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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
CLARCOR INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
CLARCOR Logo
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of CLARCOR Inc. (the "Company") will be
held at the offices of Total Filtration Services, Inc., 2911 Research Drive,
Rochester Hills, Michigan 48309, on Monday, March 22, 2004 at 9:00 A.M., Eastern
Standard Time, for the following purposes:
1. To elect three Directors for a term of three years each;
2. To consider and act upon the adoption of the Company's 2004
Employee Stock Purchase Plan; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only holders of CLARCOR Common Stock of record at the close of business on
Thursday, February 5, 2004 are entitled to receive notice of and to vote at the
meeting or any adjournment thereof.
Whether or not you plan to attend the meeting, you are requested to sign
and date the enclosed proxy and return it promptly in the envelope enclosed for
that purpose.
DAVID J. BOYD
Secretary
PLEASE SIGN AND DATE THE ACCOMPANYING PROXY
AND MAIL IT PROMPTLY.
Rockford, Illinois
February 18, 2004
CLARCOR INC.
2323 SIXTH STREET
P.O. BOX 7007
ROCKFORD, ILLINOIS 61125
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of CLARCOR Inc. (the "Company") for use at the
Annual Meeting of Shareholders to be held at the offices of Total Filtration
Services, Inc., 2911 Research Drive, Rochester Hills, Michigan 48309, on Monday,
March 22, 2004 at 9:00 A.M., Eastern Standard Time, for the purposes set forth
in the Notice of Annual Meeting. Total Filtration Services, Inc. is a
wholly-owned subsidiary of the Company. This Proxy Statement and the
accompanying proxy are being mailed to shareholders on February 18, 2004.
A shareholder who gives a proxy may revoke it at any time before it is
voted by giving written notice of the termination thereof to the Secretary of
the Company, by filing with him another proxy or by attending the Annual Meeting
and voting his or her shares in person. All valid proxies delivered pursuant to
this solicitation, if received in time and not revoked, will be voted. If no
specifications are given by the shareholder executing the proxy card, valid
proxies will be voted to elect the three persons nominated for election to the
Board of Directors listed on the proxy card enclosed herewith, to approve the
adoption of the Company's Employee Stock Purchase Plan, and, in the discretion
of the appointed proxies, upon such other matters as may properly come before
the meeting.
As of February 5, 2004, the Company had outstanding 25,372,273 shares of
Common Stock, constituting the only class of voting securities of the Company
outstanding, and each outstanding share is entitled to one vote on all matters
to be voted upon. Only holders of CLARCOR Common Stock of record at the close of
business on February 5, 2004 are entitled to notice of and to vote at the
meeting. A majority of the shares of Common Stock issued and outstanding and
entitled to vote at the meeting, present in person or represented by proxy, will
constitute a quorum for purposes of the Annual Meeting.
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
At the Annual Meeting three directors are to be elected. Proxies will be
voted for the election of Messrs. Robert J. Burgstahler, Paul Donovan and Norman
E. Johnson unless the shareholder signing such proxy withholds authority to vote
for one or more of these nominees in the manner described on the proxy. If a
quorum is present at the meeting, the three candidates for director receiving
the greatest number of votes will be elected. Accordingly, withheld votes and
broker non-votes will not affect the outcome of the election of directors.
Messrs. Burgstahler and Johnson are directors of the Company previously
elected by its shareholders whose terms in office expire this year. Mr. Donovan
was elected by the Board of Directors on March 24, 2003 to replace Mr. Lawrence
E. Gloyd who retired from the Board on that date. If elected, Messrs.
Burgstahler, Donovan and Johnson will hold office for a three-year period ending
in 2007 or until their respective successors are duly elected and qualified.
In the event that any of the nominees should for some reason, presently
unknown, fail to stand for election, the persons named in the enclosed form of
proxy intend to vote for substitute nominees.
1
INFORMATION CONCERNING NOMINEES AND DIRECTORS
YEAR TERM AS
DIRECTOR DIRECTOR
NAME AGE SINCE EXPIRES
---- --- -------- ------------
* Robert J. Burgstahler 59 December 18, 2000 2007
Mr. Burgstahler retired as Senior Vice President, Business
Development and Corporate Services of 3M, St. Paul,
Minnesota, effective in August 2003. He served as Vice
President, Finance and Administrative Services of 3M from
2000 to 2002, President and General Manager of 3M Canada from
1998 to 2000 and Staff Vice President Taxes of 3M from 1995
to 1998. 3M is a diversified manufacturer.
* Paul Donovan 56 March 24, 2003 2007
Mr. Donovan was the Executive Vice President and Chief
Financial Officer of Sundstrand Corporation from December
1988 to June 1999. Mr. Donovan was Senior/Executive Vice
President and Chief Financial Officer of Wisconsin Energy
Corporation, Milwaukee, Wisconsin, from August 1999 until
June 2003. At that time he became a special advisor to the
Chairman of Wisconsin Energy Corporation pending his
retirement from Wisconsin Energy Corporation in February
2004. Wisconsin Energy Corporation is a holding company with
subsidiaries in utility and non-utility businesses, including
electric and natural gas energy services, pump manufacturing,
waste-to-energy and real estate businesses. Mr. Donovan is a
director of AMCORE Financial, Inc., Woodward Governor Company
and Solutia, Inc.
* Norman E. Johnson 55 June 26, 1996 2007
Mr. Johnson was elected Chairman, President and Chief
Executive Officer of CLARCOR Inc., Rockford, Illinois, in
March 2000. He was elected President and Chief Operating
Officer, CLARCOR Inc. in June 1995. Mr. Johnson was elected
President-Baldwin Filters, Inc. in 1990, Vice
President-CLARCOR Inc. in 1992, and Group Vice
President-Filtration Products in 1993. He is a director of
Amcore Financial, Inc.
Robert H. Jenkins 60 March 23, 1999 2005
Mr. Jenkins is retired Chairman, Hamilton Sundstrand
Corporation (formerly Sundstrand Corporation), Rockford,
Illinois. He served as Chairman, President and Chief
Executive Officer from 1997 to 1999 and as President and
Chief Executive Officer, Sundstrand Corporation from 1995 to
1997. Hamilton Sundstrand Corporation is an aerospace and
industrial company. Mr. Jenkins is a director of AK Steel
Holding Corporation, Solutia, Inc., Sentry Insurance, Visteon
Corporation and Jason Incorporated.
Philip R. Lochner, Jr. 60 June 17, 1999 2005
Since his retirement from Time Warner, Inc. in 1998, Mr.
Lochner has served on corporate boards of public and private
companies. Currently, Mr. Lochner is a director of Apria
Healthcare Group Inc., Adelphia Communications Corp., GTech
Holdings Inc., Solutia Inc. and the Investor Responsibility
Research Center.
Roseann Stevens 49 March 19, 2002 2005
Ms. Stevens has been employed by Visteon Corporation,
Detroit, Michigan, as Vice President and General Manager,
General Motors & Alliance Partners Customer Business Group
since 2001. From 1997 to 2001, she was Vice President of
Global OEM Accounts of Visteon. Visteon is an automotive
systems supplier of integrated systems including climate
control, drive-line, interior and electronics systems.
J. Marc Adam 65 March 23, 1991 2006
Mr. Adam is retired Vice President Marketing, 3M, St. Paul,
Minnesota. He served as Vice President Marketing from 1995 to
1999 and from 1986 to 1995 as Group Vice President, 3M. 3M is
a diversified manufacturer. Mr. Adam is a director of
Schneider National Inc.
James L. Packard 61 June 22, 1998 2006
Mr. Packard is Chairman and Chief Executive Officer,
REGAL-BELOIT Corporation (AMEX), Beloit, Wisconsin since
2002. From 1986 to 2002 he served as Chairman, President and
Chief Executive Officer. REGAL-BELOIT Corporation is a
manufacturer of mechanical and electrical products. Mr.
Packard is a director of The First National Bank & Trust
Company of Beloit and Manitowoc Company, Manitowoc,
Wisconsin.
Keith E. Wandell 54 March 27, 2001 2006
Mr. Wandell has been President-Automotive Group, Johnson
Controls, Inc. Plymouth, Michigan since August, 2003. He
served as President-Automotive Systems Group, Battery,
Johnson Controls, Inc. from 1997 to 2003; Vice President and
General Manager-Automotive of Johnson Controls from 1996 to
1997; and Vice President Operations from 1993 to 1996.
Johnson Controls is a manufacturer of automotive products and
facility management and control systems.
------------------------------
* Nominees for election to terms expiring in 2007
THE BOARD OF DIRECTORS
The Board of Directors consists of nine directors divided into three
classes, each class consisting of three directors. One class of directors is
elected at each Annual Meeting of Shareholders. The Board has determined that
eight of the directors are independent as such term is defined in the listing
standards adopted by the New York Stock Exchange ("NYSE") on which the Company's
Common Stock is listed and that such directors have no material relationship
with the Company. Mr. Norman E.
2
Johnson, the Chairman of the Board, President and Chief Executive Officer of the
Company, is the only director who is not independent as defined in such
standards.
The Board of Directors held five meetings during fiscal 2003. All of the
Company's directors attended at least 75% of the aggregate number of meetings of
the Board of Directors and Committees of the Board of which they are members.
In fiscal 2003, directors who were not employees of the Company received an
annual retainer of $32,500 and fees of $1,000 for each meeting of the Board of
Directors and each separate Committee meeting attended and reimbursement for
travel expenses related to attendance at Board and Committee meetings.
Non-employee directors who are Chairmen of Committees received an additional
annual fee of $3,250 in fiscal 2003.
Pursuant to the Company's Deferred Compensation Plan for Directors, a
non-employee director may elect to defer receipt of the director's fees to which
he or she is entitled and to be paid the amounts so deferred, plus interest
thereon at the prime rate announced quarterly by Bank One Corporation, or its
successor, either when the participant ceases being a director of the Company or
upon his or her retirement from his principal occupation or at the time the
participant reaches a specified age. None of the directors deferred any portion
of the fees payable during fiscal 2003.
The Board has adopted a Directors' Stock Compensation Plan. Under this
Plan, as amended, in lieu of the annual retainer otherwise payable, on the date
a person first becomes a non-employee director, and annually thereafter on the
date of each annual meeting of shareholders, such person receives a grant of
shares of the Company's Common Stock with an aggregate fair market value equal
to and in lieu of the amount of the annual retainer for non-employee directors.
Under the Company's Incentive Plan, each non-employee director is
automatically granted, on the date of each annual meeting of shareholders and on
the date on which such non-employee director is first elected or begins to serve
as a non-employee director, options to purchase 3,750 shares of Common Stock at
an option exercise price equal to the fair market value of a share of Common
Stock on the date of grant. Such options are fully exercisable on the date of
grant and expire ten years after the date of grant. Shares acquired upon
exercise of an option may not be sold or transferred during the six month period
following the date of grant of such option. As of January 1, 2004, Mr. Adam has
fully exercisable options for 37,500 shares, Mr. Donovan has 3,750, Mr. Packard
has 21,575, Mr. Jenkins has 18,750, Mr. Lochner has 17,850, Mr. Burgstahler has
12,267, Ms. Stevens has 7,500 and Mr. Wandell has 11,250.
COMMITTEES OF THE BOARD OF DIRECTORS
During fiscal 2003, the standing committees of the Board of Directors were
the Director Affairs/ Corporate Governance Committee, the Audit Committee and
the Compensation Committee.
Directors Affairs/Corporate Governance Committee. The Directors
Affairs/Corporate Governance Committee consists of three directors. The present
members of the Committee are Messrs. J. Marc Adam, Chairman, and Philip R.
Lochner, Jr. and Ms. Roseann Stevens. Each of these directors is independent as
such term is defined in the listing standards of the NYSE.
The Board has adopted a Charter for the Committee. A current copy of that
Charter is available on the Company's website: www.clarcor.com. The Charter
provides, among other things, that the Committee will make recommendations to
the full Board regarding changes to the size and composition of the Board or any
committee thereof; identify individuals that the Committee believes are
qualified to become Board members and recommend that the Board select such
nominee or nominees to stand for election; and identify individuals for
appointment to the Board to fill vacancies on the Board.
The Charter of the Committee requires the Committee to review and evaluate
any stockholder nominees for director. The Company's By-laws (available on the
Company's website) provide that
3
notice of any proposed nomination by a shareholder for election of a person to
the Board shall be delivered to or mailed and received at the principal
executive offices of the Company no less than 60 days nor more than 90 days
prior to the date of the Annual Meeting of Shareholders at which the election is
to be held. Section 2.12 of the By-Laws specifies the information to be included
by a shareholder in such a notice.
The Committee has no specific policy with regard to the minimum
qualifications of director candidates. In the recent past, candidates
recommended for election to the Board have generally had significant experience
and expertise in the manufacture and distribution of disposable and replaceable
industrial or automotive products, in international sales and distribution
and/or in the preparation and analysis of financial statements and in accounting
matters generally. The Company believes that persons with these qualifications
are the most qualified to assist the Company in the development of its business
and in compliance with its financial reporting responsibilities.
Messrs. Burgstahler, Donovan and Johnson are the current nominees
recommended by the Committee for election to the Board. Messrs. Burgstahler and
Johnson are standing for reelection by the shareholders. Mr. Donovan was
appointed in March 2003 by the Board to fill a vacancy on the Board and is
standing for election by the shareholders for the first time. Mr. Donovan,
formerly the Chief Financial Officer of Wisconsin Energy Corporation, was
initially recommended to the Committee by Mr. Robert Jenkins, an independent
director of the Company who had a previous business relationship with Mr.
Donovan.
In the past the Committee has reviewed potential candidates for election to
the Board recommended primarily by Board members or third party search firms.
The process has included a review of the candidate's previous business
experience and, in some cases, interviews with the candidate. No different
process would be applied with respect to nominees recommended by holders of the
Company's common stock.
The Directors Affairs/Corporate Governance Committee met once during fiscal
2003.
Audit Committee. The Audit Committee was established by the Board in
accordance with applicable provisions of the Securities Exchange Act of 1934, as
amended. The Audit Committee consists of three directors. The present members of
the Committee are Messrs. Robert J. Burgstahler, Paul Donovan and Keith E.
Wandell. Each of these directors is independent and financially literate as such
terms are defined in the listing standards of the NYSE. Further, Mr. Burgstahler
and Mr. Donovan have previously served as the chief financial officers of large,
publicly held corporations. Consequently, the Board has determined that Mr.
Burgstahler and Mr. Donovan are each an "audit committee financial expert" as
such term is defined in applicable rules of the Securities and Exchange
Commission.
The Board has adopted a Charter for the Audit Committee. A current copy of
that Charter is attached to this Proxy Statement as Exhibit A and is available
on the Company's website: www.clarcor.com.
The purposes of the Committee include assisting Board oversight of the
integrity of the Company's financial statements, its compliance with legal and
regulatory requirements, the selection of an independent auditor, determination
of the independence auditor's qualifications and independence and the
performance of the Company's internal audit function and independent auditors.
The Committee also discusses the Company's annual audited financial statements,
quarterly financial statements and the earnings press release with management
and the independent auditors.
The Audit Committee met 10 times during fiscal 2003.
Compensation Committee. The Compensation Committee consists of three
directors. The present members of the Committee are Messrs. James L. Packard,
Chairman, J. Marc Adam and Robert H. Jenkins. Each of these directors is
independent as such term is defined in the listing standards of the NYSE.
4
The Board has adopted a written Charter for the Committee. A current copy
of that Charter is available on the Company's website: www.clarcor.com.
The purposes of the Committee include discharging the Board's
responsibilities relating to compensation of the Company's executive officers
and review and recommendations to the Board with respect to compensation plans,
policies and programs. The Committee annually reviews and approves corporate
goals and objectives relevant to the compensation of the Company's Chief
Executive Officer and, together with the other independent directors, determines
and approves the compensation level of the Chief Executive Officer. The
Committee also makes recommendations to the full Board with respect to the
compensation of the Company's other executive officers and approves grants and
awards of restricted stock and stock options under the Company's Incentive
Plans.
The Committee met three times during fiscal 2003.
EXECUTIVE SESSIONS OF THE BOARD; COMMUNICATIONS WITH THE BOARD
The Company's Corporate Governance Guidelines (available on the Company's
website: www.clarcor.com) provide that at each meeting of the Board of Directors
the independent directors shall meet separately from the management of the
Company. Mr. Norman E. Johnson, a director and the Chairman, President and Chief
Executive Officer of the Company, does not attend these executive sessions.
Under the Guidelines, these sessions are chaired on a rotating basis by the
chairperson of one of the standing committees of the Board (currently the Audit
Committee, the Compensation Committee and the Directors Affairs/Corporate
Governance Committee).
The Board has adopted a process for holders of the Company's common stock
and other interested parties to send written communications to the Board. Such
communications should be sent to the Corporate Secretary at CLARCOR Inc., 2323
Sixth Street, P.O. Box 7007, Rockford, Illinois 61125. The Corporate Secretary
will forward all such communications to the Chairman of the Directors Affairs/
Corporate Governance Committee of the Board. That Committee will determine
whether any such communication will be distributed to the full Board or, if
requested by the sender, only to the non-management directors.
The Board has adopted a policy which recommends that all directors
personally attend each annual and special meeting of the shareholders of the
Company. At the last Annual Meeting of Shareholders held on March 24, 2003,
eight of the directors then in office were in attendance.
BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK
CERTAIN BENEFICIAL OWNERS
The following table provides information concerning each person who is
known to the Company to be the beneficial owner of more than 5% of the Company's
Common Stock:
SHARES PERCENT
NAME AND ADDRESS BENEFICIALLY OF
OF BENEFICIAL OWNER OWNED CLASS
------------------- ------------ -------
Gabelli Funds, LLC ......................................... 2,466,883(1) 9.72%
GAMCO Investors, Inc.
One Corporate Center
Rye, NY 10580-1434
Liberty Wanger Asset Management, L.P. ...................... 1,737,600(2) 6.85%
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
------------------------------
(1) Based upon information contained in a Schedule 13D dated December 17, 2003
filed with the Securities and Exchange Commission by certain Gabelli
entities.
5
(2) Based upon information contained in a Schedule 13F filed October 20, 2003
with the Securities and Exchange Commission by Liberty Wanger Asset
Management, L.P. on behalf of certain Wanger entities.
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table provides information concerning the shares of common
stock of the Company beneficially owned as of January 15, 2004 by all directors
and nominees, each of the executive officers named in the Summary Compensation
Table on page 7 and by all directors, nominees and executive officers of the
Company as a group:
SHARES PERCENT
NAME OF PERSON OR BENEFICIALLY OF
IDENTITY OF GROUP OWNED CLASS
----------------- ------------ -------
J. Marc Adam (2)............................................ 57,924 *
Robert J. Burgstahler (2)................................... 16,018 *
Paul Donovan (2)............................................ 4,647 *
Robert H. Jenkins (2)....................................... 25,218 *
Norman E. Johnson (1)(3).................................... 736,078 2.76%
Philip R. Lochner, Jr. (2).................................. 23,937 *
James L. Packard (2)........................................ 28,895 *
Roseann Stevens (2)......................................... 9,412 *
Keith E. Wandell (2)........................................ 14,549 *
Sam Ferrise (1)(3).......................................... 59,063 *
Bruce A. Klein (1)(3)....................................... 228,397 *
David J. Boyd (1)(3)........................................ 34,300 *
David J. Lindsay (1)(3)..................................... 151,027 *
All directors and executive officers as a group
(16 persons) (1)(2)(3)(4)................................. 1,717,661 6.45%
------------------------------
* Less than one percent.
(1) Includes Restricted Stock Units granted under the 1994 Incentive Plan.
(2) Includes shares granted under the Directors' Stock Compensation Plan and
shares subject to stock options granted to Directors pursuant to the
Company's 1994 Incentive Plan. See "Election of Directors -- Meetings and
Fees of the Board of Directors."
(3) Includes all shares subject to stock options granted pursuant to the
Company's 1984 Stock Option Plan and the 1994 Incentive Plan. For
information as to the total number of shares subject to options granted to
Messrs. Johnson, Ferrise, Klein, Boyd and Lindsay and the options which are
exercisable by them within 60 days, see the table on page 9.
(4) Includes 1,239,805 shares subject to stock options of which 153,500 were
granted on December 14, 2003. Options for 763,395 shares are exercisable
within 60 days. Also includes 30,225 deferred and 49,863 non-vested
Restricted Stock Units.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Each director and each officer of the Company who is subject to Section 16
of the Securities Exchange Act of 1934 (the "Act") is required by Section 16(a)
of the Act to report to the Securities and Exchange Commission, by a specified
date, his or her beneficial ownership of or transactions in the Company's Common
Stock. Reports received by the Company indicate that all such officers and
directors have filed all requisite reports with the Securities and Exchange
Commission on a timely basis during 2003. To the knowledge of the Company, no
person or entity owns beneficially 10% or more of its outstanding Common Stock.
6
COMPENSATION OF EXECUTIVE OFFICERS AND OTHER INFORMATION
The following Summary Compensation Table sets forth the cash compensation
and certain other components of the compensation of Norman E. Johnson, the
Chairman, President and Chief Executive Officer of the Company and the other
four most highly compensated executive officers of the Company for the fiscal
year that ended on November 29, 2003.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------- ----------------------- ----------
OTHER ALL
ANNUAL RESTRICTED SECURITIES OTHER
COMPEN- STOCK UNDERLYING LTIP COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY(2) BONUS(3) SATION(4) AWARDS(5) OPTIONS(6) PAYOUTS(7) SATION(8)
----------------------------------- ---- --------- -------- --------- ---------- ---------- ---------- ---------
Norman E. Johnson (1).............. 2003 $546,154 $1,091,644 $ -- $222,063 172,508 $ -- $76,852
Chairman, President and Chief 2002 500,000 700,387 -- 220,000 55,000 -- 30,341
Executive Officer 2001 449,231 94,339 -- 185,000 99,452 192,652 24,506
Sam Ferrise (9).................... 2003 281,154 390,457 -- 99,646 17,500 -- 12,187
President - 2002 270,346 301,464 -- 27,500 10,000 -- 5,998
Baldwin Filters, Inc. 2001 171,635 65,258 -- -- -- -- 1,453
Bruce A. Klein..................... 2003 264,000 376,913 -- 93,670 48,312 -- 36,378
Vice President, Finance and 2002 252,000 252,221 -- 93,280 20,000 45,400 17,919
Chief Financial Officer 2001 241,846 29,022 -- 86,340 26,624 101,374 14,798
David J. Boyd...................... 2003 164,423 164,324 -- 41,667 8,000 28,941 6,724
Vice President, General 2002 157,500 110,348 -- 41,250 5,000 14,432 6,249
Counsel and Corporate Secretary 2001 151,154 15,872 -- 38,536 5,000 -- 5,534
David J. Lindsay................... 2003 159,539 159,442 -- 40,375 27,454 -- 25,508
Vice President, Administration and 2002 154,000 107,786 -- 40,728 20,933 -- 9,444
Chief Administrative Officer 2001 145,538 13,099 -- 37,000 21,295 46,367 8,401
------------------------------
(1) Mr. Johnson serves as a director of the Company but receives no separate
remuneration in that capacity.
(2) Includes compensation deferred by the Company's executive officers pursuant
to the Company's Retirement Savings Plan and the Company's Deferred
Compensation Plan.
(3) Cash bonuses paid under the Company's Annual Incentive Plan.
(4) The aggregate value of all perquisites and personal benefits did not exceed
the lesser of either $50,000 or 10% of the total annual salary and bonus
reported for the named executive officers in the Summary Compensation Table.
(5) Represents restricted stock units (the "Restricted Stock Units") granted
pursuant to the 1994 Incentive Plan. Restricted Stock Units provide for the
issuance of Common Stock to the grantee over a four year period. 25% of the
total number of Restricted Stock Units vest on each anniversary of the grant
so long as the grantee remains in the employment of the Company or one of
its subsidiaries. Until Restricted Stock Units vest and shares of Common
Stock are issued in conversion of the Restricted Stock Units, the grantee
does not have any rights as a shareholder of the Company, but prior to
vesting the grantee will receive a cash payment equal to the dividends paid
on the Common Stock. The Restricted Stock Units permit a grantee to defer
the issuance of Common Stock pursuant to the Restricted Stock Units for a
period of years or until the termination of the grantee's employment by the
Company. During 2003, Messrs. Johnson, Ferrise, Klein and Lindsay deferred
vesting with respect to 5,483, 250, 2,487 and 1,093 Restricted Stock Units,
respectively. On November 30, 2003 the named executive officers held an
aggregate of 53,174 Restricted Stock Units with a total value of $1,331,221,
based upon the closing market price of the Company's Common Stock at the
date of grant.
(6) Consists of options and replacement options granted under the Company's 1994
Incentive Plan to acquire shares of the Company's Common Stock. See
"-- Stock Options" below.
(7) Consists of Performance Shares and Performance Units distributed and paid
under the Performance Share Plan at the close of the Performance Cycle
ending in the year and shares of Common Stock issued upon the vesting of
Restricted Stock Units. The amounts shown for 2001 are equal to the number
of Performance Shares and Performance Units paid and distributed, multiplied
by the average of the closing prices of a share of the Company's Common
Stock for the last 30 trading days of the last fiscal year in the
Performance Cycle. No further awards will be made under the Performance
Share Plan and none of the named executive officers have any outstanding
Performance Shares or Performance Units. The amounts shown for 2003 and 2002
are calculated based on the closing price of shares of Common Stock (on the
date of issuance) issued upon the vesting of Restricted Stock Units.
7
(8) The amounts shown in this column for All Other Compensation for the last
fiscal year are derived from the following figures: Messrs. Johnson,
Ferrise, Klein, Boyd and Lindsay respectively: $13,654; $6,758; $6,600;
$4,110 and $3,989 - Company match for employee stock purchase plan; Messrs.
Johnson, Ferrise, Klein, and Lindsay respectively: $3,000; $3,000; $3,211
and $3,170 - Company match for 401(k) plan; Messrs. Johnson, Klein, and
Lindsay respectively: $43,539; $17,360 and $15,023 - payments in respect of
certain split dollar insurance policies; Messrs. Johnson, Ferrise, Klein,
Boyd and Lindsay respectively: $2,472; $417; $3,687; $912 and $559 - Company
paid group insurance premium; Messrs. Johnson, Ferrise, Klein, Boyd and
Lindsay respectively: $14,187; $2,012; $5,520; $1,702 and $2,767 - Company
paid compensation for dividends on Restricted Stock Units.
(9) Mr. Ferrise began employment with Baldwin Filters, Inc., a wholly-owned
subsidiary of the Company, on April 2, 2001.
Each officer of the Company is elected by the Board of Directors for a term
of one year which begins at the Board of Directors meeting at which he or she is
elected held in conjunction with the Annual Meeting of Shareholders and ends on
the date of the next Annual Meeting of Shareholders or upon the election of his
or her successor.
STOCK OPTIONS
The following table provides information with respect to stock options
granted during fiscal year 2003 under the Company's 1994 Incentive Plan, as
amended, to the five individuals named in the Summary Compensation Table:
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
--------------------------------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED TO
GRANTED EMPLOYEES IN EXERCISE EXPIRATION GRANT DATE
NAME (1) FISCAL YEAR PRICE (2) DATE PRESENT VALUE (3)
---- ---------- ------------ --------- ---------- -----------------
N. E. Johnson..................... 60,000 12.5% $32.30 12/14/12 $525,600
18,837(4) 3.9 36.30 12/04/04 82,883
24,281(4) 5.1 36.30 12/19/05 132,331
29,552(4) 6.2 36.30 12/18/06 190,019
39,838(4) 8.3 36.30 12/16/07 287,630
S. Ferrise........................ 17,500 3.6 32.30 12/14/12 153,300
B. A. Klein....................... 22,000 4.6 32.30 12/14/12 192,720
7,060(4) 1.5 36.40 01/25/05 32,123
9,555(4) 2.0 36.40 12/19/05 53,890
9,697(4) 2.0 36.40 12/18/06 64,485
D. J. Boyd........................ 8,000 1.7 32.30 12/14/12 70,080
D. J. Lindsay..................... 11,500 2.4 32.30 12/14/12 100,740
4,705(4) 1.0 36.40 12/04/04 21,408
4,851(4) 1.0 36.40 12/19/05 27,360
6,398(4) 1.3 36.40 12/18/06 42,547
------------------------------
(1) Consists of nonqualified options issued for a ten year term (other than as
noted in footnote (4)) with a four year vesting schedule (see "Long-Term
Incentive Plan" in the Report of the Compensation Committee).
(2) Closing price of Common Stock as reported on the New York Stock Exchange
Composite Transactions at date of grant.
(3) Options are valued using Cox-Ross-Rubinstein Binomial Model, which is a
variation of the Black-Scholes Option Pricing Model using the following
assumptions:
(i) an expected option term of seven years to exercise (based on
estimated prior experience);
(ii) interest rates ranging from 1.38% to 3.87% depending on the date of
grant and based on the quoted yield of Treasury Strips;
8
(iii) dividends of $.4825 per share of Common Stock; and
(iv) stock price volatility of 24.5% based upon the monthly stock closing
prices for the preceding 7 years.
(4) These grants resulted from the exercise of an option and from the payment of
the related exercise price by the optionee using shares of previously owned
Company Common Stock. Under these circumstances, the 1994 Incentive Plan
permits the grant of options ("replacement options") for the number of
shares used in payment of the exercise price. The exercise price for each
replacement option is equal to the market value of the Company's Common
Stock on the date of such exercise and replacement options expire on the
same date as the original option which was exercised. The replacement option
grants do not contain the replacement feature.
The following table sets forth certain information regarding option
exercises during the fiscal year and the unexercised options held by such
individuals at November 29, 2003.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FY-END AT FY-END
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE (1) UNEXERCISABLE (2)
---- ----------- ---------- ------------------- --------------------
N. E. Johnson.................. 183,316 $3,614,680 326,353/150,948 $5,785,463/2,977,099
S. Ferrise..................... -- -- 11,875/20,625 183,744/284,281
B. A. Klein.................... 41,250 928,687 96,530/45,406 1,792,896/835,399
D. J. Boyd..................... -- -- 8,250/9,750 158,543/141,277
D. J. Lindsay.................. 29,454 584,558 58,539/26,278 1,096,125/497,030
------------------------------
(1) On December 14, 2003, subsequent to the fiscal year-end, additional option
grants were awarded as follows: Mr. Johnson 60,000; Mr. Ferrise 17,500; Mr.
Klein 22,000; Mr. Boyd 8,000 and Mr. Lindsay 11,500.
(2) Based on the $43.79 closing price of Common Stock as reported on the New
York Stock Exchange Composite Transactions on November 28, 2003, the last
trading date prior to the Company's fiscal year-end close on Saturday,
November 29, 2003.
RETIREMENT PLANS
Most current employees of the Company and certain of its subsidiaries,
including the individuals named in the Summary Compensation Table, are eligible
to receive benefits under the CLARCOR Inc. Pension Plan (the "Pension Trust").
The amount of the Company's contribution to the Pension Trust in respect to a
specified person cannot be individually calculated. During fiscal 2003 the
Company made a $3,000,000 contribution to the Pension Trust.
The Pension Trust provides benefits calculated under a Social Security
step-rate formula based on career compensation. Benefits are payable for life
with a guarantee of 120 monthly payments. The formula accrues an annual benefit
each plan year equal to the sum of (a) plan year compensation up to age 65
covered compensation ($42,000 in fiscal 2004) in effect each December multiplied
by .012 plus (b) any excess of such plan year compensation over age 65 covered
compensation (subject to Internal Revenue limitations applicable to all
qualified retirement plans) multiplied by .0175. The aggregate of all annual
accruals plus the benefit accrued at November 30, 1989 under prior plans is the
amount of annual pension.
Estimated annual retirement benefits payable under the Pension Trust at
normal retirement (age 65) for Messrs. Johnson, Ferrise, Klein, Boyd and Lindsay
are $68,173, $5,185, $21,532, $7,726, and
9
$89,622, respectively. Such annual retirement benefits are not subject to any
reduction for Social Security amounts.
Effective January 1, 2004, the Board adopted a program pursuant to which
the pension benefits payable under the Pension Trust to most employees of the
Company were frozen. As to these employees, no further benefits will accrue
under the Pension Trust. As a substitute benefit the Company implemented a new
401(k) plan (the "New 401(k) Plan") which is available to substantially all
United States employees of the Company and its subsidiaries. Under the New
401(k) Plan the Company will match all contributions by a participant up to 3%
of his or her compensation and 50% of the next 2% of such compensation
contributed.
The Company offered employees who were both at least 40 years old and have
10 years of service the option of continuing to participate in the Pension Trust
or adopting the New 401(k) Plan. Those employees electing to continue
participation in the Pension Trust also are eligible to continue to participate
in the Company's previously established 401(k) Plan (the "Old 401(k) Plan").
Under the Old 401(k) Plan, the Company will match 50% of contributions by a
participant up to 3% of his or her compensation. Messrs. Johnson and Lindsay
elected to continue to participate in the Pension Trust and they will therefore
continue to accrue benefits under that program. Messrs. Ferrise, Klein and Boyd
were not eligible to continue to participate in the Pension Trust. The amounts
currently payable to Messrs. Ferrise, Klein and Boyd pursuant to the Pension
Trust will not increase or decrease in the future.
Effective December 1, 1994, the Company established two new retirement
plans for officers and senior executives of the Company: the 1994 Supplemental
Pension Plan and the 1994 Executive Retirement Plan. The 1994 Supplemental
Pension Plan is intended to preserve benefits lost by reason of the maximum
limitations on compensation and benefits imposed on tax qualified retirement
plans by the Internal Revenue Code of 1986. The 1994 Executive Retirement Plan
provides a monthly benefit to a participant equal to (a) 65% of his average
monthly compensation with respect to the three consecutive fiscal years for
which he received the highest compensation, reduced by (b) his monthly normal
retirement benefit provided by the Pension Trust. A minimum of 15 years of
service after attainment of the age of 40 is required to earn a full benefit of
65% of compensation at retirement. Messrs. Johnson, and Klein are participants
in both of the 1994 plans. Messrs. Ferrise and Lindsay are participants in the
1994 Supplemental Pension Plan. Mr. Boyd is not a participant in either plan.
Estimated total annual retirement benefits pursuant to both the 1994
Supplemental Pension Plan and the 1994 Executive Retirement Plan payable at
normal retirement (age 65) for Messrs. Johnson, Ferrise, Klein and Lindsay are
$664,541, $9,088, $285,268 and $35,782, respectively. Such annual retirement
benefits are not subject to reduction for Social Security amounts.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Messrs. Johnson,
Ferrise, Klein, Boyd and Lindsay and certain other executive officers of the
Company. Mr. Johnson's employment agreement provides for such compensation,
incentive plan compensation, benefits and perquisites, pensions, employment
termination, and "change of control" provisions as are described in this Proxy
Statement. Mr. Johnson's agreement, as amended, expires on the date of the 2006
Annual Meeting. His agreement is extended automatically each year unless
terminated by the Board. The agreements with Messrs. Klein, Ferrise, Boyd and
Lindsay and certain other executive officers include the provisions described in
the next two paragraphs.
The "Change of Control" provisions of Mr. Johnson's agreement and other
agreements, as amended, with Messrs. Klein, Ferrise, Boyd and Lindsay and
certain other executive officers become effective upon the occurrence of any of
the following: (i) the acquisition by any person, entity or group (other than
from the Company) of 15% or more of the outstanding securities of the Company
which are entitled to vote generally in the election of directors; (ii)
individuals who, at the date of the employment agreement, constitute the Board
of Directors of the Company (the "Incumbent Board")
10
cease for any reason to constitute at least a majority of the Board, provided
that any person becoming a director after the date of the employment agreements
whose election or nomination was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board will be considered as though
such person was a member of the Incumbent Board; (iii) consummation of a
reorganization, merger or consolidation, in each case in respect of which the
persons who were shareholders of the Company immediately prior to such
transaction do not immediately thereafter own more than 60% of the securities
entitled to vote generally in the election of directors of the entity resulting
from such transaction or (iv) approval by the shareholders of the Company of a
liquidation or dissolution of the Company or the sale of all or substantially
all of its assets.
The agreements provide that the Company agrees to employ these officers,
and the officers agree to remain in the employ of the Company, from the date of
a change of control to the earlier to occur of the third anniversary of such
change of control or the officer's normal retirement date at a rate of
compensation at least equal to the highest monthly base salary which the officer
was paid during the 36 calendar months immediately prior to the change of
control. In addition, during that period the Company agrees to provide employee
benefits which are the greater of the benefits provided by the Company to
executives with comparable duties or the benefits to which the officer was
entitled during the 90-day period immediately prior to the date of the change of
control. In the event that employment is terminated after a change of control,
the terminated officer is entitled to (i) a lump-sum cash payment equal to three
times the sum of the officer's base salary and annual bonus, (ii) continued
health and welfare benefits and perquisites for the three year period following
termination; and (iii) a lump sum payment equal to the pension benefits the
terminated officer would have earned during the three year period after the
termination. If any of such agreements subjects the officer to excise tax under
Section 4999 of the Internal Revenue Code, the Company will pay such officer an
additional amount calculated so that after payment of all taxes, interest and
penalties, the officer retains an amount of such additional payment equal to
such excise tax. The agreements define "termination" to mean termination of
employment by the Company for reasons other than death, disability, cause or
retirement. "Termination" also includes resignation by the officer after (a) a
material adverse reduction in the nature or scope of his authorities, duties or
responsibilities, following a change of control, as determined in good faith by
the officer; (b) a reduction in compensation or benefits after a change of
control or (c) a good faith determination by the officer that, as a result of
the change of control, he is unable to exercise the authority, power, function
and duties contemplated by the agreement.
REPORT OF THE COMPENSATION COMMITTEE
One of the duties of the Compensation Committee ("Committee") is to assure
that the Chief Executive Officer and the other executive officers of the Company
("Executive Officers") are compensated equitably, competitively and in a manner
that is consistent with the long-term best interests of the Company and its
shareholders. The Committee, which is composed entirely of independent
non-employee directors, is responsible for determining the annual salary, cash
incentives, benefits and intermediate-term and long-term incentive plan awards
for the Company's Executive Officers.
COMPENSATION PHILOSOPHY
There are certain stated principles which the Committee follows in
structuring the compensation packages for the Chief Executive Officer and the
other Executive Officers of the Company. These are:
Pay for Performance
A high percentage of total compensation is linked directly to the
performance of the Company and the executive's individual performance in
attaining the Company's objectives and
11
supporting the Company's mission statement. The Committee believes that
this structure aligns the executives' interests with the interests of the
shareholders.
Competitiveness
Total compensation packages are designed to be comparable with those
of executives occupying comparable positions in comparable companies. The
packages are also designed to allow an opportunity to earn at a level above
median industry practices and market competitors when Company performance
exceeds the results of comparable companies. The opportunity to earn at
higher levels provides a significant challenge to the Executive Officers.
Executive Ownership
A major component of executive compensation is equity-based, and as a
result, the Executive Officer's interests are more directly linked with
shareholders' interests. The Committee believes that equity-based
compensation properly balances the rewards for long-term versus short-term
results.
The Committee has established ownership guidelines for Executive
Officers and non-employee directors to align their interests and objectives
with the Company's shareholders. These guidelines require that Executive
Officers, after a five-year period, own shares with a value ranging from a
minimum of two times annual salary for officers at the level of corporate
vice president to a minimum of four times annual salary for the Company's
Chairman and Chief Executive Officer. In addition, the guidelines require
that non-employee directors, after a five-year period, own shares with a
value equal to a minimum of five times the annual retainer.
Management Development
The compensation packages are also designed to attract and retain
quality executives with the leadership skills and other key competencies
required to meet the Company's objectives and to enhance shareholder value.
COMPONENTS OF EXECUTIVE PAY
The components of total pay for all executives are annual salary, cash
incentives, benefits and intermediate-term and long-term incentive awards. The
Committee reviews annually each component of compensation and total compensation
for the Executive Officers. The review includes a market comparison of
compensation and changes in compensation for equivalent positions in related
industrial groups and comparably-sized companies. Competitive information and
data relating to executive compensation packages is provided by independent
compensation consultants at the request of the Committee.
Annual Salary
Annual salary and annual adjustments are based on the executive's
performance, experience, and reference to competitive rates for comparable
positions in related industry groups and comparably-sized companies.
Cash Incentives
Annual cash incentives are determined based upon the attainment of
financial targets by the Company and the individual performance of the
executive. If certain minimum target results are not achieved, no annual
incentive will be paid. If target levels, which the Committee considers to
be reasonably difficult to attain, are achieved, annual incentive levels
generally range from 30% to 70% of base salary, and maximum awards may
exceed 100% of base salary if performance materially exceeds the target
objectives.
12
The financial target that must be attained is economic value added, or
as referred to by the Company, CLARCOR Value Added ("CVA"). In basic terms,
CVA is consolidated annual after-tax operating earnings less the annual
cost of capital. Thus the size of the cash incentives varies directly with
the amount by which such after-tax earnings exceed the cost of capital. As
a result, the CVA program is designed to reward managers who increase
shareholder value by most effectively deploying the capital contributed by
the shareholders and lenders. If the Company fails to achieve the target
levels of CVA, the cash incentive awards are reduced. The Committee sets
the target levels.
Benefits
Employee benefits offered to the general employee population of the
Company are provided to Executive Officers as part of the total
compensation program. In addition, certain Executive Officers are provided
supplemental retirement benefits, life insurance policies and certain other
benefits.
Intermediate-Term Incentive
The Company's intermediate term incentive program involves grants of
Restricted Stock Units ("Units"). Units provide for the issuance of Common
Stock to the grantee over a four year period. 25% of the total number of
Units vests on each anniversary of the grant so long as the grantee remains
in the employment of the Company or one of its subsidiaries. Until Units
vest and shares of Common Stock are issued in conversion of the Units, the
grantee does not have any rights as a shareholder of the Company, but prior
to vesting the grantee will receive a cash payment equal to the dividends
paid on the Common Stock. The Units permit a grantee to defer the issuance
of Common Stock pursuant to the Units for a period of years or until the
termination of the grantee's employment by the Company. The Committee
believes that intermediate-term incentive programs based on appreciation in
the price of the Company's Common Stock are in the best interests of the
Company and its shareholders.
Long-Term Incentive Plan
The Company's long-term incentive plan awards non-qualified stock
options to its executives and key employees. Options granted under the
Company's shareholder approved 1994 Incentive Plan or the 2004 Incentive
Plan have a 10-year life and all options granted during fiscal 2003 were at
the market value of the Common Stock on the date of grant. The option
grants provide the executives an opportunity to acquire an equity interest
in the Company and to share in the long-term appreciation of the stock.
Market surveys of long-term incentives are reviewed to establish
competitive practices. Management makes recommendations to the Committee on
the size of a grant, if any, for each executive based on the individual's
ability to affect financial performance, the executive's past performance,
and expectations of the executive's future contributions. The CEO's grant
is similarly determined by the Committee and all other stock option grants
are reviewed and approved by the Committee.
Stock options granted in fiscal 2003 are not exercisable for one year
after the grant. Thereafter they become exercisable at the rate of 25% per
year and they are fully exercisable after the 4th year and through the 10th
year of the option.
SECTION 162(m) COMPLIANCE
The Committee has considered the possible impact of Section 162(m) of the
Internal Revenue Code of 1986, which generally limits to $1 million (with
several exceptions) the tax deduction available for compensation paid to a
person who is an executive listed in the Summary Compensation Table and who is
employed by the Company at the end of its fiscal year. The Committee intends to
preserve to
13
the Company the maximum opportunity for obtaining deductibility for all amounts
paid to its officers by administering the Company's plans and programs in a way
that will meet the regulations in effect at the time compensation decisions are
made.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Johnson's annual salary was increased during fiscal 2003 to be
competitive with the median base salary paid to chief executive officers of
comparably-sized corporations identified by the Committee. For fiscal 2003, Mr.
Johnson was awarded an annual cash incentive equal to 200% of his base salary in
accordance with the annual cash incentive plan as a result of the CVA levels
attained in fiscal 2003 which significantly exceeded established target levels.
Mr. Johnson also received grants of 6,875 Restricted Stock Units and was
granted non-qualified stock options for 60,000 shares of the Company's Common
Stock at an exercise price of $32.30 per share, the closing price as reported on
the New York Stock Exchange on the date of grant. In addition, during fiscal
2003 he deferred the receipt of 5,483 shares of Common Stock issuable pursuant
to Restricted Stock Units.
The Committee believes that the key executive team of the Company will
receive appropriate rewards under this program of corporate incentives, but only
if they achieve the performance goals established for them and the Company and
if they succeed in building increased value for the Company's shareholders.
Compensation Committee
James L. Packard, Chairman
J. Marc Adam
Robert H. Jenkins
14
REPORT OF THE AUDIT COMMITTEE
The Company's Board of Directors' Audit Committee is comprised of three
directors who are independent as such term is defined in the listing standards
of the New York Stock Exchange. The Audit Committee reviews the Company's
financial reporting process on behalf of the Board of Directors. Management of
the Company has the primary responsibility for the financial statements and the
reporting processes of the Company, including the system of internal controls,
the presentation of the financial statements and the integrity of the financial
statements. Management has represented to the Audit Committee that the Company's
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America ("GAAP"). The Company's
auditors, PricewaterhouseCoopers LLP, are engaged to audit the Company's
financial statements and to express an opinion on the conformity of such audited
financial statements to GAAP. Members of the Audit Committee rely on the
information provided to them and on the representations made by management and
the information, representations, opinions and communications of the Company's
auditors.
In this context, the Audit Committee has reviewed and discussed the
Company's audited financial statements with management and the Company's
auditors. The Audit Committee has discussed with the Company's auditors the
matters required to be discussed by Statement on Auditing Standards No. 61
(Codification of Statements on Auditing Standards, Au sec.380). In addition, the
Audit Committee has received from the Company's auditors the written disclosures
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and discussed with the auditors their
independence from the Company and its management. While the activities of the
Audit Committee are designed to provide an additional level of review, such
activities cannot provide absolute assurance that the audit of the Company's
financial statements has been carried out in accordance with generally accepted
auditing standards, that the financial statements are presented in accordance
with GAAP or that the Company's auditors are in fact independent.
In reliance on the reviews and discussions referred to above and subject to
the limitations set forth above, the Committee recommended to the Board of
Directors, and the Board has approved, that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
November 29, 2003, for filing with the Securities and Exchange Commission.
AMOUNTS PAID TO PRICEWATERHOUSECOOPERS LLP
The following table presents fees for professional services rendered by
PricewaterhouseCoopers LLP for the audit of the Company's consolidated financial
statements as of and for the years ended November 29, 2003 and November 30,
2002, and fees billed for other services rendered by PricewaterhouseCoopers LLP
during those periods.
YEARS ENDED
-------------------------------------
NOVEMBER 29, 2003 NOVEMBER 30, 2002
----------------- -----------------
Audit Fees......................................... $539,299 $500,440
Audit-Related Fees (1)............................. 10,200 8,700
Tax Fees (2)....................................... 17,000 995
All other Fees..................................... 0 0
Total.............................................. $566,499 $510,135
------------------------------
(1) Audit-Related Fees are for assurance and related services. During 2003 the
primary component of fees in this category related to consultation on
general internal control matters and compliance with the Sarbanes-Oxley Act
of 2002. In 2002, these services related to attest services that were not
required by statute or regulation.
15
(2) Tax fees in both 2003 and 2002 primarily related to advice and assistance
with respect to domestic and foreign tax compliance matters.
The charter of the Audit Committee (attached to this Proxy Statement as
Exhibit A) provides that the Audit Committee is responsible for the appointment,
compensation and oversight of the work of the independent auditors and must
approve in advance any non-audit services to be performed by the independent
auditors. The Audit Committee has not established any pre-approval procedures,
but instead reviews each proposed engagement to determine whether the provision
of services is compatible with maintaining the independence of the independent
auditors. Pre-approval is detailed as to the particular service or category of
services and is generally subject to a specific budget. All of the fees shown
above were pre-approved by the Committee.
Audit Committee
Robert J. Burgstahler, Chairman
Paul Donovan
Keith E. Wandell
16
PERFORMANCE GRAPH
The following Performance Graph compares the Company's cumulative total
return on its Common Stock for a five year period (November 28, 1998 to November
29, 2003) with the cumulative total return of the S&P SmallCap 600 Index and the
S&P Industrial Machinery Index.
TOTAL RETURN TO SHAREHOLDERS
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG THE COMPANY, S&P SMALLCAP 600 INDEX AND
S&P INDUSTRIAL MACHINERY INDEX
[PERFORMANCE GRAPH]
* Assumes that the value of the investment in the Company's Common Stock and
each index was $100 on November 28, 1998 and that all dividends were
reinvested.
The reference points on the foregoing graph are as follows:
1998 1999 2000 2001 2002 2003
---- ---- ---- ---- ---- ----
CLARCOR INC.............................. $100.00 94.48 103.19 154.81 192.72 259.90
S&P SMALLCAP 600 INDEX................... 100.00 110.56 121.30 132.22 124.72 164.34
S&P INDUSTRIAL MACHINERY INDEX........... 100.00 108.93 101.30 106.70 114.84 143.65
The 1998 beginning measuring point was the market close on November 27,
1998, the last New York Stock Exchange trading day before the beginning of the
Company's fifth preceding fiscal year. The closing measuring point for 2003 was
November 28, 2003 based on the last New York Stock Exchange trading date prior
to the Company's Saturday, November 29, 2003 fiscal year-end.
APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors is proposing for shareholder approval the CLARCOR
Inc. Employee Stock Purchase Plan (the "Stock Purchase Plan"). The Stock
Purchase Plan is designed to encourage greater stock ownership among employees,
by providing an easy, cost-effective way to purchase the Company's common stock.
The proposed Stock Purchase Plan is intended to qualify as an "employee stock
purchase plan" under section 423 of the Internal Revenue Code ("Code").
The Board of Directors adopted the Stock Purchase Plan on September 22,
2003. The Stock Purchase Plan is effective January 1, 2004, subject to
shareholder approval at the Annual Meeting. The Stock Purchase Plan will replace
the Monthly Investment Plan previously adopted and most recently
17
amended under the CLARCOR Inc. 2004 Incentive Plan. The Monthly Investment Plan
terminated effective December 31, 2003.
A shareholder may mark the accompanying form of proxy to (i) vote for the
Stock Purchase Plan, (ii) vote against the Stock Purchase Plan or (iii) abstain
from voting with respect to the Stock Purchase Plan. If a quorum is present at
the Annual Meeting, approval of the Stock Purchase Plan requires the affirmative
vote of a majority of the shares of Common Stock of the Company present in
person or represented by proxy at the meeting and entitled to vote with respect
to the Stock Purchase Plan. Proxies marked to abstain from voting with respect
to the Stock Purchase Plan will have the legal effect of proxies voted against
the Stock Purchase Plan. Proxies submitted by brokers for shares beneficially
owned by other persons may indicate that all or a portion of the shares
represented by such proxies are not being voted with respect to the Stock
Purchase Plan. This is because the rules of the New York Stock Exchange do not
permit a broker to vote shares held in street name with respect to the Stock
Purchase Plan in the absence of instructions from the beneficial owner of the
shares. The shares represented by broker proxies which are not voted with
respect to the Stock Purchase Plan will not be considered entitled to vote with
respect to the Stock Purchase Plan and accordingly will not affect the
determination of whether the Stock Purchase Plan is approved although such
shares will be considered entitled to vote for other purposes and will be
counted in determining the presence of a quorum.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
CLARCOR INC. EMPLOYEE STOCK PURCHASE PLAN.
The description of the Stock Purchase Plan set forth below is a summary,
does not purport to be complete and is qualified in its entirety by reference to
the provisions of the Stock Purchase Plan. A copy of the Stock Purchase Plan is
attached to this Proxy Statement as Exhibit B.
ADMINISTRATION. The Stock Purchase Plan will be administered by the
Compensation Committee ("Committee") of the Board of Directors. Among other
powers, the Committee will have discretionary authority to adopt, construe and
enforce rules regarding the Stock Purchase Plan.
SHARES AVAILABLE. A total of 500,000 shares of the Company's Common Stock
would be available for purchases under the Stock Purchase Plan. If the Company's
outstanding shares of Common Stock are affected by any recapitalization,
reclassification, stock split, reverse stock split, combination of shares,
exchange of shares, or stock dividend or if some other increase or decrease in
the Company's Common Stock occurs without the Company receiving consideration,
the Committee will make a proportionate adjustment in shares under the Stock
Purchase Plan.
ELIGIBILITY. Employees (including officers and directors who are
employees) of the Company and certain designated subsidiaries will be eligible
to participate in the Stock Purchase Plan after three months of service, except
for employees scheduled to work less than 20 hours per week or who are scheduled
to work less than five months per year. As required by applicable tax laws, no
employee who owns 5% or more of the Company's Common Stock is eligible to
participate. As of January 1, 2004, approximately 4,000 employees would be
eligible to participate in the Stock Purchase Plan.
OFFERING PERIOD. During an offering period, which generally runs for six
months, from January 1 to June 30 and from July 1 to December 31 each year, the
Stock Purchase Plan would permit eligible employees to elect payroll deductions
that would be applied to purchase the Company's Common Stock. An employee has no
rights as a shareholder with respect to the shares the employee is eligible to
purchase until the shares are so purchased and issued by the Company. The
Committee has the power under the Stock Purchase Plan to change the duration of
the offering periods at any time prospectively as of the first day of the
offering period, including the beginning date, which would affect the price of
shares as indicated below. Purchases would be made on the last trading day of
the offering period. No employee will be permitted to purchase shares during any
calendar year with a fair market value
18
(determined at the beginning of an offering period) greater than $25,000. The
first offering period would run from January 1, 2004 to June 30, 2004.
PRICE OF SHARES. Common Stock purchased by employees under the Stock
Purchase Plan would be priced at a discount of 15% below the fair market value
on the first day of the offering period (generally, January 1 and July 1) or the
date when the shares are purchased, whichever is lower. Fair market value is
defined as the closing sale price of the Company's Common Stock on the New York
Stock Exchange on the trading date coinciding with or immediately preceding the
relevant date. The Board of Directors may shorten the offering period and
increase the purchase price at any time to mitigate adverse accounting
consequences.
REVOCATION OF ELECTION. Participating employees who revoke their elections
under the Stock Purchase Plan during an offering period or who terminate
employment during an offering period would receive a refund of payroll
deductions under the Stock Purchase Plan that have not been applied to purchase
the Company's Common Stock at the time of such revocation or termination.
Participating employees may only change their elections under the Stock Purchase
Plan thirty days prior to, and effective on, the first day of the next offering
period.
DIVIDENDS. Dividends on stock held in the Stock Purchase Plan will be
reinvested in shares of the Company's Common Stock at fair market value.
PLAN EXPENSES. The Company will pay all expenses incident to operation of
the Stock Purchase Plan, including costs of record keeping, accounting fees,
legal fees, commissions and issue or transfer taxes on purchases of Common Stock
under the Stock Purchase Plan, on dividend reinvestments and on delivery of
shares to a participant. However, the Company will not pay expenses associated
with the participant's sale of shares acquired under the Stock Purchase Plan.
ADJUSTMENTS. The Committee may make an appropriate adjustment in the
nature and kind of shares reserved for purchase under the Stock Purchase Plan
and the calculation of the purchase price in the event of a recapitalization,
reclassification, stock split or similar change, increase or decrease in the
Company's Common Stock in order to preserve (to the extent practicable) the
proportionate interest of each participant in the Stock Purchase Plan.
PLAN AMENDMENT OR TERMINATION. The Stock Purchase Plan automatically
terminates if the Company's Common Stock is no longer listed on any nationally
recognized stock exchange or national market quotation system. The Stock
Purchase Plan will also terminate automatically upon a change of control of the
Company. A "change of control" includes certain acquisitions of 15% or more of
the Common Stock, a change in the majority of the Board of Directors, or the
consummation of a reorganization, merger or consolidation (unless the Company's
shareholders own 60% or more of the stock of the surviving company) or
shareholder approval of a liquidation, dissolution or sale of all or
substantially all of the Company's assets. The Board of Directors may also amend
or terminate the Stock Purchase Plan at any time, except that no amendment may
adversely affect options previously granted, except as described above. If the
Stock Purchase Plan terminates, then outstanding payroll deductions that have
not been applied to the purchase of stock will be refunded to participants. Any
increase in the maximum number of shares available under the Stock Purchase Plan
is subject to shareholder approval. The Board of Directors is permitted to alter
the Stock Purchase Plan at any time to mitigate adverse accounting consequences.
FEDERAL INCOME TAX CONSEQUENCES. The operation of the Stock Purchase Plan
under section 423 of the Code provides various tax consequences to the employee
and to the Company, depending on the timing of certain transactions. The
following discussion outlines in general terms the federal income tax
consequences of participating in the Stock Purchase Plan.
TAXATION OF EMPLOYEE CONTRIBUTIONS. The amounts withheld from an
employee's pay under the Stock Purchase Plan will be taxable income to him or
her and must be included in his or her gross income for federal income tax
purposes in the year in which such amounts otherwise would have been
19
received. An employee's direct payments to the Stock Purchase Plan, if any, do
not result in any tax deductions for his or her personal income tax return.
TAXATION UPON RECEIPT AND EXERCISE OF OPTIONS. An employee does not
recognize any income for federal income tax purposes either at the time he or
she is granted the opportunity to elect payroll deductions that will be applied
toward the purchase of the Company's Common Stock, or at the time he or she
acquires shares of Common Stock pursuant to the Stock Purchase Plan.
TAXATION UPON DISPOSITION OF SHARES BEFORE END OF HOLDING PERIODS. Under
the federal income tax laws, favorable tax treatment of a disposition of shares
acquired under the Stock Purchase Plan depends, in part, upon the length of time
the employee holds the shares before disposing of them.
An employee generally will have a taxable gain or loss when any shares of
Common Stock purchased through the Plan are sold. If an employee sells the stock
within two years after the commencement of the offering period or within one
year after the actual purchase of the shares (each, a "disqualifying
disposition"), then the difference between the purchase price and the fair
market value of the shares on the purchase date will be taxed as ordinary
income. Any difference between the fair market value of the shares on the
purchase date and the sale price will be capital gain or loss for income tax
purposes. The Company will be entitled to a tax deduction from its income in an
amount equal to the ordinary income reported by the employee arising from a
disqualifying disposition. If an employee sells the stock after the holding
period described above (i.e., not a disqualifying disposition), then the
employee will recognize ordinary income in the amount of the lesser of: (i)
difference between the fair market value of the shares when sold and the actual
purchase price for the shares, or (ii) the difference between the fair market
value of the shares on the first day of such offering period and the purchase
price of the shares. The balance of the employee's gain, if any, will be taxed
as a capital gain. If shares are sold, their fair market value at the time of
sale generally will be the sale price.
UPON TRANSFER OF SHARES AT DEATH. If an employee dies while owning his or
her shares, he or she will be taxed in the year of death as though he or she
disposed of such shares after holding them for the holding periods described
above (i.e., not as a disqualifying disposition), except that no capital gain or
capital loss will be realized as a result of the employee's death.
TAXATION OF DIVIDENDS. Pursuant to the recent Jobs and Growth Tax
Reconciliation Act of 2003, dividends received by an employee with respect to
shares acquired under the Stock Purchase Plan generally will be treated as
long-term capital gain, although reinvested in Company Common Stock.
TAX DEDUCTION FOR COMPANY UPON SALE OF SHARES WITHIN HOLDING PERIODS. The
Company does not receive any income tax deduction as a result of purchasing
shares pursuant to the Stock Purchase Plan, except upon a sale of shares by an
employee within the holding periods. In such an event, the Company would be
entitled to a deduction equal to the amount included as ordinary income to the
employee with respect to his or her sale of shares.
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EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of November 29, 2003 regarding
the shares of Common Stock of the Company issuable under awards and grants under
the Company's 1994 Incentive Plan.
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES FUTURE ISSUANCE UNDER
TO BE ISSUED UPON WEIGHTED AVERAGE EQUITY COMPENSATION
EXERCISE OF EXERCISE PRICE OF PLANS (EXCLUDING SHARES
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, REFLECTED IN NUMBER OF
WARRANTS AND RIGHTS WARRANTS AND RIGHTS SHARES IN COLUMN (A))
PLAN CATEGORY (A) (B) (C)
------------- -------------------- -------------------- -----------------------
Equity compensation plans approved
by security holders:
Options........................... 1,917,024 $23.66
Restricted Stock Units............ 71,904 --
---------
Total........................ 1,988,928 -- 551,611
Equity compensation plans not
approved by security holders...... -- -- --
--------- ------ -------
Total........................ 1,988,928 -- 551,611
========= ====== =======
Note: The above amounts are as of November 29, 2003, the end of the Company's
most recent fiscal year. Subsequent to year-end, (i) additional option grants
were made totaling 293,400 which increased the average price in column (b) to
$26.57, (ii) Restricted Stock Units vested totaling 6,823 and (iii) Restricted
Stock Units were also granted totaling 18,916. The total in column (a) would
then be 2,294,421 and as a result, the balance in column (c) would be reduced to
239,295.
All of such awards and grants were made pursuant to the Company's 1994
Incentive Plan. On March 24, 2003 the Company's shareholders approved the
Company's 2004 Incentive Plan. The 2004 Incentive Plan, by its terms, went into
effect on December 15, 2003. No grants of options or Restricted Stock Units have
been made under the 2004 Incentive Plan and no further grants will be made under
the 1994 Incentive Plan. All future grants of options and Restricted Stock Units
will be made under and subject to the 2004 Incentive Plan. The 2004 Incentive
Plan limits the total number of shares of the Company's Common Stock which may
be issued under that Plan to 1,500,000.
MISCELLANEOUS
AUDITORS
It is expected that the Audit Committee of the Board of Directors will
select PricewaterhouseCoopers LLP to audit the financial statements of the
Company for the fiscal year ending November 27, 2004. PricewaterhouseCoopers LLP
(or its predecessors) has served as the Company's auditors for more than 30
years. A representative of PricewaterhouseCoopers LLP will be present at the
Annual Meeting of Shareholders and will have an opportunity to make a statement
and respond to appropriate questions.
OTHER BUSINESS
The Board of Directors has no knowledge of any matters, other than as set
forth in this Proxy Statement, upon which action is to be taken at the meeting.
In the event any such matters are brought before the meeting, the attorneys
named in the enclosed form of proxy will vote proxies received by them as they
deem best with respect to all such matters.
21
PROPOSALS OF SECURITY HOLDERS FOR 2005 ANNUAL MEETING OF SHAREHOLDERS
Under the rules and regulations of the Securities and Exchange Commission,
any proposal which a shareholder of the Company intends to present at the Annual
Meeting of Shareholders to be held in 2005 and which such shareholder desires to
have included in the Company's proxy materials for such meeting, must be
received by the Company on or before October 23, 2004.
The Company's bylaws provide that nomination by a shareholder of a person
for election as a director and other proposals made by such shareholders for
action by the shareholders at any meeting of shareholders may be disregarded
unless proper notice of such nomination or proposal shall have been given to the
Secretary of the Company not less than 60 days nor more than 90 days prior to
the date of the meeting and certain other requirements are met. It is currently
expected that the 2005 Annual Meeting of Shareholders of the Company will be
held on March 21, 2005. Consequently, written notice of any such nomination or
proposal which a shareholder desires to make at the 2005 Annual Meeting must be
received by the Company no earlier than December 22, 2004 and no later than
January 21, 2005. A copy of the Company's bylaws may be obtained without charge
from the Secretary of the Company.
EXPENSE OF SOLICITATION OF PROXIES
The expense of solicitation of proxies, including printing and postage,
will be paid by the Company. In addition to the use of the mail, proxies may be
solicited personally, or by telephone, by officers and regular employees of the
Company. The Company has employed D. F. King & Co., Inc. to solicit proxies for
the Annual Meeting from brokers, bank nominees and other institutional holders.
The Company has agreed to pay $8,500, plus the out-of-pocket expenses of D. F.
King & Co., Inc., for these services. The Company will reimburse brokers and
other persons holding stock in their names, or in the name of nominees, for
their expenses for sending proxy material to principals and obtaining their
proxies.
By Order of the Board of Directors
DAVID J. BOYD
Secretary
Rockford, Illinois
February 18, 2004
22
EXHIBIT A
CLARCOR INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
OPERATING CHARTER
The Board of Directors of CLARCOR Inc. (the "Company") has appointed an Audit
Committee pursuant to authorization in Section 3.11 of Article III of the
Company's Bylaws. The objectives, composition and responsibilities of the Audit
Committee are as follows:
PURPOSES:
The purpose of the Committee is to:
(a) assist Board oversight of (i) the integrity of the Company's financial
statements, (ii) the Company's compliance with legal and regulatory
requirements, (iii) the independent auditor's qualifications and independence,
and (iv) the performance of the Company's internal audit function and
independent auditors;
(b) prepare an Audit Committee report as required by the Securities and
Exchange Commission to be included in the Company's annual proxy statement;
(c) do an annual performance evaluation of the Audit Committee;
(d) at least annually, obtain and review a report by the independent
auditor describing: the firm's internal quality-control procedures; any material
issues raised by the most recent internal quality-control review, or peer
review, of the firm, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years, respecting one or
more independent audits carried out by the firm, and any steps taken to deal
with any such issues; and (to assess the auditor's independence) all
relationships between the independent auditor and the Company;
(e) discuss the Company's annual audited financial statements and quarterly
financial statements with management and the independent auditor, including the
Company's disclosures under "Management's Discussion and Analysis of Financial
Condition and Results of Operations";
(f) discuss the Company's earnings press releases, as well as financial
information and earnings guidance provided to analysts and rating agencies;
(g) discuss policies with respect to risk assessment and risk management;
(h) meet separately, periodically, with management, with internal auditors
(or other personnel responsible for the internal audit function) and with
independent auditors;
(i) review with the independent auditor any audit problems or difficulties
and management's response;
(j) set clear hiring policies regarding employment by the Company of
employees or former employees of the independent auditors; and
(k) report regularly to the full Board of Directors of the Company.
In fulfilling its purposes, the Committee shall have full access to all books,
records, facilities and personnel of the Company and the power to retain and pay
outside counsel, auditors or other experts for this purpose and is empowered to
investigate any matter brought to its attention. The fees and expenses of such
counsel, auditors and other experts shall be payable by the Company upon
approval by the Committee.
The Committee's job is one of oversight and it recognizes that the Company's
management is responsible for preparing the Company's financial statements and
that the outside auditor is
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responsible for auditing those financial statements. Additionally, the Committee
recognizes that financial management, including the internal audit staff as well
as the outside auditor, has more time, knowledge and more detailed information
on the Company than the Committee members do. Consequently, in carrying out its
oversight responsibilities, the Committee is not providing any assurance as to
the Company's financial statements or any professional certification as to the
outside auditor's work.
The Committee shall review this Charter on an annual basis.
COMPOSITION:
The Committee shall consist of not less than three members, all of whom shall
meet the requirements, from time to time in effect, of the New York Stock
Exchange and applicable law (including, without limitation, the Securities and
Exchange Act of 1934, the Sarbanes-Oxley Act of 2002 and the regulations issued
under such acts). No member of the Committee shall be, at the time he or she is
serving as a member of the Committee, a member of more than two additional audit
committees, or their equivalents, of other listed companies. The Board of
Directors shall appoint the Chairperson and the members of the Audit Committee
who shall serve until their successors shall have been duly elected and
qualified or until their earlier resignation or removal.
SPECIFIC DUTIES:
In carrying out its purposes, the Committee:
- shall annually appoint a public accounting firm (the "Outside Auditor")
for the purpose of issuing an audit report (and related work) with regard
to the annual financial statements of the Company and its subsidiaries.
The Committee shall determine the compensation to be paid by the Company
to the Outside Auditor and shall be responsible for the resolution of any
disagreement between the Company or its management and the Outside
Auditor.
- shall have the power to terminate the appointment of the Outside Auditor
for any cause or for no cause.
- shall approve in advance any non-audit services proposed to be provided
by the Outside Auditor to the Company.
- shall annually appoint a person (the "Internal Audit Director")
responsible for the internal audit function of the Company. The Committee
shall have the power to terminate the appointment of the Internal Audit
Director for any cause or for no cause.
- shall review with management, the Internal Audit Director and the Outside
Auditor the audited financial statements to be included in the Company's
Annual Report on Form 10-K and review and consider with the Outside
Auditor the matters required to be discussed by Statement of Auditing
Standards ("SAS") No. 61.
- shall review with management and the Outside Auditor, (a) the Company's
interim financial results to be included in the Company's quarterly
reports to be filed with the Securities and Exchange Commission and the
matters to be discussed by SAS No. 61 and (b) the related earnings press
release. This review shall occur prior to the filing of Form 10-Q for
such quarter.
- shall review the Outside Auditor's Management Letter and the Company's
response and discuss with management, the Internal Audit Director and the
Outside Auditor the quality and adequacy of the Company's internal
controls.
- shall receive from the Outside Auditor annually, a formal written
statement delineating all relationships between the Outside Auditor and
the Company consistent with Independence Standards Board Standard No. 1
and any other applicable rule;
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- shall discuss with the Outside Auditor any such disclosed relationships
and their impact on the Outside Auditor's independence;
- shall review with the Outside Auditor, the staffing, scope, planning and
fees for each year's audit;
- shall review with the Outside Auditor and the Company's Internal Audit
Director, the staffing, scope and planning for each year's internal audit
activities and findings from prior internal audits;
- shall meet with the Internal Audit Director to discuss the ongoing
internal audit activities;
- shall oversee the Company's policies which are disclosed to the Committee
with respect to risk management and assessment;
- shall review proposals to hire a chief financial officer, chief
accounting officer, Internal Audit Director or any person holding an
equivalent position;
- shall annually oversee the preparation of an annual report to
shareholders as required by the Securities and Exchange Commission;
- shall keep a record of acts and proceedings of the Audit Committee and
report thereon to the Board;
- shall review quarterly, with the Company's legal counsel, legal
compliance matters or any legal matter that could have a significant
impact on the Company's financial statements which is brought to the
Audit Committee's attention;
- shall perform such other activities, consistent with this Charter, the
Company's Certificate of Incorporation, Bylaws and governing law as the
Audit Committee deems necessary or appropriate; and
- shall establish procedures for (i) the receipt, retention and treatment
of complaints received by the Company regarding accounting, internal
accounting controls, or auditing matters and (ii) the confidential,
anonymous submission by employees of the Company of concerns regarding
questionable accounting or auditing matters and review periodically with
management and Internal Audit Director these procedures and any
significant complaints received.
QUALIFICATIONS, MEETINGS AND PROCEDURES:
The Board of Directors shall evaluate the performance of the Committee and the
compliance by the Committee with this Charter, no less often than annually.
Reference is made to the Corporation's Corporate Governance Guidelines for
Committee member qualifications, procedures, Committee member appointment and
removal; and Committee structure and operations.
ADOPTED BY THE BOARD OF DIRECTORS ON DECEMBER 15, 2003
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EXHIBIT B
CLARCOR INC.
EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the CLARCOR Inc. Employee Stock
Purchase Plan.
1. PURPOSE. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. The Plan is
intended to qualify as an "employee stock purchase plan" under Section 423 of
the Code. The provisions of the Plan, accordingly, shall be construed so as to
extend and limit participation in a uniform and nondiscriminatory manner
consistent with the requirements of Section 423.
2. DEFINITIONS.
(a) "BOARD" shall mean the Board of Directors of the Company.
(b) "CHANGE OF CONTROL" is defined in Section 19(c).
(c) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means the Compensation Committee of the Board.
(e) "COMMON STOCK" shall mean the common stock, par value $1.00 per share,
of the Company.
(f) "COMPANY" shall mean CLARCOR Inc., a Delaware corporation.
(g) "COMPENSATION" shall mean all base straight time gross earnings,
commissions, overtime and shift premium, but excluding payments for incentive
compensation, bonuses, expense reimbursements, payments under any benefit
program, payments from any deferred compensation arrangement, and other
compensation.
(h) "DESIGNATED SUBSIDIARY" shall mean any Subsidiary selected by the
Committee as eligible to participate in the Plan.
(i) "ELIGIBLE EMPLOYEE" shall mean any individual who is an employee of
the Company or any Designated Subsidiary: (i) who has been continuously employed
through the three-month anniversary of his employment commencement date and (ii)
whose customary scheduled employment with the Company or Designated Subsidiary
is at least twenty (20) hours per week and more than five (5) months in any
calendar year; provided, an Eligible Employee shall continue to be eligible to
participate in the Plan during any period of authorized leave of absence in
which the employment relationship has not terminated.
(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(k) "EXERCISE DATE" shall mean the last Trading Day on or immediately
preceding June 30 and December 31 each year, or as may be provided pursuant to
Section 4 of the Plan. The first Exercise Date under the Plan shall be June 30,
2004.
(l) "FAIR MARKET VALUE" shall mean, as of any date, the closing sale
price for Common Stock (or the closing bid, if no sales were reported), as
quoted on any stock exchange, or a national market quotation system (including
without limitation the Nasdaq National Market) in which Common Stock of the
Company is listed, as reported in The Wall Street Journal.
(m) "OFFERING" means each separate offering of shares of Common Stock under
the Plan that occurs during each Offering Period.
(n) "OFFERING DATE" shall mean the first Trading Day of each Offering
Period.
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(o) "OFFERING PERIODS" shall mean the periods of approximately six (6)
months during which an Option granted pursuant to the Plan may be exercised,
commencing on the first Trading Day on or after July 1 and January 1 of each
year and terminating on the first Trading Day on or immediately preceding June
30 and December 31 of each year, or as may be provided pursuant to Section 4 of
this Plan.
(p) "OPTION" means the option of a Participant to purchase shares of
Common Stock pursuant to Section 7.
(q) "PARTICIPANT" means each Eligible Employee who elects to participate
in the Plan.
(r) "PLAN" shall mean this Employee Stock Purchase Plan.
(s) "PURCHASE PRICE" shall mean an amount equal to eighty-five percent
(85%) of the Fair Market Value of a share of Common Stock on the Offering Date
or on the Exercise Date, whichever is lower; provided, that the Purchase Price
may be adjusted by the Committee pursuant to Section 20.
(t) "SUBSIDIARY" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
(u) "TRADING DAY" shall mean a day on which national stock exchanges and
the Nasdaq System are open for trading in shares of Common Stock.
Unless the context requires otherwise, the use of masculine pronouns shall
also refer to feminine pronouns and the use of a singular noun shall also refer
to the plural. Unless otherwise stated, references to sections refer to sections
of the Plan.
3. ELIGIBILITY.
(a) OFFERING PERIODS. Any Eligible Employee on a given Offering Date
shall be eligible to participate in the Plan.
(b) LIMITATIONS. Any provisions of the Plan to the contrary
notwithstanding, no Eligible Employee shall be granted an Option under the Plan:
(i) to the extent that, immediately after the grant, such Eligible
Employee (or any other person whose stock would be attributed to such
Eligible Employee pursuant to Section 424(d) of the Code) would own capital
stock of the Company or hold outstanding options to purchase such stock
possessing five percent (5%) or more of the total combined voting power or
value of all classes of the capital stock of the Company or of any
Subsidiary;
(ii) to the extent that his rights to purchase stock under all
employee stock purchase plans (as defined in Section 423 of the Code) of
the Company and its subsidiaries accrues at a rate that exceeds $25,000 of
the Fair Market Value of the stock (determined at the time such Option is
granted) for each calendar year in which such Option is outstanding at any
time; or
(iii) as otherwise may be provided in accordance with Section 423 of
the Code.
4. OFFERING PERIODS. The Plan shall be implemented by consecutive
Offering Periods with a new Offering Period commencing on the first Trading Day
on or after January 1 and July 1 each year, or on such other date as the
Committee shall determine, and continuing thereafter until terminated in
accordance with Section 20 hereof. The Committee shall have the power to change
the duration of Offering Periods (including the commencement dates thereof),
from time to time, with respect to future offerings without shareholder approval
if such change is announced prior to the first Trading Day of the first Offering
Period to be affected thereafter; provided, no Offering Period shall be for a
period of more than twenty-seven (27) months.
5. PARTICIPATION.
(a) An Eligible Employee shall be entitled to participate in an Offering
only if such individual files a subscription agreement with the Company
authorizing payroll deductions in a form and at such
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time as shall be approved by the Committee, which shall not be less than 30 days
prior to the Offering Date for such Offering Period.
(b) Any Eligible Employee that fails to file a timely initial subscription
agreement for an Offering shall not participate in such Offering but may elect
to participate in a succeeding Offering.
(c) Once an Eligible Employee commences participation in the Plan, his
participation shall continue in all future Offerings unless or until the
Participant revokes his election, otherwise withdraws from the Plan or ceases to
be an Eligible Employee.
6. PAYROLL DEDUCTIONS.
(a) At the time an Eligible Employee files a subscription agreement, he
shall elect to have payroll deductions made on each pay day during the Offering
Period in an amount not exceeding 15% of the Compensation which he receives on
each pay day during the Offering Period; provided, that should a pay day occur
on an Exercise Date, a Participant shall have the payroll deductions made on
such day applied to his account under the next succeeding Offering Period. A
Participant's subscription agreement shall remain in effect for successive
Offering Periods unless terminated as provided in Section 10 hereof.
(b) Payroll deductions for a Participant shall commence on the first
payday following the Offering Date and shall end on the last payday in the
Offering Period to which such election is applicable, unless sooner terminated
by the Participant as provided in Section 10 hereof.
(c) All payroll deductions made for a Participant shall be credited to his
account under the Plan and shall be withheld in whole percentages only. A
Participant may not make any additional payments into such account.
(d) A Participant may discontinue his participation in the Plan as
provided in Section 10 hereof, but may not increase or decrease (other than to
$0.00) his rate of payroll deduction during an Offering Period. A Participant
may increase or decrease the rate of his payroll deductions by filing a
subscription agreement in accordance with Section 5, which shall be effective
for the next succeeding Offering Period.
(e) Anything to the contrary herein notwithstanding, in order to satisfy
the limitations under Section 3(b), the Committee shall have the authority to
decrease or suspend a Participant's payroll deductions, not apply all or any
portion of a Participant's stock purchase account toward the purchase of shares
of Common Stock, and repurchase shares of Common Stock previously purchased by a
Participant at the Purchase Price paid by the Participant. Payroll deductions
shall recommence at the rate provided in such Participant's subscription
agreement at the beginning of the first Offering Period which is scheduled to
end in the following calendar year, unless terminated by the Participant as
provided in Section 10 hereof.
(f) At the time the Option is exercised, in whole or in part, or at the
time some or all of the Company's Common Stock issued under the Plan is disposed
of, the Participant must make adequate provision for the Company's federal,
state, or other tax withholding obligations, if any, which arise upon the
exercise of the Option or the disposition of the Common Stock. At any time, the
Company may, but shall not be obligated to, withhold from the Participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Participant.
7. GRANT OF OPTION. Subject to the limitations set forth at Section
3(b), on the Offering Date of each Offering Period, each Eligible Employee
participating in such Offering shall be granted an Option to purchase on each
Exercise Date during such Offering Period (at the applicable Purchase Price) up
to the whole number of shares of the Company's Common Stock determined by
dividing such Eligible Employee's payroll deductions accumulated prior to such
Exercise Date and retained in the Participant's account as of the Exercise Date
by the applicable Purchase Price. The Eligible Employee may
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accept the grant of such Option by filing a completed subscription agreement
with the Company in accordance with Section 5(a). Exercise of the Option shall
occur as provided in Section 8 hereof, unless the Participant has withdrawn from
the Offering pursuant to Section 10 hereof. The Option shall expire on the last
day of the Offering Period to the extent not exercised.
8. EXERCISE OF OPTION.
(a) Unless a Participant withdraws from an Offering as provided in Section
10 hereof, his Option for the purchase of shares shall be exercised
automatically on the Exercise Date, and the maximum number of whole shares
subject to the Option shall be purchased for such Participant at the applicable
Purchase Price with the accumulated payroll deductions in his account. No
fractional shares shall be purchased; any payroll deductions accumulated in a
Participant's account which are not sufficient to purchase a full share shall be
retained in the Participant's account for the subsequent Offering Period,
subject to earlier withdrawal by the Participant as provided in Section 10
hereof. Any other funds not applied to purchase shares after the Exercise Date
shall be returned to the Participant. During a Participant's lifetime, a
Participant's Option to purchase shares hereunder is exercisable only by him.
(b) If the Committee determines that, on a given Exercise Date, the number
of shares with respect to which Options are to be exercised may exceed (i) the
number of shares of Common Stock that were available for sale under the Plan on
the Offering Date of the applicable Offering Period, or (ii) the number of
shares available for sale under the Plan on such Exercise Date, then the
Committee shall make a pro rata allocation of the shares available for purchase
on such Offering Date or Exercise Date, as applicable, in as uniform a manner as
shall be practicable and as it shall determine in its sole discretion to be
equitable among all Participants exercising Options to purchase Common Stock on
such Exercise Date, and thereupon terminate any or all Offerings then in effect
pursuant to Section 20 hereof. The Committee may make pro rata allocation of the
shares available on the Offering Date of any applicable Offering Period pursuant
to the preceding sentence, notwithstanding any authorization of additional
shares for issuance under the Plan by the Company's shareholders subsequent to
such Offering Date.
9. DELIVERY; DIVIDENDS REINVESTED.
(a) As soon as reasonably practicable after each Exercise Date on which a
purchase of shares occurs, the Company shall arrange the delivery of shares
purchased upon exercise of the Participant's Option in a form and to a custodian
determined and selected by the Committee.
(b) Cash dividends on any shares held by a Participant shall be
automatically reinvested in additional shares of Common Stock; such amounts will
not be available in the form of cash to Participants. All cash dividends paid on
Common Stock credited to Participants' shares will be paid over by the Company
to the custodian of the shares at the dividend payment date. The custodian will
aggregate all purchases of Common Stock in connection with the Plan for a given
dividend payment date. Purchases of Common Stock for purposes of dividend
reinvestment will be made as promptly as practicable (but not more than 30 days)
after a dividend payment date. The custodian shall make such purchases, as
directed by the Committee, either (i) in transactions on any securities exchange
upon which Common Stock is traded, otherwise in the over-the-counter market, or
in negotiated transactions, or (ii) directly from the Company at 100 percent of
the Fair Market Value of a share of Common Stock on the dividend payment date.
10. WITHDRAWAL. During an Offering Period, a Participant may terminate his
subscription at any time, and withdraw all but not less than all of the payroll
deductions credited to his account and not yet used to exercise his Option under
the Plan, by giving written notice to the Company in the form approved by the
Committee. All of the Participant's payroll deductions credited to his account
shall be paid to such Participant promptly after receipt of notice of withdrawal
and such Participant's Option for the Offering Period shall be automatically
terminated, and no further payroll deductions for the purchase of shares shall
be made for such Offering Period. If a Participant withdraws from an Offering,
payroll deductions shall not resume at the beginning of the succeeding Offering
Period unless the
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Participant files a new subscription agreement and the Committee, in its sole
discretion, consents to his participation in such Offering.
11. TERMINATION OF EMPLOYMENT. Termination of a Participant's employment
for any reason or a Participant's ceasing to be an Eligible Employee of the
Company or of a Designated Subsidiary, shall cause his participation in the Plan
to terminate immediately. In such event, payroll deductions shall cease, payroll
deductions previously withheld and credited to the Participant's account during
the Offering Period but not yet used to purchase Common Stock under the Plan
shall be refunded to him (or to his beneficiary designated under Section 15 in
the event of his death) without interest.
12. INTEREST. No interest shall accrue on the payroll deductions of a
Participant in the Plan.
13. STOCK.
(a) Subject to adjustment upon changes in capitalization of the Company as
provided in Section 19 hereof, the maximum number of shares of the Company's
Common Stock that shall be available for purchase under the Plan shall be
500,000 shares of the Common Stock.
(b) Until the shares are issued (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the Company),
a Participant shall have no right to vote or to receive dividends or any other
right of a stockholder with respect to such shares.
(c) Shares to be delivered to a Participant under the Plan shall be
registered in the name of the Participant.
14. ADMINISTRATION. The Plan shall be administered by the Committee which
shall have the discretionary authority and power to adopt, construe, and enforce
rules and regulations not inconsistent with the provisions of the Plan and
Section 423 of the Code. Any action of the Committee with respect to the Plan
shall be final, conclusive and binding on all Participants and any person
claiming any rights under the Plan from or through any Participant. The
Committee may delegate to officers or managers of the Company the authority,
subject to such terms as the Committee shall determine, to perform such
functions as the Committee may determine, to the extent permitted under
applicable law. No member of the Committee, or any officer or employee of the
Company acting on behalf of the Committee, shall be personally liable for any
action, determination or interpretation taken or made in good faith with respect
to the Plan, and shall, to the maximum extent permitted by the articles of
incorporation and by-laws of the Company and applicable law, be fully
indemnified and protected by the Company with respect to any such action,
determination or interpretation. Transactions under the Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successor under the
Exchange Act.
15. DESIGNATION OF BENEFICIARY.
(a) A Participant may file a written designation of a beneficiary who is
to receive any shares and cash from the Participant's account under the Plan in
the event of such Participant's death during an Offering Period or subsequent to
an Exercise Date on which the Option is exercised but prior to delivery to such
Participant of such shares.
(b) Such designation of beneficiary may be changed by the Participant at
any time by written notice to the Committee. In the event of the death of a
Participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such Participant's death, the Company shall
deliver such shares and cash to the legal representative of the Participant's
estate (or other validly authorized individual or person in the event of a
"small estate" in which no legal representative is appointed).
(c) All beneficiary designations shall be in such form and manner as the
Committee may designate from time to time.
16. TRANSFERABILITY. Neither payroll deductions credited to a
Participant's account nor any rights with regard to the exercise of an Option or
to receive shares under the Plan may be assigned,
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transferred, pledged or otherwise disposed of in any way (other than by will,
the laws of descent and distribution or as provided in Section 15 hereof) by the
Participant. Any such attempt at assignment, transfer, pledge or other
disposition shall be void, except that the Committee, in its sole discretion,
may treat such act as an election to terminate the Participant's subscription in
accordance with Section 10 hereof.
17. USE OF FUNDS. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions. Until
shares are issued, a Participant shall only have the rights of an unsecured
creditor with respect to payroll deductions on his account pursuant to his
subscription agreement.
18. ACCOUNTS AND REPORTS. Individual accounts shall be maintained for each
Participant in the Plan. Statements of account shall be given to participating
Eligible Employees at least annually, which statements shall set forth the
amounts of payroll deductions, the Purchase Price, the number of shares
purchased and the remaining cash balance, if any.
19. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, LIQUIDATION,
MERGER OR CHANGE OF CONTROL.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
shareholders of the Company, the maximum number of shares of the Company's
Common Stock which shall be made available for sale under the Plan, the maximum
number of shares each Participant may purchase each Purchase Period (pursuant to
Section 7), as well as the price per share and the number of shares of Common
Stock covered by each Option under the Plan which has not yet been exercised,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other change in the number of shares of Common Stock effected without receipt of
consideration by the Company; provided, that conversion of any convertible
securities of the Company shall not be deemed to have been "effected without
receipt of consideration." Such adjustment shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an Option.
(b) In the event of a Change of Control, the Offering Period then in
progress shall immediately terminate, each outstanding Option shall be
automatically exercised immediately prior to such Change of Control, and upon
such Change of Control the Plan shall otherwise shall terminate in accordance
with Section 20. When practicable, the Committee shall notify each Participant
in writing, at least ten (10) business days prior to such Change of Control of
the imminent Change of Control and the effect thereof on the Participant.
(c) A "CHANGE OF CONTROL" shall mean the occurrence of any of the
following events:
(i) The acquisition (other than from the Company) by any person,
entity, or "group," within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 15% or more of either the then
outstanding shares of Common Stock or the combined voting power of the
Company's then outstanding voting securities entitled to vote generally in
the election of directors; provided, however, no Change in Control shall be
deemed to have occurred for any acquisition by any corporation with respect
to which, following such acquisition, more than 60% of such corporation and
the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively,
of the then outstanding shares of Common Stock or the combined voting power
of
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the Company's then outstanding voting securities immediately prior to such
acquisition in substantially the same proportions as their ownership,
immediately prior to such acquisition, of the Company's then outstanding
Common Stock and then outstanding voting securities, as the case may be; or
(ii) Individuals who, as of the date hereof, constitute the Board
(as of the date hereof the "INCUMBENT BOARD") cease for any reason to
constitute at least a majority of the Board, provided that any person
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising the Incumbent
Board (other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the Directors of the Company) shall be,
for purposes of this Agreement, considered as though such person were a
member of the Incumbent Board; or
(iii) Consummation of a reorganization, merger or consolidation, in
each case, with respect to which persons who were the stockholders of the
Company immediately prior to such reorganization, merger or consolidation
do not, immediately thereafter, own more than 60% of the combined voting
power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated company's then outstanding voting
securities, or shareholder approval of a liquidation or dissolution of the
Company or of the sale of all or substantially all of the assets of the
Company.
20. AMENDMENT OR TERMINATION.
(a) The Board or Committee may at any time and for any reason terminate or
amend the Plan, subject to any requirement of shareholder approval of a Plan
amendment pursuant to Section 423 of the Code (and the regulations thereunder)
or any rule or regulation of the Securities and Exchange Commission or any
exchange on which shares of the Company are traded. Except as otherwise provided
in the Plan, no such termination shall affect Options previously granted;
provided, an Offering Period may be terminated by the Committee on any Exercise
Date if the Committee determines that the termination of the Offering Period or
the Plan is in the best interests of the Company and its shareholders. Except as
provided in Section 19 and this Section 20 hereof, no amendment shall modify any
Option theretofore granted that adversely affects the rights of the Participant
granted such Option. Anything to the contrary herein notwithstanding, any
amendment to increase the maximum number of shares of Common Stock available for
purchase under the Plan as set forth in Section 13(a) shall be effective only
upon shareholder approval.
(b) Without shareholder consent and without regard to whether any
Participant rights may be considered to have been "adversely affected," the
Committee shall be entitled to change the Offering Periods, limit the frequency
and/or number of changes in the amount withheld during an Offering Period,
establish the exchange ratio applicable to amounts withheld in a currency other
than U.S. dollars, permit payroll withholding in excess of the amount designated
by a Participant in order to adjust for delays or mistakes in the Company's
processing of properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of Common Stock for each
Participant properly correspond with amounts withheld from the Participant's
Compensation, and establish such other limitations or procedures as the
Committee determines in its sole discretion advisable which are consistent with
the Plan.
(c) The Plan shall immediately terminate, and all amounts on account shall
be refunded to the Participants, without interest:
(i) if the Company shall not obtain such shareholder approval as
may be required pursuant to Section 423 of the Code (or any successor rule
or provision or any other applicable law, regulation or stock exchange
rule);
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(ii) following the automatic exercise of Options upon a Change of
Control as provided under Section 19; or
(iii) if the Common Stock of the Company shall cease for any reason
to be listed on any nationally recognized stock exchange or national market
quotation system.
(d) In the event the Committee determines that the ongoing operation of
the Plan may result in unfavorable financial accounting consequences, the Board
may, in its discretion and, to the extent necessary or desirable, modify or
amend the Plan to reduce or eliminate such accounting consequence including, but
not limited to:
(i) increasing the Purchase Price for any Offering Period including
an Offering Period underway at the time of the change in Purchase Price;
(ii) shortening any Offering Period so that Offering Period ends on
a new Exercise Date, including an Offering Period underway at the time of
the Board action; and
(iii) allocating shares.
Such modifications or amendments shall not require stockholder approval or the
consent of any Plan Participants.
21. NOTICES. All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form and manner specified by the Company at the
location, or by the person, designated by the Company for the receipt thereof.
22. NO RIGHT TO CONTINUED EMPLOYMENT. Neither the Plan nor any action
taken hereunder shall be construed as giving any employee, director or other
person the right to be retained in the employ or service of the Company, nor
shall it interfere in any way with the right of the Company to terminate any
employee's employment.
23. GOVERNING LAW. The Plan shall be governed by the laws of the State of
Illinois (determined without regard to the choice of law provisions thereof).
Each Participant shall, by participating in the Plan, consent to the
jurisdiction and venue of the federal and state courts located in Chicago,
Illinois.
24. CONDITIONS UPON ISSUANCE OF SHARES.
(a) Shares shall not be issued with respect to an Option unless the
exercise of such Option and the issuance and delivery of such shares pursuant
thereto shall comply with all applicable provisions of law, domestic or foreign,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the Sarbanes-Oxley Act of 2002, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the shares may then be listed.
(b) As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
(c) Certificates representing shares issued under the Plan shall be
subject to such stop-transfer orders and other restrictions as may be applicable
under such laws, regulations and other obligations of the Company, including any
requirement that a legend or legends be placed thereon. Notwithstanding the
foregoing, the Committee may adopt additional terms and conditions to the extent
required to comply with local laws and regulations.
25. TERM OF PLAN. The Plan shall become effective upon the date of its
adoption by the Board of Directors (and the first Offering Period shall commence
January 1, 2004), subject to approval of the shareholders of the Company within
twelve months thereafter. It shall continue in effect until terminated under
Section 20 hereof.
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CLARCOR Inc. PROXY/VOTING INSTRUCTION CARD
================================================================================
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING ON MARCH 22, 2004.
The undersigned hereby appoints J. MARC ADAM and JAMES L. PACKARD or any one or
more of them, acting alone if only one shall be present, or jointly if more than
one shall be present, the true and lawful attorneys of the undersigned, with
power of substitution, to vote as proxies for the undersigned at the Annual
Meeting of Shareholders of CLARCOR Inc. to be held at the offices of Total
Filtration Services, Inc., 2911 Research Drive, Rochester Hills, Michigan 48309,
on Monday, March 22, 2004 at 9:00 a.m., Eastern Standard Time, and all
adjournments thereof, all shares of Common Stock which the undersigned would be
entitled to vote and all as fully and with the same effect as the undersigned
could do if then personally present.
Receipt is acknowledged of the Company's Annual Report to Shareholders for the
fiscal year ended November 29, 2003, and the Notice and Proxy Statement for the
above Annual Meeting.
The Company is aware of two matters to be voted upon at this Annual Meeting: 1.
the election of directors - the nominees are Messrs. Robert J. Burgstahler, Paul
Donovan and Norman E. Johnson; and 2. the proposed Employee Stock Purchase Plan
described in the Proxy Statement for this Annual Meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES (SEE
REVERSE SIDE) BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. IF A VOTE IS NOT SPECIFIED, THE
PROXIES NAMED ABOVE WILL VOTE FOR THE NOMINEES FOR ELECTION AS DIRECTORS AND FOR
THE ADOPTION OF THE EMPLOYEE STOCK PURCHASE PLAN. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
PLEASE MARK YOUR
[X] VOTES AS IN THIS
EXAMPLE. 5086
-------
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE NOMINEES FOR ELECTION AS DIRECTORS NAMED IN THIS PROXY AND
FOR THE ADOPTION OF THE EMPLOYEE STOCK PURCHASE PLAN.
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR SUCH NOMINEES AND FOR ADOPTION OF THE EMPLOYEE STOCK PURCHASE PLAN.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Proposal to adopt [ ] [ ] [ ]
Directors Employee Stock
(See Reverse) Purchase Plan.
FOR, EXCEPT VOTE WITHHELD
FROM THE FOLLOWING NOMINEE(s):
1
3. In their discretion, the
Proxies are authorized to
vote upon such other
business as may properly come
before the meeting.
SIGNATURE(S) DATE
------------------------------------------ -------------------
NOTE: Please date and sign as name appears hereon. If shares are held jointly
by two more persons, each shareholder named should sign. Executors,
administrators, trustees, etc. should so indicate when signing. If the
signer is a corporation, please sign full corporate name by duly
authorized officer. If a partnership, please sign in partnership name by
authorized person.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
2