcy, or any other disposition of any kind, whether
voluntary or involuntary, prior to actual payment of an award. No
Participant, or any other person, shall have any interest in any fund, or
in any specific asset or assets of the Company, by reason of an award that
has been made but has not been paid or distributed.
Nothing contained in the EOAAP shall be construed as a contract of
employment or as a right of any Participant to be continued in the
employment of the Company, or as a limitation on the right of the Company
to discharge any Participant with or without cause.
The Compensation Committee may at any time amend, suspend, or discontinue
the Plan or alter or amend any or all awards under the Plan to the extent
(1) permitted by law and (2) that such action would not result in the
disallowance of a deduction to the Company under Section 162(m) of the Code
or any successor section (including the rules and regulations promulgated
thereunder); provided, however, that if any of the foregoing requires the
approval by stockholders of any such amendment, suspension or
discontinuance, then the Compensation Committee may take such action
subject to the approval of the stockholders. No such amendment, suspension,
or discontinuance of the Plan shall, without the consent of the
Participant, adversely alter or change any of the rights or obligations
under any awards previously granted the Participant. In the case of a
Participant employed outside the United States, the Compensation Committee
may vary the provisions of the Plan as it may deem appropriate to conform
to local laws, practices and procedures. Further, unless the stockholders
of the Company shall have first approved thereof, no amendments shall be
made which shall increase the maximum amount of any award above the amount
determined by the formula described in Section 3 in any year.
A-2
[KIMBERLY-CLARK LOGO]
Invitation to Stockholders
Notice of 2002 Annual Meeting
Proxy Statement
[GRAPHIC]
[KIMBERLY-CLARK LOGO]
ZKCC3B DETACH HERE
[KIMBERLY-CLARK LOGO]
P.O. BOX 619100, DALLAS, TEXAS 75261-9100
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS -- APRIL 25, 2002
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Wayne R. Sanders, O. George Everbach and Ronald D. McCray, or any of them,
with full power of substitution to each, hereby are appointed proxies and are
authorized to vote, as specified below, all shares of common stock that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of
Kimberly-Clark Corporation, to be held at the Corporation's World Headquarters
351 Phelps Drive, Irving, Texas on April 25, 2002 at 11:00 a.m. and at any
adjournment thereof. In their discretion, the proxies are authorized to vote on
such other business as may properly come before the meeting.
Please date, sign and return this proxy promptly. If you plan to attend the
meeting, please so indicate in the space provided on the reverse side.
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1,2 AND 3 AND
AGAINST PROPOSAL 4. IF YOU PREFER TO VOTE SEPARATELY ON INDIVIDUAL ISSUES YOU
MAY DO SO BY MARKING THE APPROPRIATE BOXES ON THE REVERSE SIDE.
IMPORTANT: TO BE SIGNED AND DATED ON THE REVERSE SIDE
PLEASE RETURN THIS CARD IN THE SELF-ADDRESSED ENVELOPE PROVIDED.
KIMBERLY-CLARK CORPORATION
YOUR VOTE IS IMPORTANT! IT'S FAST, CONVENIENT AND IMMEDIATE:
VOTE BY TELEPHONE: CALL TOLL-FREE 1-877-PRX-VOTE (1-877-779-8683) ANYTIME!
1. Read the accompanying Proxy Statement and Proxy Card.
2. Call the toll-free number 1-877-PRX-VOTE (1-877-779-8683).
Stockholders residing outside the United States may call collect on a
touch-tone phone 1-201-536-8073.
3. Enter your 14-digit Voter Control Number located on your Proxy Card above
your name.
4. Follow the recorded instructions.
VOTE BY INTERNET: GO TO http://www.eproxyvote.com/kmb ANYTIME!
1. Read the accompanying Proxy Statement and Proxy Card.
2. Go to the Website http://www.eproxyvote.com/kmb
3. Enter your 14-digit Voter Control Number located on your Proxy Card
above your name.
If you are interested in enrolling in the electronic delivery service to
receive Kimberly-Clark's future Annual Reports and Proxy Statements, you
may do so at this time.
4. Follow the instructions provided.
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
--------------------------------------------------------------------------------
IT'S A WIN-WIN SOLUTION! Reduce paper flow to your home and help the
environment, too! If you have access to the Internet, we encourage you to
consider receiving Kimberly-Clark's future Annual Reports and Proxy Statements
in electronic format rather than in printed form. In electing to do so, you
conserve natural resources and save your company money! ACT NOW!
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ZKCC3A DETACH HERE
[X] PLEASE MARK YOUR
VOTES AS IN THE
EXAMPLE.
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3 AND AGAINST
PROPOSAL 4.
--------------------------------------------------------------------------------
1. Election of Directors
NOMINEES: (01) John F. Bergstrom, (02) Paul J. Collins,
and (03) Robert W. Decherd
(terms to expire at 2005 Annual Meeting of Stockholders)
[ ] FOR [ ] WITHHOLD
ALL AUTHORITY
NOMINEES TO VOTE
FOR ALL
NOMINEES
[ ]
---------------------------------------------------------
FOR all nominees, except vote withheld for those named above.
FOR AGAINST ABSTAIN
2. Approve the Executive Officer [ ] [ ] [ ]
Achievement Award Program
3. Selection of Auditors [ ] [ ] [ ]
4. Stockholder Proposal Regarding the [ ] [ ] [ ]
Corporation's Amended and Restated
Rights Agreement
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LOWER LEFT [ ]
I Will be accompanied by __________________________.
Please sign below exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If signing in the name of a corporation or partnership,
please sign full corporate or partnership name and indicate title of authorized
signatory.
Signature: Date: Signature: Date:
--------------------------- ----------------- ---------------------------- -----------------
[KIMBERLY-CLARK CORPORATION LOGO]
ZKC34B DETACH HERE
TO: U.S. BANK, TRUSTEE OF THE KIMBERLY-CLARK CORPORATION DEFINED CONTRIBUTION
PLANS TRUST
With respect to whole shares of Kimberly-Clark Corporation common stock held by
the Trustee and attributable to my accounts to which I am entitled under the
terms of the respective Plans to give this direction you are directed (i) to
sign and forward a proxy in the form being solicited on behalf of the Board of
Directors of Kimberly-Clark Corporation to vote at the Annual Meeting of
Stockholders on April 25, 2002 and at any adjournment thereof as specified on
the reverse side hereof and (ii) to authorize the proxies appointed by the Board
of Directors to vote, in their discretion, on such other business as may
properly come before the meeting.
IF NO DIRECTION IS GIVEN, THE RESPECTIVE PLAN COMMITTEES, WHICH ARE COMPOSED OF
MANAGEMENT PERSONNEL, WILL DIRECT THE TRUSTEE HOW TO VOTE THE SHARES.
------------------------------------------------------------------------------
NOTICE TO PARTICIPANTS: KIMBERLY-CLARK CORPORATION HOURLY EMPLOYEES
INCENTIVE INVESTMENT PLAN AND KIMBERLY-CLARK
CORPORATION SALARIED EMPLOYEES INCENTIVE INVESTMENT
PLAN (IIP) KIMBERLY-CLARK CORPORATION RETIREMENT
CONTRIBUTION PLAN (RCP)
Pursuant to the terms of the respective Plans, you have the right to direct the
Trustee how to vote whole shares of Kimberly-Clark Corporation common stock held
by the Trustee and attributable to your accounts in the respective Plans as
provided therein at the Annual Meeting of Stockholders to be held on April 25,
2002 and at any adjournment thereof. YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES
BY MARKING APPROPRIATELY ON THE REVERSE SIDE, BUT YOU NEED NOT MARK A CHOICE
IF YOU WISH YOUR SHARES TO BE VOTED IN ACCORDANCE WITH THE KIMBERLY-CLARK
CORPORATION BOARD OF DIRECTORS' RECOMMENDATIONS. IN EITHER CASE, PLEASE BE SURE
TO SIGN ON THE REVERSE SIDE. If no Voting Instruction Card is returned, the
respective Plan Committees, which are composed of management personnel, will
direct the Trustee to vote the shares. For your information, copies of the
Kimberly-Clark Corporation Notice of Annual Meeting and Proxy Statement are
enclosed.
U.S. BANK
Your instructions will be held in strict confidence and will not be made known
to officers and employees of Kimberly-Clark.
IMPORTANT: TO BE SIGNED AND DATED ON REVERSE SIDE
KIMBERLY-CLARK CORPORATION
YOUR VOTE IS IMPORTANT! IT'S FAST, CONVENIENT AND IMMEDIATE:
VOTE BY TELEPHONE: CALL TOLL-FREE 1-877-PRX-VOTE (1-877-779-8683) ANYTIME!
1. Read the accompanying Proxy Statement and Voting Instruction Card.
2. Call the toll-free number 1-877-PRX-VOTE (1-877-779-8663).
Stockholders residing outside the United States may call collect on a
touch-tone phone 1-201-536-8073.
3. Enter your 14-digit Voter Control Number located on your Voting Instruction
Card above your name.
4. Follow the recorded instructions.
VOTE BY INTERNET: GO TO http://www.eproxyvote.com/kmb ANYTIME!
1. Read the accompanying Proxy Statement and Voting Instruction Card.
2. Go to the Website http://www.proxyvote.com/kmb
3. Enter your 14-digit Voter Control Number located on your Voting Instruction
Card above your name. If you are interested in enrolling in the electronic
delivery service to receive Kimberly-Clark's future Annual Reports and
Proxy Statements, you may do so at this time.
4. Follow the instructions provided.
DO NOT RETURN YOUR VOTING INSTRUCTION CARD IF YOU ARE VOTING BY TELEPHONE OR
INTERNET
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
IT'S A WIN-WIN SOLUTION! Reduce paper flow to your home and help the
environment, too! If you have access to the Internet, we encourage you to
consider receiving Kimberly-Clark's future Annual Reports and Proxy Statements
in electronic format rather than in printed form. In electing to do so, you
conserve natural resources and save your company money! ACT NOW!
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
DETACH HERE
[X] PLEASE MARK YOUR
VOTES AS IN THE
EXAMPLE.
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3 AND AGAINST
PROPOSAL 4.
--------------------------------------------------------------------------------
1. Election of Directors
NOMINEES: (01) John F. Bergstrom, (02) Paul J. Collins,
and (03) Robert W. Decherd
(terms to expire at 2005 Annual Meeting of Stockholders)
[ ] FOR [ ] WITHHOLD
ALL AUTHORITY
NOMINEES TO VOTE
` FOR ALL
NOMINEES
[ ]
FOR all nominees, except vote withheld for those named above.
FOR AGAINST ABSTAIN
2. Approve the Executive Officer [ ] [ ] [ ]
` Achievement Award Program
3. Selection of Auditors [ ] [ ] [ ]
4. Stockholder Proposal Regarding the [ ] [ ] [ ]
Corporation's Amended and Restated
Rights Agreement
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LOWER LEFT [ ]
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON.
Signature: Date:
-------------------------------- -----------------------------