1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/[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
/ /[_] 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 sec.240.14a-11(c) or sec.240.14a-12
AVERY DENNISON CORPORATION
- -------------------------------------------------------------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
AVERY DENNISON CORPORATION
- -------------------------------------------------------------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ /[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)14a-
6(i)(3).
/ /[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
/ /[_] Fee paid previously with preliminary materials.
/ /[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
2
- ----------------- --------------------------------------------------------------------------------------------------------------------
[LOGO OF AVERY Avery Dennison Corporation
(LOGO)DENNISON] 150 North Orange Grove Boulevard
Pasadena, California 91103
- ----------------- --------------------------------------------------------------------------------------------------------------------
NOTICE OF To the Stockholders:
ANNUAL MEETING OF STOCKHOLDERS The Annual Meeting of Stockholders of Avery Dennison
OF STOCKHOLDERS Corporation will be held at 150 North Orange Grove
To be held Boulevard, Pasadena, California on Thursday, April 27,25,
April 27, 1995 199525, 1996 1996 at 1:30 P.M. for the following purposes:
1. To elect fourthree directors to hold office for a term of
three years and until their successors are elected and
have qualified;
and
2. To consider and vote upon a proposal to approve certain amendmentsan
amendment to the Company's 19881990 Stock Option and
Incentive Plan for Non-Employee Directors;Key Employees; and
3. To transact such other business as may properly come
before the meeting and any adjournments thereof.
In accordance with the Bylaws, the Board of Directors has
fixed the close of business on Friday, March 3, 1995,Tuesday, February 27, 1996,
as the record date for the determination of stockholders
entitled to vote at the Annual Meeting and to receive
notice thereof.
All stockholders are cordially invited to attend the
meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Robert G. van Schoonenberg
Secretary
Pasadena, California
Dated: March 10, 1995
---------------------------------------------------------8, 1996
-----------------------------------------------------------
Whether or not you presently plan to attend the Annual
Meeting, in order to ensure your representation please
complete, sign and date the enclosed proxy as promptly as
possible and return it in the enclosed envelope (to which
no postage need be affixed if mailed in the United
States). If you attend the meeting and wish to vote in
person, your proxy will not be used.
--------------------------------------------------------------------------------------------------------------------
3
AVERY DENNISON CORPORATION
150 NORTH ORANGE GROVE BOULEVARD
PASADENA, CALIFORNIA 91103
PROXY STATEMENT
This proxy statement is furnished to the stockholders on behalf of the Board
of Directors of Avery Dennison Corporation, a Delaware corporation
(hereinafter called the "Company"), for solicitation of proxies for use at the
Annual Meeting of Stockholders to be held on Thursday, April 27, 199525, 1996 at 1:30
P.M. and at any and all adjournments thereof. A stockholder giving a proxy
pursuant to the present solicitation may revoke it at any time before it is
exercised by giving a subsequent proxy or by delivering to the Secretary of
the Company a written notice of revocation prior to the voting of the proxy at
the Annual Meeting. If you attend the meeting and wish to vote your shares in
person, your proxy will not be used. Votes cast by proxy or in person at the
Annual Meeting will be tabulated by the election inspectors appointed for the
meeting and will determine whether or not a quorum is present. Under the
Company's bylawsBylaws and Delaware law: (1) shares represented by proxies that
reflect abstentions or "broker non-votes" (i.e., shares held by a broker or
nominee which are represented at the meeting, but with respect to which such
broker or nominee is not empowered to vote on a particular proposal) will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum; (2) there is no cumulative voting and
the director nominees receiving the highest number of votes, up to the number
of directors to be elected, are elected and, accordingly, abstentions, broker
non-votes and withholding of authority to vote will not affect the election of
directors; and (3) proxies that reflect abstentions as to a particular
proposal will be treated as voted for purposes of determining the approval of
that proposal and will have the same effect as a vote against that proposal,
while proxies that reflect broker non-votes will be treated as unvoted for
purposes of determining approval of that proposal and will not be counted as
votes for or against that proposal. The Company has retained D.F. King & Co.,
Inc. to assist in soliciting proxies for this meeting at a fee estimated at
$10,000 plus out of pocket expenses. Expenses incident to the preparation and
mailing of the notice of meeting, proxy statement and form of proxy are to be
paid by the Company. This proxy statement is to be mailed to stockholders on
or about March 10, 1995.8, 1996.
The purpose of the meeting and the matters to be acted upon are set forth in
the foregoing attached Notice of Annual Meeting. In addition to the election
of directors, certain amendmentsan amendment to the Company's 19881990 Stock Option and Incentive
Plan for Non-Employee DirectorsKey Employees (the "Director"1990 Plan") will be submitted for approval by the
Company's stockholders. The Director1990 Plan previously has been approved by the
stockholders, but is proposed to be amended to changeextend the dateperiod of
grant ofexercisability, following retirement, for options under the Director Plangranted on or after November
30, 1995 (i) to the date of each regular December meetingfull term of the Board of Directors, remove the age 72 limitation on the granting of options
under the Director Plan, provideoption for the vesting on a director's dateChief Executive Officer
and Chief Operating Officer; (ii) to the lesser of retirement atfive years or after age 72the full term
of allthe option for options owned by that director which are
unexercisable on the date of such retirement, extend the Director Plan's
termination date from January 31, 1997granted to January 31, 2007 and permit directors
to designate beneficiaries to receive vested optionsparticipants in the eventCompany's Second
Amended and Restated Key Executive Long-Term Incentive Plan or any successor
plan; and (iii) to the lesser of their
deaths.three years or the full term of the option
for all other optionees. As of the date of this statement, management knows of
no other business which will be presented for consideration at the meeting.
However, if any such
other business shall properly come before the meeting, votes
will be cast pursuant to said proxies in respect of any such other business in
accordance with the best judgment of the persons acting under said proxies.
See "GENERAL -- Stockholder Proposals" below.
ELECTION OF DIRECTORS (PROXY ITEM 1)
The Bylaws of the Company presently provide for 14twelve directors, divided
into three classes. However, two directors, Messrs. Lawrence R. Stanton AveryTollenaere and
H. Russell
Smith,F. Daniel Frost, are retiring from the Board and will not seek reelection upon
expiration of their current terms immediately prior to the 19951996 Annual
Meeting. Therefore, the Board of Directors has amended the Bylaws, effective
immediately prior to the 19951996 Annual Meeting, to reduce
1
the number of directors to 12.ten. In order to balance the number of directors in
each of the three classes of directors, as contemplated by the 1
4
Bylaws, Mr.
Philip M. NealCharles D. Miller has resigned as a director in the class of directors which
was elected to serve until the 19961997 Annual Meeting, contingent upon his
election at the 1996 Annual Meeting as one of the class of directors elected
to serve until 1998 at the
1995 Annual Meeting.
Four1999.
Three directors are to be elected at the 19951996 Annual Meeting and will hold
office until the 19981999 Annual Meeting and until their successors are elected
and have qualified. It is intended that the persons so appointed in the
enclosed proxy will, unless authority is withheld, vote for the election of
the fourthree nominees proposed by the Board of Directors, all of whom are
presently directors of the Company. In voting for the election of directors
each share has one vote for each position to be filled. All of the nominees
have consented to being named herein and to serve if elected. In the event
that any of them should become unavailable prior to the Annual Meeting, the
proxy will be voted for a substitute nominee or nominees designated by the
Board of Directors, or the number of directors may be reduced accordingly.
The following information, which has been provided by the directors, shows
for each of the nominees for election to the Board of Directors and for each
director whose term continues, his or her name, age, and principal occupation
or employment during the past five years, the name of the corporation or other
organization, if any, in which such occupation or employment is or was carried
on, the period during which such person has served as a director of the
Company and the year in which each continuing director's present term as
director expires.
19951996 NOMINEES
FRANK V. CAHOUET,[PHOTO OF CHARLES D. MILLER, age 62.68. Since November 1983, Mr. Miller has
CHARLES D. served as Chairman and Chief Executive Officer of Avery Dennison
MILLER] Corporation. Prior to 1983, he served as President and Chief
Executive Officer. He is a director of Great Western Financial
Corporation, Nationwide Health Properties, Inc., Pacific Mutual
Life Insurance Company, Edison International, and Davidson &
Associates, Inc. He has been a director of Avery Dennison
Corporation since January 1975.
[PHOTO OF RICHARD M. FERRY, age 58. Since May 1991, Mr. Ferry has been
RICHARD M. Chairman and Chief Executive Officer of Korn/Ferry International,
FERRY] an international executive search firm. Prior to 1991, he served
as President of Korn/Ferry International. He is a director of Dole
Food Company and Pacific Mutual Life Insurance Company. He has
been a director of Avery Dennison Corporation since December 1985.
[PHOTO OF DWIGHT L. ALLISON, JR., age 66. Since October 1986, Mr. Allison
DWIGHT L. has been a private investor. From January 1977 to September 1986,
ALLISON, Mr. Allison served in various senior executive positions
JR.] (including Chairman and CEO, Vice Chairman and President) with The
Boston Company, a trust banking and financial management firm. Mr.
Allison has been a director of Avery Dennison Corporation since
October 1990. Mr. Allison also served as a director of Dennison
Manufacturing Company from 1974 to October 1990.
2
CONTINUING DIRECTORS
[PHOTO OF SIDNEY R. PETERSEN, age 65. During the past five years, Mr.
SIDNEY R. Petersen has been a private investor. In 1984, he retired as
PETERSEN] Chairman and Chief Executive Officer of Getty Oil Company,
positions which he had held since 1980. He is a director of Global
Natural Resources, Inc., Group Technologies Corporation, Union
Bank and NICOR, Inc. He has been a director of Avery Dennison
Corporation since December 1981. His present term expires in 1997.
[PHOTO OF JOHN C. ARGUE, age 64. Over the past five years, Mr. Argue has
JOHN C. been Of Counsel and formerly Senior Partner of the law firm of
ARGUE] Argue Pearson Harbison & Myers. Since October 1992, Mr. Argue has
been Chairman of Rose Hills Memorial Park Association. Mr. Argue
is a director of CalMat Co., Coast Savings Financial, Inc. and TCW
Funds, Inc., a registered investment company. He is also a trustee
of the TCW/DW family of funds and the TCW/DW Term Trust 2000,
TCW/DW Term Trust 2002 and TCW/DW Term Trust 2003. Mr. Argue is an
advisory director (Chairman of advisory directors) of LAACO Ltd.
He has been a director of Avery Dennison Corporation since January
1988. His present term expires in 1997.
[PHOTO OF JOHN B. SLAUGHTER, age 62. Since August 1988, Dr. Slaughter has
JOHN B. served as President of Occidental College. Dr. Slaughter is a
SLAUGHTER] director of Atlantic Richfield Company, International Business
Machines Corporation, Northrop Grumman Corporation and Monsanto
Company. He has been a director of Avery Dennison Corporation
since December 1988. His present term expires in 1997.
[PHOTO OF FRANK V. CAHOUET, age 63. Since June 1987, Mr. Cahouet has been
FRANK V. Chairman, President and Chief Executive Officer of Mellon (photo) Bank
CAHOUET] Corporation. From September 1986 through June 1987, Mr. Cahouet
served as President of the Federal National Mortgage Association.
He is a director of Mellon Bank Corporation, Saint Gobain
Corporation and Teledyne, Inc. Mr. Cahouet has been a director of
Avery Dennison Corporation since February 1983. - -------------His present term
expires in 1998.
[PHOTO OF PETER W. MULLIN, age 54. During55. Over the past five years, Mr. Mullin has
PETER W. been Chairman and Chief Executive Officer of Mullin (photo) Consulting,
MULLIN] Inc., formerly known as Management Compensation Group, Los
Angeles, Inc., an executive compensation, benefit planning and
corporate insurance consulting firm, and related entities. He has
been a director of Avery Dennison Corporation since January 1988.
- -------------His present term expires in 1998.
3
[PHOTO OF JOAN T. BOK, age 65. During the past five years,66. Since February 1984, Mrs. Bok has been
JOAN T. Chairman of the Board of New England Electric System, a public
BOK] utility holding company and supplier of electricity.electricity, and from July
1988 to February 1989 she served as Chairman, President and Chief
Executive Officer. She is a director of Monsanto Company, John
Hancock Mutual Life Insurance
(photo) Company and New England Electric
System, and its subsidiaries, New England Power Company,
Massachusetts Electric Company, and The Narragansett Electric
Company. Mrs. Bok has been a director of Avery Dennison
Corporation since October 1990. Mrs. Bok also served as a director
of Dennison Manufacturing Company from 1984 to October 1990. 2
5
- -------------Her
present term expires in 1998.
[PHOTO OF PHILIP M. NEAL, age 54.55. Since December 1990, Mr. Neal has been
PHILIP M. President and Chief Operating Officer of Avery Dennison
(photo)NEAL] Corporation. From March 1990 to December 1990, he served as
Executive Vice President. He has been a director of Avery Dennison
Corporation since December 1990. - -------------
CONTINUING DIRECTORS
LAWRENCE R. TOLLENAERE, age 72. In December 1994, Mr. Tollenaere
retired as Chairman of the Board of Ameron, Inc., a manufacturer
of engineered products for construction, utilities and industry.
He was Chairman, Chief Executive Officer and President of Ameron,
(photo) Inc. from April 1991 to June 1993 and Chairman and Chief Executive
Officer of Ameron, Inc. from May 1989 to April 1991. Mr.
Tollenaere is a director of Ameron, Inc., Newhall Land and Farming
Company and Pacific Mutual Life Insurance Company. He has been a
director of Avery Dennison Corporation since 1964. His present term expires in 1996.
- -------------
F. DANIEL FROST, age 73. During the past five years, Mr. Frost has
been the owner and Chief Executive Officer of Sun Ridge Foods,
(photo) Inc. and Cascade Columbia Foods, Ltd., both located in the State
of Washington. He has been a director of Avery Dennison
Corporation since 1966. His present term expires in 1996.
- -------------
RICHARD M. FERRY, age 57. Since May 1991, Mr. Ferry has been
Chairman and Chief Executive Officer of Korn/Ferry International,
an international executive search firm. Prior to 1991, he served
(photo) as President of Korn/Ferry International. He is a director of Dole
Food Company and Pacific Mutual Life Insurance Company. He has
been a director of Avery Dennison Corporation since 1985. His
present term expires in 1996.
- -------------
DWIGHT L. ALLISON, JR., age 65. During the past five years,
Mr. Allison has been a private investor. Mr. Allison has been a
(photo) director of Avery Dennison Corporation since October 1990.
Mr. Allison also served as a director of Dennison Manufacturing
Company from 1974 to October 1990. His present term expires in
1996.
- -------------
3
6
CHARLES D. MILLER, age 67. During the past five years, Mr. Miller
has served as Chairman and Chief Executive Officer of Avery
Dennison Corporation. He is a director of Great Western Financial
(photo) Corporation, Nationwide Health Properties, Inc., Pacific Mutual
Life Insurance Company and Southern California Edison Company. He
has been a director of Avery Dennison Corporation since 1975. His
present term expires in 1997.
- -------------
SIDNEY R. PETERSEN, age 64. During the past five years,
Mr. Petersen has been a private investor. In 1984, he retired as
Chairman and Chief Executive Officer of Getty Oil Company. He is a
(photo) director of Broadway Stores, Inc., Global Natural Resources, Inc.,
Group Technologies Corporation, Union Bank and NICOR, Inc. He has
been a director of Avery Dennison Corporation since 1981. His
present term expires in 1997.
- -------------
JOHN C. ARGUE, age 63. During the past five years, Mr. Argue has
been Of Counsel and formerly Senior Partner of the law firm of
Argue Pearson Harbison & Myers. Since October 1992, Mr. Argue has
been Chairman of Rose Hills Memorial Park Association. Mr. Argue
(photo) is a director of CalMat Co. and TCW Funds, Inc., a registered
investment company. He is also a trustee of the TCW/DW family of
funds and the TCW/DW Term Trust 2000, TCW/DW Term Trust 2002 and
TCW/DW Term Trust 2003. Mr. Argue is an advisory director of
LAACO Ltd. He has been a director of Avery Dennison Corporation
since January 1988. His present term expires in 1997.
- -------------
JOHN B. SLAUGHTER, age 61. During the past five years,
Dr. Slaughter has served as President of Occidental College.
Dr. Slaughter is a director of Atlantic Richfield Company,
(photo) International Business Machines Corporation, Northrop Grumman
Corporation and Monsanto Company. He has been a director of Avery
Dennison Corporation since December 1988. His present term expires
in 1997.
- -------------1998.
4
7
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the number of shares of the Company's common stock
beneficially owned by each director of the Company and each of the executive
officers named in the table on page 9, and the aggregate number of such shares
beneficially owned by all directors and executive officers as of December 31,
1994.1995.
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OWNERSHIP(1) OF CLASS
---- ------------ --------
R. Stanton Avery.......................................... 2,716,324(2) 5.07%
H. Russell Smith.......................................... 1,086,954(3) 2.03%
Lawrence R. Tollenaere.................................... 81,808(4)(5) (6)Tollenaere......................... 84,501(2)(3) (4)
F. Daniel Frost........................................... 17,097 (6)Frost................................ 18,097(5) (4)
Charles D. Miller......................................... 598,816(7) 1.11%Miller.............................. 671,958(6) 1.25%
Sidney R. Petersen........................................ 18,322(4)(8) (6)Petersen............................. 20,384(2)(7) (4)
Frank V. Cahouet.......................................... 24,265(4)(9) (6)Cahouet............................... 26,267(2)(8) (4)
Richard M. Ferry.......................................... 18,000(4) (6)Ferry............................... 20,000(2) (4)
John C. Argue............................................. 18,440(4)(10) (6)Argue.................................. 20,440(2)(9) (4)
Peter W. Mullin........................................... 19,200(4) (6)Mullin................................ 21,200(2) (4)
John B. Slaughter......................................... 16,000(4)(11) (6)Slaughter.............................. 18,000(2)(10) (4)
Philip M. Neal............................................ 199,993(12) (6)Neal................................. 225,838(11) (4)
Dwight L. Allison, Jr. ................................... 36,492(13) (6)........................ 39,332(12) (4)
Joan T. Bok............................................... 16,007(14) (6)Bok.................................... 18,113(13) (4)
Kim A. Caldwell........................................... 65,445(15) (6)Caldwell................................ 74,791(14) (4)
R. Gregory Jenkins........................................ 120,566(16) (6)Jenkins............................. 122,025(15) (4)
Donald L. Thompson........................................ 60,998(17) (6)Thompson............................. 66,068(16) (4)
All Directors and Executive Officers as a Group
(31(30 persons, including those named)..................... 5,500,572(18) 10.04%........... 1,878,593(17) 3.44%
- -------------------------
(1) Except as otherwise indicated and subject to applicable community
property and similar statutes, the persons listed as beneficial owners of
the shares have sole voting and/or investment power with respect to such
shares.
(2) Does not include 10,259 shares held by Mrs. R. Stanton Avery, as to which
Mr. Avery disclaims any beneficial ownership. Includes 162,736 shares held
by The Durfee Foundation, as to which Mr. Avery as a director of that
foundation shares the authority to vote and to dispose of the shares, but
in which Mr. Avery has no economic interest. Also includes 1,690,224 shares
held by the testamentary trust created by the will of Dorothy Durfee Avery.
As the sole trustee, Mr. Avery has the right to vote and to dispose of the
shares; he is also entitled to receive the trust income during his
lifetime.
(3) Includes 12,950 shares held under the Elden Smith Trust. As co-trustee,
Mr. Smith shares the right to vote and to dispose of such shares but has no
economic interest in such shares. Also includes 24,000 shares held under
the Stewart R. Smith Children Trust. As trustee, Mr. Smith has the sole
right to vote and to dispose of such shares, but has no economic interest
in such shares. Also includes 1,049,170 shares held by the Kinsmith
Financial Corporation, of which Mr. Smith is Chairman of the Board and
Mr. Smith's family as a group owns all of the outstanding stock. Mr. Smith
shares the right to vote and to dispose of such shares.
(4) Includes 16,00018,000 shares with respect to which each of Messrs. Tollenaere,
Petersen, Cahouet, Ferry, Argue, Mullin and Slaughter holds options
exercisable within 60 days from December 31, 1994.
(5)1995.
(3) Includes 2,5342,569 shares held jointly with Mrs. Lawrence R. Tollenaere, as
to which Mr. Tollenaere has shared voting and investment power. Also
includes 15,000 shares held in trust, as to which Mr. Tollenaere shares
the authority to vote and to dispose of the shares.
5
8
(6)(4) Less than 1%.
(7)(5) Includes 418,5781,000 shares with respect to which Mr. Frost holds options
exercisable within 60 days from December 31, 1995.
(6) Includes 503,578 shares with respect to which Mr. Miller holds options
exercisable within 60 days from December 31, 1994.1995. Also includes 171,614158,237
shares held in the Miller Family Trust, as to which Mr. Miller has sole
authority to vote and to dispose of the shares. Also includes 1,2002,000
shares held in The Candyman Trust, as to which Mr. Miller, as co-trustee,
shares the authority to vote and to dispose of the shares. Does not
include 511524 shares held by Mrs. Charles D. Miller, as to which Mr. Miller
disclaims any beneficial ownership.
(8)(7) Includes 2,3222,384 shares held in the Petersen Family Trust, as to which Mr.
Petersen, as co-trustee, shares the authority to vote and to dispose of
the shares.
(9)(8) Does not include 5,250 shares held in trust by Mrs. Frank V. Cahouet, as
to which Mr. Cahouet disclaims any beneficial ownership. Includes 5,250
shares held in trust with respect to which Mr. Cahouet has sole voting
and disposition power.
(10)5
(9) Includes 2,200 shares held in trust with respect to which Mr. Argue has
sole voting power but no disposition power. Also includes 200 shares held
in trust with respect to which Mr. Argue has the authority to vote and
dispose of the shares.
(11)(10) Does not include 100104 shares held by Mrs. John B. Slaughter, as to which
Dr. Slaughter disclaims any beneficial ownership.
(12)(11) Includes 164,658182,658 shares with respect to which Mr. Neal holds options
exercisable within 60 days from December 31, 1994.1995. Does not include 7571,107
shares held by Mr. Neal's son, as to which Mr. Neal disclaims any
beneficial ownership.
(13) Does not include(12) Includes 30,492 shares held in a trust in which Mr. Allison is the
primary beneficiary and Mr. and Mrs. Allison are co-trustees with shared
voting power. Also includes 840 shares held byin a trust in which Mrs.
Dwight L. Allison, as to whichJr. is the primary beneficiary and Mr. and Mrs.
Allison disclaims any beneficial ownership.are co-trustees with shared voting power. Includes 6,0008,000 shares
with respect to which Mr. Allison holds options exercisable within 60
days from December 31, 1994.
(14)1995.
(13) Includes 12,00014,000 shares with respect to which Mrs. Bok holds options
exercisable within 60 days from December 31, 1994.
(15)1995.
(14) Includes 59,00061,000 shares with respect to which Mr. Caldwell holds options
exercisable within 60 days from December 31, 1994.
(16)1995.
(15) Includes 94,78595,885 shares with respect to which Mr. Jenkins holds options
exercisable within 60 days from December 31, 1994.
(17)1995.
(16) Includes 56,95056,575 shares with respect to which Mr. Thompson holds options
exercisable within 60 days from December 31, 1994.1995. Does not include 99103
shares held by Mrs. Donald L. Thompson, as to which Mr. Thompson disclaims
any beneficial ownership interest.
(18)ownership.
(17) Includes 1,239,3841,398,362 shares with respect to which all executive officers
and directors as a group hold options exercisable within 60 days from
December 31, 1994.1995.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
During 1994,1995, there were eight meetings of the full Board of Directors and
nineten meetings of committees of the Board. All directors of the Company attended
at least 75% of the aggregate number of meetings of the Board and meetings of
Board committees of which they were members held during the time they served
on the Board or Committee.
Standing committees of the Board of Directors include the following:
The Audit Committee, which is composed of the following directors: Lawrence
R. Tollenaere (Chairman), Frank V. Cahouet, Sidney R. Petersen, John C. Argue,
Dwight L. Allison, Jr. and Joan T. Bok, met twice during 1994.1995. The functions
of the Audit Committee are to aid the directors in undertaking and fulfilling
their responsibilities for financial reporting to the stockholders; to support
and encourage efforts to improve the financial controls exercised by
management and to ensure their adequacy for purposes of public reporting; and
to provide better avenues of communication between the Board of Directors,
management and the external and internal auditors.
6
9
The Compensation and Executive Personnel Committee, which is composed of the
following directors: F. Daniel Frost (Chairman), Richard M. Ferry, Sidney R. Petersen, Lawrence
R. Tollenaere, Frank V. Cahouet and John C. Argue, met five times during 1995.
Richard M. Ferry and Peter W. Mullin met four timesalso served on this Committee during
1994.1995. The functions of the Compensation and Executive Personnel Committee are
to review new or modified programs in the areas of executive salary and
incentive compensation, deferred compensation, and stock plans; to review and
make recommendations to the Board concerning management's proposed option
grants, cash incentive awards and other direct and indirect compensation
matters; and to monitor equal opportunity and affirmative action programs and
practices.
6
The Ethics and Conflict of Interest Committee, which is composed of the
following directors: Frank V. Cahouet (Chairman), John B. Slaughter, Joan T.
Bok and Philip M. Neal, met oncedid not meet during 1994.1995. The functions of the Ethics
and Conflict of Interest Committee are to survey, monitor and provide counsel
on a continuing basis as to the business relationships, affiliations and
financial transactions of directors, officers and key employees, as they may
relate to possible conflicts of interest or violations of the Company's Legal
and Ethical Conduct Policy; to monitor compliance with the Foreign Corrupt
Practices Act in connection with the Company's relationship to domestic and
foreign governments, political parties and the agencies, instrumentalities and
officials of each; and to report and make recommendations to the full Board in
all instances where it is believed that possible violations of Company policy
or that Act could exist.
The Finance Committee, which is composed of the following directors: Sidney
R. Petersen (Chairman), Frank V. Cahouet, F. Daniel Frost, Charles D. Miller,
Richard M. Ferry, Peter W. Mullin, Dwight L. Allison, Jr. and Philip M. Neal,
met once during 1994.1995. The functions of the Finance Committee are to assist the
Board in consideration of matters relating to the financial affairs and
capital requirements of the Company; to provide an overview of the financial
planning and policies of the Company; and to review proposed budgets, proposed
acquisitions, bank loans and changes in the financial structure of the
Company.
The Nominating Committee, which is composed of the following directors: John
C. Argue (Chairman), R. Stanton Avery, F. Daniel Frost, Charles D. Miller and Richard M. Ferry,
met once during 1994.1995. The functions of the Nominating Committee are to review
the qualifications of candidates for board membership, to review the status of
a director when his or her principal position and/or primary affiliation
changes, to recommend to the Board of Directors candidates for election by
stockholders at annual meetings, to recommend candidates to fill vacancies in
directorships, to recommend to the Board of Directors the removal of a
director, if in the Company's best interest, and to make recommendations to
the Board of Directors concerning selection, tenure, retirement, and
composition of the Board of Directors. Stockholders desiring to make
recommendations concerning new directors must submit the candidate's name,
together with biographical information and the candidate's written consent to
nomination, to: Secretary, Nominating Committee of the Board of Directors,
Avery Dennison Corporation, 150 North Orange Grove Boulevard, Pasadena,
California 91103. Stockholders wishing to nominate new directors for election
at an annual meeting must comply with the requirements described under the
heading "GENERAL -- Stockholder Proposals" on p. 23.29.
The Strategic Planning Committee, which is composed of the following
directors: Charles D. Miller (Chairman), Frank V. Cahouet, F. Daniel Frost,
John C. Argue, Peter W. Mullin, Richard M. Ferry, Philip M. Neal, and John B.
Slaughter, did not meet in 1994.met once during 1995. The functions of the Strategic Planning
Committee are to review the Company's long-term strategic plan, objectives,
programs, and proposed acquisition candidates and divestitures; to review
steps being taken to improve shareholder value; and to make recommendations to
the Board of Directors on any of these matters.
The Executive Committee, which is composed of the following directors: H. Russell Smith (Chairman), R. Stanton Avery, F.
Daniel Frost (Chairman), Charles D. Miller, Lawrence R. Tollenaere and Philip
M. Neal, did not meet during 1994.1995. The function of the Executive Committee is
to act on an interim basis for the full Board and to report all such actions
to the Board for ratification at its next meeting.
Each director who is not an officer of the Company is paid an annual
retainer fee of $28,000$30,000 and attendance fees of $1,200 per Board meeting
attended, and $1,000$1,200 per committee meeting attended as Chairman of the
committee or $900$1,000 per committee meeting attended as a member of the
committee. The Chairmen of the Audit and Compensation and Executive Personnel
Committees are each also paid an annual retainer fee of $3,000,$4,000, and the
Chairmen of the Executive, Finance, the Nominating and the Ethics and Conflict of
7
10
Interest Committees are each paid an annual retainer fee of $2,000.$3,000. Under the
Company's Deferred Compensation Plan for Directors, each director may elect to
defer payment of all or specified portions of such fees, in which case the
director is entitled to interest accruals on the amounts so deferred at the
prime rate in effect at the end of the Company's preceding fiscal year
(adjusted annually), plus one-quarter of one percent. Directors are also
eligible to participate in two additional deferred compensation plans. Under
the Directors Deferred Compensation Plan, fees which are
7
deferred accrue interest at a "Declared Rate" (adjusted annually) equal to
Moody's Long-Term Corporate Bond Index Rate plus, if the director ceases to be
a director by reason of death, disability or normal retirement or elects to
receive a preretirement benefit, 6% per annum. Under the Directors Variable
Deferred Compensation Plan, fees which are deferred either accrue interest at
a fixed rate based on the 120-month rolling average of ten-year U.S. Treasury
Notes (plus, if the director ceases to be a director by reason of death,
disability or normal retirement, 25% of such rate per annum), or accrue at the
actual rate of return (less an administrative fee) of one of four investment
funds managed by an insurance company. Benefits payable by the Company under
these plans are secured with assets placed in an irrevocable trust.
Directors are also eligible to participate in the Retirement Plan for
Directors, whereby individuals who serve on the Company's Board of Directors
after 1982 and subsequently terminate their service as a director with at
least five years' tenure, are entitled to receive an annual benefit from the
Company equal to the annual director retainer fee plus 12 times the regular
meeting fee, as such fees are in effect on the date of termination, payable to
the director (or to his surviving spouse of at least one year or other
designated beneficiary) for the number of full or partial years the director
served on the Company's Board. Following the death of the director's surviving
spouse, or if there is no surviving spouse living at the time of the death of
the director, any benefits will be paid to one or more secondary beneficiaries
designated by the director prior to his or her death until the first to occur
of (i) receipt of the maximum benefit to which the director would have been
entitled had he or she survived,(ii) the death of the secondary beneficiaries,
if natural persons or (iii) benefits have been paid under the plan to the
director, surviving spouse, and/or the secondary beneficiaries for a combined
period of ten years.
Non-employee directors also participate in the Director1988 Stock Option Plan for
Non-Employee Directors, pursuant to which options to purchase a total of
38,00020,000 shares of Company common stock were granted in 19941995 to the non-employee
directors eligible to receive grants under the Director Plan, including options to purchase a total of 20,000 shares which
were granted on December 1, 1994, subject to stockholder approval of the
amendments to the Director Plan described under the heading "The 1988 Stock
Option Plan for Non-Employee Directors (Proxy Item 2)" (the "Amendments").such plan. The option price for
each such option granted is 100% of the fair market value of Company common
stock on the date of grant. All options granted have a term of ten years, and
become exercisable in two cumulative installments of 50% of the number of
shares with respect to which the option was initially granted, on each of the
first and second anniversaries of the grant date, except that if the
Amendments are approved by stockholders, all options
owned by a director which are unexercisable on the date the director retires
at or after age 72 will become fully exercisable on the date of such
retirement. The Director Planplan calls for each non-employee director to receive an option
grant with respect to 5,000 shares upon joining the Board of Directors, and
automatic annual grants thereafter to each continuing non-employee director
with respect to 2,000 shares.
In addition, the Company made a cash payment in February 1995 to Mr. F.
Daniel Frost in the amount of $11,560. This payment was made in lieu of the
regular grant of an option to purchase 2,000 shares of the Company's common
stock under the Director Plan which Mr. Frost did not receive in February 1994
because he had attained the age of 72 at that time and therefore had ceased to
be eligible to receive options under the Director Plan. Such amount represents
the grant date present value of an option for 2,000 shares at an exercise price
of $30.5625 (the price at which options were granted to the other directors
under the Director Plan on February 24, 1994) under a Black-Scholes option
pricing model adapted for use in valuing director stock options.
8
11
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The following table and accompanying notes show for the Chief Executive
Officer and the other four most highly compensated executive officers of the
Company for 1994,1995, the compensation paid by the Company to such persons for
services in all capacities during 19941995 and to the extent required by applicable
rules, the preceding two fiscal years.
SUMMARY COMPENSATION TABLE
LONG TERMLONG-TERM COMPENSATION
----------------------------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
ANNUAL COMPENSATION ------------------------------------------------------- --------------------- --------
----------------------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(1) ($) ($) (#)(2) (3) ($)(4)(5)
------------------ ---- -------- ------------------ ------------ ---------- ---------- -------- ------------
Charles D. Miller 1995 $731,667 $1,000,000 -- -- 100,000 -- $177,728
Chairman and Chief 1994 $695,000 $850,000695,000 850,000 -- -- 167,000 $217,000 $167,904
Chairman and Chief167,904
Executive Officer 1993 683,333 555,000 -- -- 73,400 -- 120,038
Executive Officer 1992 650,000 530,000 -- -- 85,000 -- 164,410
Philip M. Neal 1995 $471,333 $ 600,000 -- -- 50,000 -- $ 62,936
President and Chief 1994 $440,000 $500,000440,000 500,000 -- -- 83,000 $137,400 $ 54,014
President and ChiefOperating Officer 1993 428,333 325,000 -- -- 37,200 -- 42,642
Operating Officer 1992 393,333 300,000 -- -- 41,000 -- 55,802
Kim A. Caldwell 1995 $311,667 $ 175,000 -- -- 23,000 -- $ 28,981
Senior Group Vice 1994 $289,084 $251,000289,084 251,000 -- -- 44,000 $127,200 $ 28,708
Senior Group VicePresident, 1993 271,000 165,000 -- -- 16,700 -- 19,405
President, 1992 245,333 155,000 -- -- 19,000 -- 25,712
Worldwide Materials
R. Gregory Jenkins 1995 $285,000 $ 225,000 -- -- 20,000 -- $ 38,517
Senior Vice President, 1994 $267,000 $200,000267,000 200,000 -- -- 33,000 $83,400 $ 35,960
Senior Vice President,Finance and Chief 1993 262,000 150,000 -- -- 14,600 -- 27,975
Finance and Chief 1992 247,100 140,000 -- -- 17,600 -- 42,876
Financial Officer
Donald L. Thompson 1995 $286,000 $ 236,000 -- -- 21,000 -- $ 19,202
Group Vice President, 1994 $252,084 $161,000252,084 161,000 -- -- 36,000 $28,700 $ 17,295
Group Vice President, 1993 219,250 85,000 -- -- 8,500 -- 14,595
Office Products 1992 175,667 75,0001993 219,250 85,000 -- -- 10,0008,500 -- 37,52714,595
- -------------------------
(1) Amounts shown include amounts earned but deferred at the election of
executive officers under the Company's deferred compensation plans and the
Company's Employee Savings Plan, a qualified defined contribution plan
under Section 401(k) of the Internal Revenue Code of 1986, as amended (the
"Code").
(2) Amounts for 1994 consist of options granted in February and December 1994.
The December grant was a result of a decision by the Board of Directors to
change the date of grants from the regular meeting of the Board in each
February to Decemberthe date of the regular meeting of the Board in each year,December
and consequently the two grants in 1994 represent grants inwith respect ofto
two years of service. Amounts for 1993each of 1995 and 19921993 consist of options granted in February
1993 and February 1992, respectively.only
one option grant.
(3) Amounts for 1994 consist of cash payments under the Company's Key
Executive Long-Term Incentive Plan for the cycle which was completed on
December 31, 1993. The determination of cash payments, if any, under the
Company's Amended and Restated Key Executive Long-Term Incentive Plan for
the cycle which was completed on December 31, 1995 will not be made until
the second quarter of 1996.
(4) Amounts consist of (i) Company contributions to deferred compensation
plans in lieu ofand Company contributions to the Company's Employee Savings Plan, a
401(k) plan, and, in the case of Mr. Thompson, Company contributions to the
Savings Plan;plan; (ii) Company contributions to the Company's Stock Holding and
Retirement Enhancement Plan, a leveraged employee stock ownership plan
which offsets benefits under the Retirement Plan for Employees of Avery
Dennison Corporation; and (iii) interest earned on deferred compensation
accounts above 120% of the applicable federal rate ("above market
interest"). These amounts for 19941995 are $39,112, $6,488$47,312, $4,419 and $122,304,$125,997,
respectively for Mr. Miller; $24,475, $6,488$28,682, $4,419 and $23,051,$29,835, respectively for
Mr. Neal; $15,398,
$4,521$16,835, $4,419 and $8,789,$7,727, respectively for Mr. Caldwell;
$14,198, $3,301$12,232, $4,419 and $18,461,$21,866, respectively for Mr. Jenkins; and $9,837, $6,488$13,368,
$4,419 and $970,$1,415, respectively for Mr. Thompson.
(5) A substantial portion of above market interest earned on deferred
compensation accounts for Messrs. Neal,Mr. Caldwell and Thompson (each of whom(who is under age 55) will not be
payable in the event that the executive
officer'shis employment terminates other than by reason
of death, disability or retirement.
9
12
OPTION GRANTS
The following table shows information regarding options granted in 19941995 to
each of the named executive officers under the Company's 1990 Stock Option and
Incentive Plan for Key Employees (the "1990 Plan") pursuant to the
Company's Second Amended and Restated Key Executive Long-Term Incentive Plan
(the "LTIP").
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
---------------------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES % OF
UNDERLYING TOTAL OPTIONS EXERCISE
OPTIONS GRANTED TO OR BASE
GRANTED EMPLOYEES IN PRICE EXPIRATION GRANT DATE
NAME (#)(1)(2) FISCAL YEAR ($/SH) DATE PRESENT VALUE($VALUE ($)(3)
---- ----------- ------------- ------------------- ---------- ----------------------------------------
Charles D. Miller 85,000 12.80% $30.5625 2/24/2004 $597,550
82,000 11.94% 32.5000 12/01/2004 701,100100,000 11.41% $47.2500 11/30/2005 $971,250
Philip M. Neal 42,000 6.33% 30.5625 2/24/2004 295,260
41,000 5.97% 32.5000 12/01/2004 350,55050,000 5.71% 47.2500 11/30/2005 485,625
Kim A. Caldwell 24,000 3.61% 30.5625 2/24/2004 168,720
20,000 2.91% 32.5000 12/01/2004 171,00023,000 2.63% 47.2500 11/30/2005 223,388
R. Gregory Jenkins 18,000 2.71% 30.5625 2/24/2004 126,540
15,000 2.18% 32.5000 12/01/2004 128,25020,000 2.28% 47.2500 11/30/2005 194,250
Donald L. Thompson 19,000 2.86% 30.5625 2/24/2004 133,570
17,000 2.48% 32.5000 12/01/2004 145,35021,000 2.40% 47.2500 11/30/2005 203,963
- -------------------------
(1) Amounts consist of non-qualifiedNon-qualified stock options granted in February and
December 1994. The December grant was a result of a decision by the Board of
Directors to change the date of grants from February to December of each
year, and consequently the two grants in 1994 represent grants in respect of
two years of service. All options were granted at fair market value for a term
of ten years under the 1990 Plan pursuant to the LTIP. The options vest
nine years and nine months from the date of grant, but are eligible for
accelerated vesting, beginning three years from the date of grant, if the
Company meets the "return on total capital" (as defined in the LTIP) test
set forth in the LTIP. This test generally measures the Company's return
on total capital against that of a specified group of other companies
approved by the Compensation and Executive Personnel Committee.
(2) The Compensation and Executive Personnel Committee may accelerate the time
at which an option becomes exercisable, and in the event of a "change of
control" of the Company (as defined in the option agreement) options
become immediately exercisable. However, no option will be accelerated to
the extent that such acceleration would subject the optionee to the excise
tax under Section 4999 of the Code.
(3) Option grant date values were determined using a Black-Scholes option
pricing model adapted for use in valuing executive stock options. In
determining the Black-Scholes value, the following underlying assumptions
were used: (i) stock price volatility is measured as the standard
deviation of the Company's stock price over the three years prior to grant
(ranges from .2254.1816 to .2838); (ii) dividend yield is measured as the
twelve month average ratio of dividends to month-end closing price (for
the month in which the dividend was declared) prior to grant of the option
(ranges from 2.33%2.66% to 3.19%2.86%); (iii) the risk-free rate of return
represents the weekly average of the ten-year Treasury bond rates for the
52 weeks immediately preceding the grant date of the options (ranges from
5.75%6.60% to 6.90%7.06%); (iv) option term represents the period from the date of
grant of each option to the expiration of the term of each option (10
years); (v) vesting restrictions are reflected by reducing the value of
the option determined by the Black-Scholes model by 5% for each full year
of vesting restrictions, assuming that exercisability of the options was
accelerated to the fifth anniversary of the option grant date as a result
of meeting the performance condition described in footnote (1) as of that
date (i.e., 25%). In the event that the performance condition described in
footnote (1) is met later than the fifth anniversary of the grant date, or
is not met 10
13
during the term of the options, the grant date present value of
the options would be lower. In the event that such performance condition
is not met at all and the options become exercisable nine years and nine
months after the options are granted, the grant date present value of the
February 1994 and
December 1994 option grantsoptions would be $408,000 and $477,240, respectively$600,000 for Mr. Miller; $201,600 and $238,620, respectively$300,000 for Mr. Neal; $115,200 and
$116,400, respectively$138,000
for Mr. Caldwell; $86,400 and $87,300, respectively$120,000 for Mr. Jenkins; and $91,200 and $98,940, respectively$126,000 for Mr. Thompson.
The Black-Scholes option pricing model establishes a cash equivalent value
for an option on the date of grant. The Company's use of such model is not
intended to forecast any future appreciation in the price of the Company's
stock. In addition, no gain to the optionees is possible without
appreciation in the price of the Company's common stock, which will
benefit all stockholders. If the market price of the stock does not exceed
the exercise price of the options at some time after the options become
exercisable or if they terminate unvested or unexercised, the value of the
options will ultimately be zero.
10
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table shows for each of the named executive officers the
shares acquired on exercise of options during 1994,1995, the difference between the
option exercise price and the market value of the underlying shares on the
date of such exercise, and (as to outstanding options at December 31, 1994)1995)
the number of unexercised options and the aggregate unrealized appreciation on
"in-the-money", unexercised options held at such date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR-ENDYEAR- FISCAL YEAR-
END (#) FISCAL YEAR-END($END ($)(2)
--------------- ----------------------
SHARES ------------------- ---------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED($REALIZED ($)(1) UNEXERCISABLE UNEXERCISABLE
---- ------------ -------------- ------------------- ------------------------------------ ---------------- --------------- ----------------------
Charles D. Miller 80,000 $1,256,755 401,078/342,900 $5,250,525/-- -- 503,578/340,400 $13,408,990/$2,300,8695,099,588
Philip M. Neal 15,500 246,359 155,658/23,000 556,500 182,658/170,200 $2,127,355/$1,143,075 4,837,501/$2,552,200
Kim A. Caldwell -- -- 55,750/ 82,95017,000 423,000 61,000/ 83,700 $ 762,234/1,563,813/$ 539,2161,274,263
R. Gregory Jenkins 28,000 417,374 91,535/ 68,450 $1,233,293/16,500 359,063 95,885/ 67,600 $ 462,3032,529,249/$1,012,975
Donald L. Thompson -- -- 50,525/ 49,1755,000 101,719 51,950/ 63,750 $ 665,281/1,386,250/$ 269,969877,000
- -------------------------
(1) Market value of the common stock at the exercise date minus the exercise
price of the options exercised. Amounts in this column represent the value
realized by the named executive upon the exercise of stock options granted
in prior years. All options had exercise prices equal to the market price
of the Company's stock on the date the options were granted, and vested on
the basis of the executive's continued employment with the Company. Thus,
the amount realized upon exercise of the options resulted directly from
appreciation in the Company's stock price during the executives' tenure
with the Company.
(2) Market value of the common stock at December 31, 19941995 minus the exercise
price of "in-the-money" options.
11
LONG-TERM INCENTIVE PLAN AWARDS
Under the LTIP, key executives recommended by the Company's Chief Executive
Officer and designated by the Compensation and Executive Personnel Committee
of the Board of Directors (the "Committee") are eligible to receive annual
grants of stock options and to earn a deferred cash incentive award based on
the financial performance of the Company and, in some cases, its business
units. Participants in the LTIP are eligible to earn a deferred cash incentive
award after the end of each three-year performance cycle, which cycles begin
every other year (e.g., 1991, 1993 and 1995). Option grants pursuant to the
LTIP are made under the 1990 Plan.
CashThe following table shows, for each of the named executive officers, the
estimated future payouts, made in 1994if any, under the LTIP for the performance cycle
which began in 11
14
19911995. Threshold amounts are the minimum amounts which could be
paid under the LTIP and endedassume that the minimum level of performance is
achieved with respect to only one of the two pre-established performance
objectives (return on total capital and earnings per share) during the
performance cycle. If such performance is not achieved, amounts would be zero.
In addition, maximum awards would not be paid unless the Company achieved pre-
established objectives substantially in 1993 are set forthexcess of these objectives.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR (1)
PERFORMANCE OR ESTIMATED FUTURE PAYOUT UNDER
NUMBER OF SHARES, OTHER PERIOD UNTIL NON-STOCK PRICE BASED PLANS (3) (4)
UNITS OR OTHER MATURATION OR ------------------------------------
NAME RIGHTS (#) PAYOUT (2) THRESHOLD ($) TARGET ($) MAXIMUM ($)
---- ----------------- ------------------ ------------- ---------- -----------
Charles D. Miller -- 3 years $231,525 $661,500 $1,323,000
Philip M. Neal -- 3 years $150,337 $429,534 $ 859,068
Kim A. Caldwell -- 3 years $ 97,240 $277,830 $ 555,660
R. Gregory Jenkins -- 3 years $ 90,757 $259,308 $ 518,616
Donald L. Thompson -- 3 years $ 89,986 $257,103 $ 514,206
- ----------
(1) Each listed executive officer has been designated by the Committee as a
participant in the table on page 9. NoLTIP for the performance cycle which began in 1995 and
is eligible to receive a deferred cash incentive award after the end of
that cycle of a percentage of his base salary in effect at the end of the
performance cycle. The threshold (minimum), target and maximum awards were madeare
28 percent, 80 percent and 160 percent of the executive's base salary,
respectively. The amount of the executive's award will depend on the
Company's actual performance during the performance cycle versus the pre-
established performance objectives. See "Report of Compensation and
Executive Personnel Committee on Executive Compensation" for a more
detailed description of the LTIP.
(2) The performance cycle began on January 1, 1995 and ends on December 31,
1997.
(3) Estimated future payouts under the LTIP are calculated using projected
salaries for the executive officers at December 31, 1997, the end of the
performance cycle.
(4) Upon a "change of control" (as defined in 1994.the LTIP) of the Company, each
executive will be entitled to receive a cash payment equal to his target
award based on his annual base salary rate in effect at the time of the
change of control. However, no such payment will be made to the extent
that the payment would be subject to the excise tax under Section 4999 of
the Code.
12
RETIREMENT PLAN
The table set forth below illustrates representativeCompany provides retirement benefits
for various compensation levels and service periods for employees under the Retirement
Plan for Employees of Avery Dennison Corporation (the "Retirement Plan").
PENSION PLAN TABLE(1)
YEARS OF SERVICE(2)
----------------------------------------------------------
REMUNERATION (2)(3) 15 20 25 30 35
------------------- ------- ------- -------- -------- --------
$200,000 $50,796 $67,728 $ 84,661 $101,593 $118,525
$250,000 and above $60,204 $80,272 $100,341 $120,409* $140,477*
- ---------------
* For
the planBenefit Restoration Plan (the "BRP"), described below. Benefits under the
Retirement Plan are based on compensation and are calculated separately for
each year beginning December 1, 1993, amountof service using the formula 1.25% times compensation up to the
breakpoint (currently $24,312, which is subject to annual
pension limitation of $118,800 imposed under Section 415the average of the Code.
(1) Amounts shown assume paymentSocial Security
wage bases for the preceding 35 years) plus 1.75% times compensation in excess
of the formbreakpoint. The results of a straightthe calculation for each year of service are
added together to determine the annual single life annuity level
compensation, and areRetirement Plan
benefit for an employee at normal retirement (age 65). The benefit is not
subject to deductions for Social Security payments or other offsets.
Amounts shown do not include estimated benefitspayable under the
Company's Supplemental Executive Retirement Plan described below.
(2) Compensation covered by the Retirement Plan may be reduced in accordance with
certain Code provisions which, as applied to plan years beginning on or after
December 1, 1994, limited the amount of compensation used to determine annual
benefit accruals under the Retirement Plan to the first $150,000 of covered
compensation and which limited the annual pension benefit payable under the
Retirement Plan to $120,000. The Company established the BRP in 1995 to
provide for the payment of supplemental retirement benefits to eligible
employees, including each of the individuals listed in the table on page 9,
whose Retirement Plan benefits are limited under the foregoing Code
provisions. The BRP is an unfunded excess benefit plan which is administered
by the sumCompany. Benefits are payable under the BRP in amounts equal to the
amount by which a participant's benefits otherwise payable under the
Retirement Plan, with respect to periods from and after December 1, 1994, are
reduced under the applicable provisions of the 1994Code.
Compensation covered by the Retirement Plan includes both salary as shown in the
third column in that table and the 1993 bonus
(which was paid in 1994) as
shown in the fourth column in that table,amounts, less amounts deferred at the election of executive officersemployees under the
Company's deferred compensation plans and the Company's Employee Savings Plan.
Such coveredHowever, the BRP covers compensation for
Messrs. Miller, Neal, Caldwell, Jenkins and Thompson is $1,111,760,
$628,000, $311,884, $266,400 and $321,844, respectively. Full yearswithout deduction of credited serviceamounts deferred
under such plans. Hence the retirement benefits payable to each of the
individuals listed in the table on page 9 under the Retirement Plan forand the
BRP, taken together, will be based (for each year of service from and after
December 1, 1994) on the sum of the salary and bonus amounts (including all
deferred amounts), earned in each such year. The estimated annual benefits
payable to each of these individuals at normal retirement are as
follows: Charles D.$176,949 for Mr.
Miller, 29 years; Philip M.$256,847 for Mr. Neal, 19 years; Kim A.$243,683 for Mr. Caldwell, 20 years; R. Gregory$117,709 for Mr.
Jenkins, 20 years; and Donald L.$149,833 for Mr. Thompson, 20 years.
(3) For the plan year beginning December 1, 1993, compensation used to determinerespectively. These estimated benefits
do not include any assumption for annual benefit accruals under the Retirement Plan was limited under the Code
to the first $235,840 of coveredincreases in compensation.
Benefits under the Company's Retirement Plan and the BRP are coordinated
with benefits from the Stock Holding and Retirement Enhancement Plan (the
"SHARE Plan"), a leveraged employee stock ownership plan. Under this
arrangement, the pension benefit to which an employee would otherwise be
entitled under the Retirement Plan and the BRP ("basic pension benefit") is
provided first under the SHARE Plan and then, to the extent necessary, under
the Retirement Plan.Plan and the BRP. If the sum of the Retirement Plan benefit
accrued before adoption of the SHARE Plan and the SHARE Plan benefit exceeds
the basic pension benefit, the employee receives the higher benefit.
The Supplemental Executive Retirement Plan (the "SERP"), adopted in 1983, is
designed to provide its participants with additional incentives to further the
Company's growth and development and as an inducement to remain in its
service. Participants designated by the Committee of the Board of Directors
are offered benefits under this plan to supplement those to which they may be
entitled at the time of their retirement. The Committee has designated Charles
D. Miller as a participant in this plan. Mr. Miller's participation has been
set to commence upon his retirement at or after age 65 at a benefit level
which, when added to the benefits to which he will be entitled from the
Retirement Plan, the BRP and the SHARE Plan at the time of his retirement,
Company contributions to the Employee Savings Plan and Social Security, will
equal 62.5% of his final three-year average compensation, plus an additional
0.5% of such compensation for each year of employment after age 65 (or during
which termination compensation payments under his October 24, 1990 agreement
with the Company are being made). Assuming retirement at age 70, and certain
modest increases in compensation over the next fivetwo years, Mr. Miller's
estimated annual retirement benefit under the SERP would be $530,000. Survivor
and disability
13
benefits are also payable under the SERP under certain circumstances. Benefits
payable under the SERP are secured with assets placed in an irrevocable trust.
The
12
15 cost of benefits payable under the SERP will be recovered from the
proceeds of life insurance purchased by the Company if assumptions made as to
life expectancy, policy dividends, and other factors are realized.
OTHER INFORMATION
On October 24, 1990, the Company entered into an agreement with Mr. Miller,
replacing Mr. Miller's substantially similar 1982 agreement with the Company.
The new agreement providesproviding that if Mr. Miller's employment with the Company is terminated for
any reason other than cause, retirement at or after age 70 or voluntary
resignation or following a "change of control" of the Company (as defined in
the agreement), the Company must for three years thereafter or until he
reaches age 70, whichever first occurs, pay Mr. Miller (or his beneficiary,
should he die before all such payments have been made) annual termination
compensation equal to the highest compensation (salary plus bonus) paid to him
in any of the three previous years (half of his average annual compensation
over this period for disability termination) and continue coverage during such
period for Mr. Miller, and to the extent possible for his spouse, under
existing life, accident, medical and dental plans. Amounts to which Mr. Miller
would be entitled under this agreement are reduced to the extent of any
compensation he earns from any new employment. If he dies while receiving
disability termination payments, or if his employment is terminated by death,
his spouse will be entitled to receive such disability termination payments,
as well as medical and dental benefits, until her death or September 1, 1997,
whichever first occurs. Following a change of control, payments to which Mr.
Miller would otherwise be entitled under other plans on account of a change of
control are to be limited to an aggregate amount equal to 2.99 times the "base
amount" as defined in Section 280G of the Code. If Mr. Miller's employment is
terminated for any reason other than cause, he will be entitled to purchase
the Company automobile, if any, then being provided for his use at the
depreciated book value thereof, and to have assigned to him at no cost
(although Mr. Miller must reimburse the Company for the cash value of the
policy, if any), and with no apportionment of prepaid premiums, any assignable
insurance policy then owned by the Company relating specifically to him (paid
up to age 70).
On October 23, 1990, Mr. Neal entered into an agreement with the Company
substantially the same as that of Mr. Miller described above, except (i) Mr.
Neal receives no benefits from the Company except those provided under other
Company plans under the agreement if his employment is terminated by death or
disability, (ii) the period of compensation following termination other than
for cause, voluntary resignation or retirement (at or after age 65) or
following a change of control is 18 months or until age 65, whichever first
occurs, (iii) Mr. Neal must use his best efforts to secure new employment
following termination and compensation earned from such employment offsets
payments due under this agreement, and (iv) following a change of control Mr.
Neal's rights will be governed by the Company's Executive Employment Security
Policy described below, instead of this agreement.
Messrs. Neal and Jenkins have been designated by the Committee as
participants under the Company's Executive Employment Security Policy (the
"Policy"). The Policy provides that if within three years of a "change of
control" of the Company, as defined in the Policy, the employment of an
officer is terminated for reasons other than cause, death, disability, normal
retirement at or after age 65 or voluntary resignation (except for resignation
following a reduction in status or compensation), the officer will be entitled
to receive, for a period of one, two or three years, depending on length of
service (but in no event after the officer's 65th birthday), monthly
termination indemnity payments equal to one-twelfth of the highest annual
compensation (salary plus bonus) paid to such officer within the previous
three years. During this period the officer and his spouse are entitled to the
benefits provided under the Company's then existing life, accident, medical
and dental insurance plans, reduced to the extent they are provided by another
employer or under another group plan, and to the benefit of continued accrual
of benefits provided under the Company's Retirement Plan. During this period
the officer must use his best efforts to secure new employment, and
termination indemnity payments will be reduced by half the amount of any
compensation he receives from new employment. Messrs. Caldwell and Thompson
have been designated by the Committee as participants under the Company's 1985
Executive Employment Security Policy. This policy is in all respects identical
to the Policy except that it prohibits participants from receiving termination
compensation in excess of an amount which would subject such compensation to
the excise tax provided in Section 4999 of the Code.
1314
16
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "1934
Act") requires the Company's officers and directors, and persons who own more
than ten percent of a registered class of the Company's equity securities
(collectively, "Insiders"), to file initial reports of ownership and reports
of changes in ownership with the Securities and Exchange Commission (the
"SEC") and the New York Stock Exchange. Insiders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company and written representations from certain
Insiders that no other reports were required for such Insiders, the Company
believes that, during the 19941995 fiscal year, all Section 16(a) filing
requirements applicable to Insiders were complied with, except that one
report, covering two transactions, was filed
late by Mr. Wayne H. Smith, one report, covering one transaction, was filed late by Mr. R. Stanton Avery, and one report, covering one transaction, was filed
late by Mr. H. Russell Smith.Susan B. Garelli.
REPORT OF COMPENSATION AND EXECUTIVE PERSONNEL COMMITTEE
ON EXECUTIVE COMPENSATION
The Committee has furnished the following report on executive compensation.
OVERALL POLICY
The Company's executive compensation program is designed to be closely
linked to Company performance and returns to stockholders. To this end, the
Company developed several years ago an overall compensation strategy and specific
compensation plans that tie a significant portion of executive compensation to
the Company's success in meeting specified performance goals and to
appreciation in the Company's stock price. The overall objectives of this
strategy are to attract and retain the best possible executive talent, to
motivate these executives to achieve the goals inherent in the Company's
business strategy, to link executive and stockholders interests through equity
based plans and finally to provide a compensation package that recognizes
individual contributions as well as overall business results.
Each year the Committee, which is comprised exclusively of non-employee
directors, conducts a review of the Company's executive compensation program.
This review includes an assessment of the effectiveness of the Company's
compensation program and a comparison of the Company's executive compensation
and performance to comparable public corporations, including companies within
the Peer Group described under "Stockholder Return Performance". The Company
retains from time to time the services of executive compensation consultants
to provide to the Company and the Committee comparative data, benefit design
advice and analysis of the cost of incentives provided.
The Committee determines the compensation of the Company's 1920 executive
officers, including the individuals whose compensation is detailed in this
proxy statement, and sets policies for and reviews the compensation awarded to
another approximately 4546 highly compensated executives. This is designed to
ensure consistency throughout the executive compensation program. In reviewing
the individual performance of the 1920 executive officers (other than Mr.
Miller), the Committee takes into account the detailed performance reviews and
recommendations of Mr. Miller.
The key elements of the Company's executive compensation program consist of
base salary, annual bonus, stock options, and, for certain executives,
participation in the Company's LTIP. The Committee's policies with respect to
each of these elements, including the basis for the compensation paid and
awarded to Mr. Miller, the Company's Chairman and Chief Executive Officer, are
discussed below. In addition, while the elements of compensation described
below are considered separately, the Committee takes into account the full
compensation package afforded by the Company to the individual.
Under the 1993 Omnibus Budget Reconciliation Act ("OBRA"), income tax
deductions of publicly-traded companies may be limited to the extent total
compensation for certain executive officers exceeds $1 million (less the
amount of any "excess parachute payments" as defined in Section 280G of the
Code) in any one year, except for compensation payments which qualify as
"performance-based." The Committee has designed the
15
Company's compensation programs to conform with the OBRA legislation and
related
14
17 regulations so that total compensation paid to any employee will not
exceed $1 million in any one year, except for compensation payments which
qualify as "performance-based." However, the Internal Revenue Service has not yet
promulgated final regulations interpreting OBRA. Moreover, the Company may pay compensation
which is not deductible in limited circumstances when sound management of the
Company so requires. In furtherance of the Company's intention to design
compensation programs to conform with the OBRA legislation, at the Company's
1994 Annual Meeting the Company requested and received stockholder approval of
the LTIP,Company's Amended and Restated Long-Term Incentive Plan (the predecessor
of the LTIP), the Company's Senior Executive Incentive Compensation Plan and
certain amendments to the 1990 Plan.Plan, all of which are designed to conform with
the OBRA legislation.
BASE SALARIES
Base salaries for new executive officers are initially determined by
evaluating the responsibilities of the position to be held and the experience
of the individual, and by reference to the competitive marketplace for
executive talent, including a comparison to base salaries for comparable
positions at other companies. The Company participates each year in two
nationwide salary surveys of between approximately 350 and 400 large public
companies performed by nationally recognized compensation consulting firms.
The Committee uses the data compiled from these surveys to assist it in
establishing base salaries. In general, base salaries and total compensation
for executives are targeted to a range that is within the third quartile (the
fourth quartile being the highest) of the compensation paid by such other
companies. Mr. Miller's base salary is also targeted in this range, and his
total compensation is targeted to a range within the fourth quartile. In
addition, in establishing salary levels within that range, the Committee
considers the competitiveness of the executives' entire compensation package.
For 1994,1995, salary levels were within or below this range, based on competitive
salary data compiled in 19931994 and updated for use in 1994.1995.
Annual salary adjustments are determined by evaluating the performance of
the Company and of each executive officer, reviewing base salaries for
comparable positions at other companies contained in the salary surveys
described above, and, for selected senior executives, including Mr. Miller,
comparing the total compensation packages of the executives, including base
salary, with those of the companies in the Peer Group described under
"Stockholder Return Performance". In addition, the Committee takes into
account any new responsibilities. In the case of executive officers with
responsibility for a particular business unit, such unit's financial results
are also considered. The Committee, where appropriate, also considers non-financialnon-
financial performance measures. These include increases in market share,
manufacturing efficiency gains, and improvements in product quality, customer
service, working capital management, employee safety, relations with employees
and leadership development.
Based onWith respect to the then existing economic conditions in late 1993 and early 1994,base salary granted to Mr. Miller recommended that hisin 1995, the Committee
took into account a comparison of base salaries of chief executive officers of
the other companies contained in the salary surveys described above; the total
compensation packages of the executives, including base salary, and that of certain other executive
officers (including certain of the
officers whose compensation is detailedcompanies in this proxy statement)the Peer Group described under "Stockholder Return Performance",
remain constantthe Company's success in 1994. Accordingly,meeting several financial goals in 1994, including
return on total capital ("ROTC") and earnings per share ("EPS"); the
performance of the Company's common stock; and the assessment by the Committee
did
not increase such officers' base salaries during 1994.of Mr. Miller's individual performance, including his leadership with respect
to the development of long-term business strategies for the Company to improve
its economic value, succession planning and management continuity. The
Committee also took into account the longevity of Mr. Miller's service to the
Company and its belief that Mr. Miller is an excellent representative of the
Company to the public by virtue of his stature in the community and the
industries in which the Company operates. Mr. Miller was granted a base salary
figures
in the table on page 9of $750,000 for these officers reflect1995 (effective May 1995), an increase in salaries from
1993 to 1994 due to the fact thatof 7.9% over his
$695,000 base salaries were raised in mid-1993 and
continued at the increased levels throughoutsalary for 1994.
16
ANNUAL BONUS
The Company's executive officers, other than Messrs. Miller and Neal, are
eligible for an annual cash bonus under the Company's Executive Incentive
Compensation Plan (the "Executive Bonus Plan"). Under the Executive Bonus
Plan, individual and corporate performance objectives are established at the
beginning of each year. Eligible executives are assigned threshold, target and
maximum bonus levels. The Company performance measure for bonus payments is
based on several financial goals, including, in 1994, return on sales ("ROS"), return on
total capital ("ROTC")1995, ROTC and earnings per share ("EPS").EPS. For
executive officers with responsibility for a particular group, each of which
consists of several business units, the performance measure is based on the
group's net income and ROTC. The Committee weighs these financial goals very
heavily. Each of the specified financial performance measures is given
approximately equal weight. In 1994,1995, the Company exceeded each of its targeted financial goals, and each of the
groups exceeded each of its targeted
financial goals. The Committee also considers the individual non-financial
performance measures
15
18 described above under "Base Salaries" in determining
bonuses under the Executive Bonus Plan, but to a much lesser extent than the
financial goals described above.
Messrs. Miller and Neal are eligible for an annual cash bonus under the
Company's Senior Executive Incentive Compensation Plan (the "Senior Executive
Bonus Plan") which was approved by stockholders in 1994 as part of the
Company's policy to design the Company's compensation programs to conform with
the OBRA legislation and related regulations. Payments under the Senior
Executive Bonus Plan are based solely on the achievement of one or more of the
following pre-established objective performance goals: ROS, ROTC, EPS, return on
sales, economic value added, return on equity, net income, cash flow, sales
and total shareholder return (defined as cumulative shareholder return,
including the reinvestment of dividends, on the Company's common stock),
subject to the Committee's discretion to decrease awards which would otherwise
be payable under the Senior Executive Bonus Plan. In addition, no bonuses are
payable to the chief executive officer, chief operating officer or chief
financial officer (who is currently a participant in the Executive Bonus Plan)
unless the Company's pre-tax return on stockholders' equity exceeds a minimum
threshold and, in such event, the total of such executives' bonuses may not
exceed a specified percentage of the Company's pre-tax return on stockholders'
equity in excess of that minimum threshold. In 1994,1995, the Company substantially
exceeded each of its three targeted performance goals (ROS, ROTC(ROTC and EPS) under the
Senior Executive Bonus Plan. Based on this performance, Mr. Miller was awarded
a bonus of $850,000,$1,000,000, a 53%17.6% increase over the bonus paid in 1993.1994.
STOCK OPTIONS
Under the 1990 Plan, stock options are granted to the Company's executive
officers. In 1994, the Board of Directors decided to move the date of the
regular annual option grants to executives under the 1990 Plan from the date of
the regular meeting of the Board in each February to the date of the regular
meeting of the Board in each December. As a result, most executives received two
option grants in 1994 (one in February and one in December), but will not
receive another option grant until December 1995. The size of stock option awards is determined by the Committee using
as a guideline a formula which takes into account competitive compensation
data and the executive's total cash compensation opportunity (base salary and
bonus opportunity). The formula does not take into account the amount of stock
options previously awarded to the executive officers although the Committee
may do so. In the event of poor Company or individual performance, the
Committee can elect not to award options or grant options on fewer shares.
Stock options are designed to align the interests of executives with those
of the stockholders. The Committee believes that significant equity interests
in the Company held by the Company's management align the interests of
stockholders and management. The Company has adopted a stock ownership
philosophy for officers and directors which encourages each officer and
director to achieve and maintain certain specified levels of stock ownership
during his or her tenure with the Company. In furtherance of this philosophy,
the Company maintains a policy which limits the percentage of shares of the
Company's common stock which should be sold during each year.
Stock options are granted with an exercise price equal to the market price
of the common stock on the date of grant and with a ten-year term. Options for
LTIP participants (including the individuals whose compensation is detailed in
this proxy statement) vest nine years and nine months from the date of grant,
subject to accelerated vesting beginning three years from the date of grant if
the Company meets the ROTC test set forth in the LTIP. Options for the rest of
the Company's executives vest 25% per year over four years. This approach is
designed to promote the creation of stockholder value over the long termlong-term since
the full benefit of the compensation
17
package cannot be realized unless stock price appreciation occurs over a
number of years. In February 1994,addition, in 1995 the Committee amended the 1990 Plan,
subject to stockholder approval of the amendment at the Annual Meeting, to
extend the period of exercisability following retirement to provide incentive
to executives who are nearing retirement to maximize long-term stockholder
value for a period extending beyond their employment with the Company.
In 1995, Mr. Miller received options to purchase 85,000100,000 shares with an
exercise price of $30.5625$47.25 per share. In December 1994, Mr. Miller
received options to purchase an additional 82,000 shares with an exercise price
of $32.50 per share, as a result of the Board's decision to move the date of
annual option grants to executives as described above. Mr. Miller now owns directly 171,614158,237
shares of the Company's common stock and, with the 1994 grants,1995 grant, holds options
to purchase an additional 743,978843,978 shares, of which options to purchase 401,078503,578
shares were exercisable at December 31, 1994.
16
191995.
LTIP
Under the LTIP, key executives recommended by the Company's Chief Executive
Officer and designated by the Committee are eligible to receive annual grants
of stock options, as described above, and to earn a deferred cash incentive
award based on the financial performance of the Company and, in some cases,
its business units. Participants in the LTIP are eligible to earn a deferred
cash incentive award after the end of each three-year performance cycle, which
cycles begin every other year (e.g., 1991, 1993 and 1995). Option grants
pursuant to the LTIP are made under the 1990 Plan and are described above
under "Stock Options".
Cash payouts madeDuring 1995, the Committee designated each of the executive officers whose
compensation is detailed in 1994
underthis proxy statement, and certain other
executives, as participants in the LTIP for the performance cycle which began
in 19911995. The determination of cash payouts, if any, under the Company's
Amended and Restated Key Executive Long-Term Incentive Plan (the predecessor
of the LTIP) for the performance cycle begun in 1993 and ended in 1993
are set forth1995 is not
expected to be made until the second quarter of 1996.
Each of the most senior group of executives who is designated as a
participant in the tableLTIP (including Mr. Miller and the other executives whose
compensation is detailed in this proxy statement) ("Senior Executives") is
eligible to receive (after the end of the performance cycle (1997)) a deferred
cash incentive award of a percentage of his base salary in effect at the end
of the cycle. The threshold (i. e., minimum), target and maximum awards are 28
percent, 80 percent and 160 percent of the executive's base salary,
respectively. The award is based on page 9. Nothe Company's achievement of certain pre-
established ROTC and EPS objectives, each of which is given equal weight. The
threshold award of 28 percent of base salary will be earned if the Company
meets at least 80 percent of either the ROTC or the EPS objective. The target
award of 80 percent of base salary will be earned if the Company achieves 100
percent of each of the ROTC and EPS objectives. The maximum award will be
earned only if the Company achieves pre-established objectives substantially
in excess of these objectives.
Participants other than Senior Executives ("Other Participants") are divided
into categories under the LTIP based on their positions with the Company.
Target and threshold awards are based on the Company's achievement of certain
pre-established ROTC and EPS objectives (each of which is given equal weight)
or, for executives who are responsible for a business unit, the unit's
achievement of pre-established ROTC and net income objectives (each of which
is given equal weight). Threshold awards for Other Participants, ranging from
10.5 percent to 21 percent of base salary (depending on the category), will be
earned if at least 80% percent of one of the applicable objectives is met.
Target awards ranging from 30 percent to 60 percent of base salary will be
earned if 100 percent of both objectives is achieved. Maximum awards ranging
from 60 percent to 120 percent of base salary, depending on the category, will
be earned only if the Company achieves pre-established objectives
substantially in excess of these objectives and, for executives who are
responsible for a business unit, such business unit reaches certain levels of
achievement of its ROTC and net income objectives. In addition, for Other
Participants, the Committee may, in its discretion, provide for deferred cash
incentive awards werein excess of the awards which would be made underbased on the
LTIPformulae contained in 1994.the LTIP.
18
CONCLUSION
Through the programs described above, a very significant portion of the
Company's executive compensation is linked directly to individual and Company
performance and stock price appreciation. In 1994, as in previous years,1995, approximately 50% of the
Company's executive compensation (over 50%60% for the individuals listed in the
table on page 9) consisted of these performance-based variable elements. In
the case of Mr. Miller, approximately 65%70% of his 19941995 compensation consisted
of performance-based variable elements. The Committee intends to continue the
policy of linking executive compensation to Company performance and returns to
stockholders, recognizing that the ups and downs of the business cycle from
time to time may result in an imbalance for a particular period.
February 23, 199522, 1996
F. Daniel Frost, Chairman
John C. Argue
Frank V. Cahouet
Richard M. Ferry
Peter W. Mullin
Sidney R. Petersen
Lawrence R. Tollenaere
17
20
STOCKHOLDER RETURN PERFORMANCE
As required by the rules of the SEC, the followingThe first graph below compares the Company's cumulative stockholder return
on its common stock, including the reinvestment of dividends, with the return
on the Standard & Poor's 500 Stock Index (the "S&P 500 Index") and the average
return, weighted by market capitalization, of a peer group of companies (the
"Peer Group"). In addition, the Company has included the median return of the
Peer Group in the graph because, under the Company's LTIP, Company performance
is measured against the performance of other companies using a percentile
approach in which each company is given equal weight regardless of its size.
19
The Peer Group is comprised of The
Actava Group Inc. (formerly Fuqua Industries, Inc.), AMETEK, Inc., Avery Dennison Corporation,
Ball Corporation, Bemis Company, Inc., Boise Cascade Corporation, W.H. Brady
Co., Cabot Medical Corporation, Champion International Corporation, A.T. Cross
& Company, Deere & Company, The Dexter Corporation, Dover Corporation, Dresser
Industries, Inc., Echlin Inc., Engelhard Corporation, Ennis Business Forms,
Inc., Ethyl Corporation, Federal-Mogul Corporation, Ferro Corporation, H.B.
Fuller Company, The B.F. Goodrich Company, W.R. Grace & Co., Harris
Corporation, Harsco Corporation, Hercules Incorporated,Inc., Hunt Manufacturing Co.,
Illinois Tool Works Inc., Imo Industries Inc., James River Corporation of
Virginia, Johnson Controls, Inc., Masco Corporation, Maytag Corporation, The
Mead Corporation, Metromedia International Group (formerly The Actava Group
Inc.), Moore Corporation Limited, Nashua Corporation, National Service
Industries, Inc., Olin Corporation, Pentair, Inc., Pittway Corporation,
Premark International, Inc., Scott Paper Company, The Sherwin-Williams Company, The Standard
Register Company, Teledyne, Inc., Thomas & Betts Corporation, The Timken
Company, Union Carbide Corporation, Valhi, Inc., Wallace Computer Services,
Inc., Westvaco Corporation, and Witco Corporation. 18
21Scott Paper Co., which was
acquired in December 1995 by Kimberly-Clark, is removed from all periods.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN(1)RETURN (1)
OF AVERY DENNISON, S&P 500 INDEX AND PEER GROUP,
WEIGHTED AVERAGE(2)AVERAGE (2) AND MEDIAN
PERFORMANCE GRAPH APPEARS HERE
PEER GROUP
MEASUREMENT PERIOD AVERYPeer Group Peer
Measurement Period Avery S&P (Weighted Group
(Fiscal Year Covered) Dennison 500 (WEIGHTED PEER GROUP
(FISCAL YEAR COVERED) DENNISON INDEX AVERAGE) (MEDIAN)Index Average) (Median)
- ------------------ ---------- --------- ---------- -------
1989Measurement Pt- 12/31/90 100 100 100 100
1990(3) 68 97 78 80
1991 83FYE 12/31/91 122 130 126 105 97
1992 97 136 122 114
1993 103131
FYE 12/31/92 142 140 148 142
FYE 12/31/93 150 153 135
1994 128 152 161 135154 187 167
FYE 12/31/94 187 156 195 167
FYE 12/31/95 271 215 263 214
- -------------------------
(1) Assumes $100 invested on December 31, 19891990 and the reinvestment of
dividends.
(2) Weighted average is weighted by market capitalization.
20
During 1995, the Company undertook an exhaustive analysis of the composition
of the Peer Group which had not been revised since 1989. The Company
determined that the Peer Group was no longer an appropriate benchmark against
which to compare its performance and executive compensation (due, in part, to
the stockCompany's significant increase in size as a result of the merger of Avery
International Corporation and Dennison Manufacturing Company in 1990). As a
result of this analysis, the Company selected a new peer group (the "Updated
Peer Group") which is comprised of companies which the Company believes to be
more comparable in terms of size, industry, research and development
investment, international balance, and product lines. The graph below compares
the Company's cumulative stockholder return on its common stock, including the
reinvestment of dividends, with the return on the S&P 500 Index and the
average return, weighted by market capitalization, of the Updated Peer Group.
The Company has also included the median return of the Updated Peer Group in
the graph for the same reason as the median return of the Peer Group is
included in the first graph.
The Updated Peer Group is comprised of Air Products & Chemicals Inc.,
Armstrong World Industries Inc., Arvin Industries Inc., Avery Dennison
Corporation, Baker-Hughes, Inc., Bemis Company, Inc., Boise Cascade
Corporation, Cabot Corporation, Crane Co., Danaher Corporation, Dresser
Industries, Inc., Eaton Corporation, Ecolab Inc., Engelhard Corporation, Ethyl
Corporation, Federal-Mogul Corporation, Ferro Corporation, H. B. Fuller
Company, The B. F. Goodrich Co., W. R. Grace & Co., Great Lakes Chemical
Corporation, Harris Corporation, Harsco Corporation, Hercules Inc., Illinois
Tool Works Inc., Ingersoll-Rand Co., James River Corporation of Virginia, Mark
IV Industries Inc., The Mead Corporation, Moore Corporation Ltd., Morton
International Inc., Nacco Industries, Nalco Chemical Co., Newell Companies,
Olin Corporation, P.P.G. Industries Inc., Parker-Hannifin Corporation, Pentair
Inc., Pitney Bowes Inc., Premark International Inc., Rubbermaid Inc., Sequa
Corporation, The Sherwin-Williams Co., Snap-on Inc., Sonoco Products Co.,
Stanley Works, Tecumseh Products Co., Union Camp Corporation, Union Carbide
Corporation, Westvaco Corporation, and thatWitco Corporation. Scott Paper Co.,
which was acquired in December 1995 by Kimberly-Clark, is removed from all
dividends were reinvested.periods, and Baker-Hughes, Inc. is added to all periods.
21
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN (1)
OF AVERY DENNISON, S&P 500 INDEX AND UPDATED PEER GROUP,
WEIGHTED AVERAGE (2) AND MEDIAN
PERFORMANCE GRAPH APPEARS HERE
Updated
Peer Group Updated
Measurement Period Avery S&P (Weighted Peer Group
(Fiscal Year Covered) Dennison 500 Index Average) (Median)
- --------------------- -------- --------- ---------- ---------
- -
Measurement Pt- 12/31/1990 100 100 100 100
FYE 12/31/1991 122 130 135 136
FYE 12/31/1992 142 140 157 157
FYE 12/31/1993 150 154 189 177
FYE 12/31/1994 187 156 193 178
FYE 12/31/1995 271 215 250 228
- ----------
(1) Assumes $100 invested on December 31, 1990 and the reinvestment of
dividends.
(2) Weighted average is weighted by market capitalization.
(3) On May 25, 1990, Avery International Corporation announced its agreement to
merge with Dennison Manufacturing Company. The merger was completed on
October 16, 1990.
Stock price performance of the Company reflected in the above graphgraphs is not
necessarily indicative of future price performance.
22
COMPENSATION AND EXECUTIVE PERSONNEL COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
Effective as of December 31, 1995, Peter W. Mullin and Richard M. Ferry were
no longer members of the Committee. Peter W. Mullin, who was a member of the
Committee during 1995, is the chairman and chief executive officer and a
director of Mullin Insurance Services, Inc. ("MINC") and PWM Insurance
Services, Inc. ("PWM"), executive compensation and benefit consultants and
insurance agents. Mr. Mullin is also the majority stockholder of MINC and the
soleprincipal stockholder of PWM. During 1994,1995, the Company paid insurance
companies premiums for life insurance placed by MINC and PWM in 19941995 and prior
years in connection with various Company employee benefit plans. In 1994, the
insurance companies paid commissions to1995, MINC
and PWM earned commissions from such insurance companies in an aggregate
amount of approximately $522,000$408,900 for the placement and renewal of this
insurance, in which Mr. Mullin had direct and indirect interests approximating
$438,200.$334,900.
Richard M. Ferry, who was a member of the Committee during 1995, is theco-
founder, chairman and chief executive officer, a director and a principal stockholder of
Korn/Ferry International ("Korn/Ferry"), an executive search firm. During
1994,1995, Korn/Ferry received an aggregate of approximately $385,000$667,600 in payments
from the Company for worldwide executive search services, in which Mr. Ferry
had an indirect interest approximating $28,875.
19
22$49,737. In addition, Korn/Ferry and
PWM have interests in Strategic Compensation Associates ("SCA"). During 1995,
the Company paid SCA a total of $233,300 for consulting assignments, in which
Mr. Ferry and Mr. Mullin had indirect interests approximating $8,132 and
$47,387, respectively.
VOTING SHARES
Stockholders of record at the close of business on March 3, 1995,February 27, 1996, are
entitled to notice of, and to vote at, the Annual Meeting. There were
53,304,27152,798,966 shares of common stock of the Company outstanding on March 3, 1995.February 27,
1996.
PRINCIPAL STOCKHOLDERS
Whenever in this proxy statement information is presented as to "beneficial
ownership", please note that such ownership indicates only that the person
shown, directly or indirectly, has or shares with others the power to vote (or
to direct the voting of) or the power to dispose of (or to direct the
disposition of) such shares; he or she may or may not have any economic
interest in the shares. The reporting of information herein does not
constitute an admission that any such person is, for the purpose of Section 13
or 16 of the 1934 Act, the "beneficial owner" of the shares shown herein.
To the knowledge of the Company, the following was the only person or group
who, as of December 31, 1994,1995, owned beneficially 5% or more of the outstanding
common stock of the Company.
NAME AND ADDRESS NUMBER OF SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
- ------------------- ------------------ --------
R. Stanton Avery.............................. 2,716,324(1)Avery.................................... 2,691,224 (1) 5.07%
150 No. Orange Grove Blvd.
Pasadena, CA 91103
- -------------------------
(1) ReferDoes not include 10,377 shares held by Mrs. R. Stanton Avery, as to the table on page 5 for details ofwhich
Mr. Avery'sAvery disclaims any beneficial ownership. Includes 137,736 shares held
by The Durfee Foundation, as to which Mr. Avery as a director of that
foundation shares the authority to vote and to dispose of the shares, but
in which Mr. Avery has no economic interest. Also includes 1,690,224
shares held by the testamentary trust created by the will of Dorothy
Durfee Avery. As the sole trustee, Mr. Avery has the right to vote and to
dispose of the shares; he is also entitled to receive the trust income
during his lifetime.
The Company's Employee Savings Plan and SHARE Plan, and the Dennison
Manufacturing Company Bargaining Unit Employee Stock Ownership Plan (collectively, the
"Plans") together owned a total of 6,070,3676,160,251 shares of Company common stock on
December 31, 1994,1995, or 11.34%11.6% of Common Stock then outstanding. Although the
Company is the Administrator of the Plans, each plan was established and is
administered to achieve the different purposes for which it was created for
the exclusive benefit of its participants, and employees participating in the
Plans are entitled to vote all shares allocated to their accounts.
Accordingly, such plans do not constitute a "group" within the meaning of
Section 13(d) of the 1934 Act.
23
THE 19881990 STOCK OPTION AND INCENTIVE PLAN FOR NON-EMPLOYEE DIRECTORSKEY EMPLOYEES (PROXY ITEM 2)
PROPOSED AMENDMENTS
Upon the recommendation of the Committee, the Board of Directors has
adopted, subject to stockholder approval, the following amendmentsan amendment to the Director1990 Plan (the "Amendments"):
1. a changeto
extend the period of exercisabilty, following retirement, for options granted
on or after November 30, 1995 (i) to the full term of the option for the Chief
Executive Officer and Chief Operating Officer; (ii) to the lesser of five
years or the full term of the option for options granted to participants in
the dateLTIP or any successor plan; and (iii) to the lesser of grant of options underthree years or the
Director Plan from
the date of each regular February meetingfull term of the Board of Directors to
the date of each regular December meeting of the Board of Directors;
2. the removal of the prohibition on the granting of options under the
Director Plan to persons 72 years of age or older;
3. a change in the date of accelerated vesting of a director's
unexercisable options from his 72nd birthday to the date of such
director's retirement at or after age 72;
4. an extension of the Director Plan's termination date from January 31,
1997 to January 31, 2007; and
5. the addition of a provision permitting directors to designate
beneficiaries to receive vested options in the event of their deaths.
20
23option for all other optionees.
DESCRIPTION OF THE DIRECTOR1990 PLAN
In January 19881990 the Company's Board of Directors adopted the Director1990 Plan and
in March 19881990 the stockholders approved it. In February 1991 and January 1994,
the Board of Directors adopted certain amendments to the 1990 Plan which were
approved by the stockholders in March 1991 and April 1994, respectively. The
Director1990 Plan succeeds the Company's 1988 Stock Option and Stock Appreciation
Rights Plan for Key Employees ("1988 Plan"), which covered 4,000,000 shares of
the Company's Common Stock. The 1988 Plan was adopted by the Board of
Directors and then approved by the stockholders in March 1988 as a successor
to the expired 1973 Amended Stock Option and Stock Appreciation Rights Plan
("1973 Plan").
The principal purpose of the 1990 Plan is intended to permit the Company to attractprovide incentives for officers
and retain the services of experienced and
knowledgeable independent directors for the benefitkey employees of the Company and its stockholders,subsidiaries through granting of
options under the 1990 Plan, thereby stimulating their personal and active
interest in the Company's development and financial success, and inducing them
to provide additional incentiveremain in the Company's employ. Options granted pursuant to the Company's
LTIP are granted under the 1990 Plan (see "Report of Compensation and
Executive Personnel Committee on Executive Compensation" for such directorsa description of
the LTIP).
Under the 1990 Plan, 7,950,000 shares of Common Stock (or their equivalent
in other equity securities) are authorized for issuance upon exercise of
options and stock appreciation rights ("SAR's") under the 1973 Plan and the
1988 Plan and stock options, SAR's and other awards under the 1990 Plan. The
Company has no outstanding SAR's, restricted stock or forms of award other
than stock options. As of December 31, 1995, a total of 4,819,865 shares were
subject to continue
to workoutstanding stock options held by approximately 490 officers and
key employees under the 1990 Plan, the 1988 Plan and the 1973 Plan. Assuming
that all outstanding options are exercised, 688,926 shares remained available
for the best interestsgrant of new stock options, SAR's, restricted stock, dividend
equivalents, performance awards and stock payments under the 1990 Plan as of
December 31, 1995. On February 27, 1996, the closing price of a share of the
Company's Common Stock on the New York Stock Exchange Composite Tape was
$54.875.
The shares available under the 1990 Plan upon exercise of stock options,
SAR's and other awards, and issuance as restricted stock, may be either
previously unissued shares or issued shares which have been repurchased by the
Company, and may be equity securities of the Company other than Common Stock.
The 1990 Plan provides for appropriate adjustments in the number and its stockholders.kind of
shares subject to the 1990 Plan and to outstanding grants thereunder in the
event of a stock split, stock dividend or certain other types of
recapitalizations, including restructuring.
If any portion of a stock option, SAR or other award terminates or lapses
unexercised, or is canceled upon grant of a new option, SAR or other award
(which may be at a higher or lower exercise price than the option, SAR or
other award so canceled), or if restricted stock is repurchased by the
Company, the shares which were subject to the unexercised portion of such
option, SAR or other award, or the restricted stock repurchased, will continue
to be available for issuance under the 1990 Plan. The principalCompany has not repriced
any stock option or other award under the 1990 Plan.
The principle features of the Director1990 Plan as amended by the Amendments, are summarized below, but the
summary is qualified in its entirety by reference to the Director1990 Plan itself.
Copies of the Director1990 Plan will be available at the Annual Meeting and can also
be obtained by making written request of the Company's Secretary.
STOCK SUBJECT TO THE DIRECTOR PLAN
There24
ADMINISTRATION
The 1990 Plan is administered by the Committee, which consists of at least
three members of the Board, none of whom is an officer or employee of the
Company. The Committee is authorized to select from among the eligible
employees the individuals to whom options, SAR's, restricted stock purchase
rights and other awards are reserved for issuance uponto be granted and to determine the exercisenumber of
options grantedshares to be subject thereto and the terms and conditions thereof, consistent
with the 1990 Plan. The Committee is also authorized to adopt, amend and
rescind rules relating to the administration of the 1990 Plan.
The 1990 Plan also authorizes the Committee to delegate all or specified
administrative duties and authority, except the authority to make grants or
awards, to the Chief Executive Officer or the Secretary of the Company, or
both. In addition, the Committee may in its discretion grant to the Chief
Executive Officer of the Company authority to make grants or awards under the
Director1990 Plan 320,000 shares of Common Stock. Such shares may be authorized
and unissued shares or shares then held in the Company's treasury. Of such
shares, 128,000 shares remained available for future option grants as of
December 31, 1994. If any option granted under the Director Plan expires or
terminates without having been exercised in full, the sharesto employees other than executive officers, subject to such
option will againlimitations as the Committee may impose.
PAYMENT FOR SHARES
The exercise or purchase price for all options, SAR's, restricted stock and
other rights to acquire Company Common Stock, together with any applicable tax
required to be available forwithheld, must be paid in full in cash at the purposestime of issuance uponexercise
or purchase or may, with the exercise of
options granted under the Director Plan. On February 28, 1995, the closing stock
price of a shareapproval of the Company'sCommittee, be paid in whole or in
part in Common Stock onof the New York Stock Exchange
Composite Tape was $37.50.
OPTION GRANTS UNDER THE DIRECTOR PLAN
UnderCompany owned by the Director Plan, each non-employee director receives an option
grant with respect to 5,000 shares upon joining the Board of Directors,optionee and each
continuing non-employee director automatically receiveshaving a fair
market value on the date of exercise equal to the regular meetingaggregate exercise price of
the Boardshares so to be purchased. The Committee may also provide, in the terms of Directors in each December thereafter
an option for 2,000 shares. Employee directors who retire as employeesor other right, that the purchase price may be payable within thirty
days after the date of the Company but
who remain on the Board are not entitledexercise. The Committee may also authorize other lawful
consideration to receive a 5,000 share option grant,
but will receive annual option grants as described above commencing on the
December next following their retirement. Appropriate adjustments in the number
of shares subjectbe applied to the Director Planexercise or purchase price of an award.
This may also include services rendered, or the difference between the
exercise price of presently exercisable options and to outstanding options will be made
in the event of stock splits, stock dividends or certain other types of
recapitalization, but the options granted thereafter will not be adjusted for
such events. Only non-qualified stock options may be granted under the Director
Plan. At present, eight non-employee directors are eligible to participate in
the Director Plan (four of the non-employee directors are over age 72). Upon
approval of the Amendments by the stockholders, all ten continuing non-employee
directors will be eligible to participate in the Director Plan. Each of these
directors received the 2,000 share option grant described above on December 1,
1994, subject to stockholder approval of the Amendments at the Annual Meeting.
The grant date present value of these options using a Black-Scholes option
pricing model adapted for use in valuing director stock options was $21,060 for
each non-employee director and $210,600 in the aggregate. Values of options
granted in the future under the Director Plan are not presently determinable.
The option price for each option granted under the Director Plan is 100% of the fair market value of
the Common Stock covered by such options on the date of grant.
Options granted underexercise.
AMENDMENT AND TERMINATION
Amendments of the Director1990 Plan have a term of ten years and vest
and become exercisable in two cumulative installments of 50% ofto increase the number of shares initiallyas to which
options, SAR's restricted stock and other awards may be granted on each(except for
adjustments resulting from stock splits, etc.) require the approval of the
first and second anniversariesCompany's stockholders. In all other respects the 1990 Plan can be amended,
modified, suspended or terminated by the Board of Directors, unless such
action would otherwise require stockholder approval as a matter of applicable
law, regulation, or rule. Amendments of the Plan will not, without the consent
of the participant, affect such person's rights under an award previously
granted, unless the award itself otherwise expressly so provides. No
termination date is specified for the 1990 plan.
ELIGIBILITY
Options, SAR's, restricted stock and other awards under the 1990 Plan may be
granted to individuals who are then officers or other employees of the Company
or any of its present or future subsidiaries (as defined in Section 425 of the
Code) and who are determined by the Committee to be key employees.
Approximately 480 officers and other employees are eligible to participate in
the 1990 Plan. More than one option, SAR, restricted stock grant date, exceptor other
award may be granted to a key employee, but the aggregate fair market value
(determined at the time of grant) of shares with respect to which an Incentive
Stock Option is first exercisable by an optionee during any calendar year
cannot exceed $100,000, and the Committee may not grant options to any
optionee during any calendar year covering more than 200,000 shares.
AWARDS UNDER THE 1990 PLAN
The 1990 Plan provides that allthe Committee may grant or issue stock options,
owned bySAR's, restricted stock, dividend equivalents, performance awards, stock
payments and other stock related benefits, or any combination thereof. Each
grant or issuance will be set forth in a directorseparate agreement with the person
receiving the award and will indicate the type, terms and conditions of the
award.
25
Nonqualified stock options ("NQSO's") will provide for the right to purchase
Common Stock at a specified price which are unexercisable
on the date the director retires at or after the age of 72 will become fully
exercisablemay be less than fair market value on
the date of grant (but not less than par value), and usually will become
exercisable in installments after the grant date. NQSO's may be granted for
any reasonable term.
Incentive stock options ("ISO's"), if granted, will be designed to comply
with the provisions of the Code and will be subject to restrictions contained
in the Code, including exercise prices equal to at least 100% of fair market
value of Common Stock on the grant date and a ten year restriction on their
term, but may be subsequently modified to disqualify them from treatment as an
incentive stock option.
Restricted stock may be sold to participants at various prices (but not
below par value) and made subject to such retirement.
Ifrestrictions as may be determined by
the Committee. Restricted stock, typically, may be repurchased by the Company
at the original purchase price if the conditions or restrictions are not met.
In general, restricted stock may not be sold, or otherwise transferred or
hypothecated, until restrictions are removed or expire. Purchasers of
restricted stock, unlike recipients of options, will have voting rights and
will receive dividends prior to the time when the restrictions lapse.
Stock appreciation rights may be granted in connection with stock options or
other awards, or separately. SAR's granted by the Committee in connection with
stock options or other awards typically will provide for payments to the
holder based upon increases in the price of the Company's Common Stock over
the exercise price of the related option or other awards, but alternatively
may be based upon criteria such as book value. There are no restrictions
specified in the 1990 Plan on the exercise of SAR's or the amount of gain
realizable therefrom, although they can be imposed by the Committee in SAR
agreements. The Committee may elect to pay SAR's in cash or in Common Stock or
in a combination of cash and Common Stock.
Dividend equivalents may be credited to a participant in the 1990 Plan. They
represent the value of the dividends per share paid by the Company, calculated
with reference to the number of shares covered by the stock options, SAR's or
other awards held by the participant.
Performance awards may be granted by the Committee on an optionee ceases toindividual or group
basis. Generally, these awards will be based upon specific agreements and may
be paid in cash or in Common Stock or in a director, other thancombination of cash and Common
Stock. Performance awards may include "phantom" stock awards that provide for
payments based upon increases in the price of the Company's Common Stock over
a predetermined period. Performance awards may also include bonuses which may
be granted by reasonthe Committee on an individual or group basis and which may be
payable in cash or in Common Stock or in a combination of deathcash and Common
Stock.
Stock payments may be authorized by the Committee in the form of shares of
Common Stock or
retirement, the optionee may exercise an option (unless previously terminated)
foror other right to purchase Common Stock as part of a
perioddeferred compensation arrangement in lieu of three months after such termination, but not after expirationall or any part of compensation,
including bonuses, that would otherwise be payable to a key employee in cash.
MISCELLANEOUS PROVISIONS
Options and other rights to acquire Common Stock of the option, to the extent the option was exercisable at the date of termination.
An option is exercisable for twelve or twenty-four months after death or
retirement from the Board of Directors, respectively, to the extent the option
was exercisable on the date of death or retirement, as the case may be.
21
24
However, optionsCompany granted
under the Director1990 Plan may provide for their termination upon dissolution or
liquidation of the Company, the merger or consolidation of the Company into
another corporation, the acquisition by another corporation of all or
substantially all of the Company's assets, or the acquisition by another
corporation of 80% or more of the Company's then outstanding voting stock; but
in such event the Committee may also give optionees and other grantees the
right to exercise their outstanding options or rights in full during some
period prior to such event, even though the options or rights have not yet
become fully exercisable. Options and other rights granted under the 1990 Plan
currently provide that in the event of a "change of control" of the Company
(as defined in the option)option or grant agreement) all previously unexercisable
options and rights become immediately exercisable.
No optionexercisable unless such options or
rights, or portions thereof, are determined by the Committee to constitute,
when exercised, "excess parachute payments" (as defined in Section 280G of the
Code).
26
The 1990 Plan specifies that the Company may make loans to Plan participants
to enable them to exercise options, purchase shares or realize the benefits of
other awards granted under the DirectorPlan. The terms and conditions of such loans,
if any are made, are to be set by the Committee.
In consideration of the granting of a stock option, SAR, dividend
equivalent, performance award or right to purchase restricted stock, the
employee must agree in the written agreement embodying such award to remain in
the employ of the Company or a subsidiary of the Company for at least one year
after the award is granted.
The 1990 Plan formerly provided that, subject to the respective option
agreements, stock options cannot be exercised after one year from the date the
optionee's employment terminates by reason of death or disability, nor more
than two years after retirement. The provision was amended in September 1995,
subject to stockholder approval at the Annual Meeting. See "Reasons for
Amendment" below. Option agreements may also provide for immediate termination
in the event the optionee terminates employment in violation of any employment
agreement or is discharged for good cause.
No option, SAR or other right granted under the 1990 Plan may be assigned or
transferred by its holderthe optionee, except by will or by the laws of intestate
succession or to a properly designated beneficiary. During the lifetime of the
holder anof any option or right, the option or right may be exercised only by
the holder, or his guardian or legal representative.
ADMINISTRATION OF THE DIRECTOR PLAN
The BoardCompany requires participants to discharge withholding tax obligations
in connection with the exercise of Directors administers the Director Plan.
AMENDMENT AND TERMINATION OF THE DIRECTOR PLAN
The Director Plan may be terminated, modifiedany option or amended by the
stockholders of the Company. The Board of Directors may also terminate the
Director Plan or modify or amend it in certain respects as set forth in the
Director Plan. No options may beother right granted under the
Director1990 Plan, after January
31, 2007.or the lapse of restrictions on restricted stock, as a condition to
the issuance or delivery of stock or payment of other compensation pursuant
thereto. Shares held by or to be issued to a participant may also be used to
discharge tax withholding obligations related to exercise of options or
receipt of other awards, subject to the discretion of the Committee to
disapprove such use. In addition, the Committee may grant to employees a cash
bonus in the amount of any tax related to awards.
FEDERAL INCOME TAX CONSEQUENCES
The tax consequences of the Director1990 Plan under current federal law are
summarized in the following discussion which deals with the general tax
principles applicable to the Director1990 Plan, and is intended for general
information only. In addition, the tax consequences described below are
subject to the limitation of OBRA. Under OBRA, which became law in August
1993, income tax deductions of publicly-traded companies may be limited to the
extent total compensation (including base salary, annual bonus, stock option
exercises and non-qualified benefits paid in 1994 and thereafter) for certain
executive officers exceeds $1 million (less the amount of any "excess
parachute payments" as defined in section 280G of the Code) in any one year.
However, under OBRA, the deduction limit does not apply to qualified
"performance-based" compensation established by an independent compensation
committee which is adequately disclosed to, and approved by, stockholders. In
particular, stock options and stock appreciation rights will satisfy the
performance-based exception if the awards are made by a qualifying
compensation committee, the plan sets the maximum number of shares that can be
granted to any particular employee within a specified period and the
compensation is based solely on an increase in the stock price after the grant
date (i.e., the option exercise price is equal to or greater than the fair
market value of the stock subject to the award on the grant date). The Company
believes that it has complied with the requirements of the performance-based
compensation exclusion under OBRA, including option pricing requirements and
requirements governing the administration of the 1990 Plan so that
deductibility of compensation paid to top executives thereunder is not
expected to be disallowed. Alternative minimum tax and state and local income
taxes are not discussed below, and may vary depending on individual
circumstances and from locality to locality.
Nonqualified Stock Options. For Federal income tax purposes, the recipient
of optionsNQSO's granted under the Director1990 Plan will not have taxable income upon the
grant of the option, nor will the Company then be entitled to any deduction.
Generally, upon exercise of an optionNQSO's the optionee will realize ordinary income,
and the Company will be entitled to a deduction, in an amount equal to the
difference between the option exercise price and the
27
fair market value of the stock at the date of exercise. An optionee's basis
for the stock for purposesthe purpose of determining his gain or loss on his
subsequent disposition of the shares generally will be the fair market value
of the stock on the date of exercise of the option.
REASONS FOR AMENDMENTS
The Director Plan currently providesNQSO.
Incentive Stock Options. There is no taxable income to an employee when an
ISO is granted to him or when that continuing non-employee directorsoption is exercised; however, the amount by
which the fair market value of the shares at the time of exercise exceeds the
option price will automatically receivebe an annual"item of tax preference" for the optionee. Gain
realized by an optionee upon sale of stock issued on exercise of an ISO is
taxable at capital gains rates, and no tax deduction is available to the
Company, unless the optionee disposes of the shares within two years after the
date of grant of the option grant for 2,000or within one year of the date the shares were
transferred to the optionee. In such event the difference between the option
exercise price and the fair market value of the shares on the date of the
regular meetingoption's exercise will be taxed at ordinary income rates, and the Company will
be entitled to a deduction to the extent the employee must recognize ordinary
income. An ISO exercised more than three months after an optionee's retirement
from employment, other than by reason of death or disability, will be taxed as
an NQSO, with the optionee deemed to have received income upon such exercise
taxable at ordinary income rates. The Company will be entitled to a tax
deduction equal to the ordinary income, if any, realized by the optionee.
Stock Appreciation Rights. No taxable income is realized upon the receipt of
an SAR, but upon exercise of the BoardSAR the fair market value of Directorsthe shares (or
cash in each February. Priorlieu of shares) received must be treated as compensation taxable as
ordinary income to 1994, this grantthe recipient in the year of such exercise. The Company
will be entitled to a deduction for compensation paid in the same amount which
the recipient realized as ordinary income.
Restricted Stock. Unless an election is made under Section 83(b) of the
Code, an employee to whom restricted stock is issued will not have taxable
income upon issuance and the Company will not then be entitled to a deduction.
However, when restrictions on shares of restricted stock lapse, such that the
shares are no longer subject to repurchase by the Company, the employee will
realize ordinary income and the Company will be entitled to a deduction in an
amount equal to the fair market value of the shares at the date coincided withsuch
restrictions lapse, less the purchase price therefor. If an election is made
under Section 83(b), the employee will realize ordinary income at the date of
issuance equal to the difference between the fair market value of the shares
at that date less the purchase price therefor and the Company will be entitled
to a deduction in the same amount.
Dividend Equivalents. A recipient of a dividend equivalent award will not
realize taxable income at the time of grant, and the Company will not be
entitled to a deduction at that time. When a dividend equivalent is paid, the
participant will recognize ordinary income, and the Company will be entitled
to a corresponding deduction.
Performance Awards. A participant who has been granted a performance award
will not realize taxable income at the time of grant, and the Company will not
be entitled to a deduction at that time. When an award is paid, whether in
cash or in Common Stock, the participant will have ordinary income, and the
Company will be entitled to a corresponding deduction.
Stock Payments. A participant who receives a stock payment in lieu of a cash
payment that would otherwise have been made will be taxed as if the cash
payment has been received, and the Company will have a deduction in the same
amount.
Deferred Compensation. Participants who defer compensation generally will
recognize no income, gain or loss for federal income tax purposes when
nonqualified stock options are granted in lieu of amounts otherwise payable,
and the Company will not be entitled to a deduction at that time. When and to
the extent options are exercised, the ordinary rules regarding nonqualified
stock options outlined above will apply.
28
REASONS FOR AMENDMENT
The 1990 Plan formerly provided that, subject to the respective option
grants to Company
executives under the 1990 Plan.agreements, stock options cannot be exercised more than two years after
retirement. During 1994,1995, the Board of Directors determined that it was
advisable to moveextend the dateperiod of exercisability, following retirement, for
options granted on or after November 30, 1995 (i) to the full term of the
regular annual option grantsfor the Chief Executive Officer and Chief Operating Officer; (ii) to
the Company's executiveslesser of five years or the full term of the option for options granted to
participants in the LTIP or any successor plan; and (iii) to the datelesser of
three years or the full term of the regular meeting of the Board of
Directors in each Decemberoption for all other optionees in order to
have more time atprovide incentive to executives who are nearing retirement to maximize long-
term stockholder value for a period extending beyond their employment with the
February Board
meeting to make bonus determinations and to set goals under the bonus plans and
the LTIP. The Board also determined that it was advisable to continue to make
annual option grants under the Director Plan at the same time as option grants
for executives.Company. Accordingly, in December 1994September 1995 the Board granted options underamended the Director1990 Plan subject to stockholder approval of an amendment to the
Director Plan to change the date of grant of options under the Director Plan to
the annual Board meeting held in December, and the Board recommends such
amendment.
The Director Plan also currently provides that continuing non-employee
directors will cease to receive annual option grants once they reach the age of
72, and that all options which are unexercisable on the date a director reaches
the age of 72 shall become fully exercisable on that date, the age set for
directors' retirement from the Board under the Company's Bylaws. However, from
time to time the Board has determined that it is in the best interests of the
Company for certain directors to continue to serve on the Board beyond the age
of 72, to take advantage of such directors' experience and contributions to the
Board. Therefore, the Board believes that it is appropriate for such directors
to continue to receive the same compensation as other active members of the
Board, and recommends approval of amendments to the Director Plan to remove the
age 72 limitation and, correspondingly, to
extend the vesting dateperiod of exercisability, following retirement, for options which are unexercisablegranted
on the date such director reaches the age of 72 to the
date of such director's date of retirement at or after age 72.
22
25
Accordingly, in December 1994 the Board granted options to the two non-employee
directors who are age 72 or older and who will continue to serveNovember 30, 1995, as directors
after the 1995 Annual Meeting,described above, subject to stockholder
approval of the Amendments.
The Director Plan currently terminates on January 31, 1997. The Board has
determined that it is advisable to continue to provide stock-based incentive
compensation to the Company's directors, thereby continuing to align the
interests of such directors with those of the stockholders, and that option
grants under the Director Plan are an effective means of providing such
compensation. Accordingly, the Board has amended the Director Plan to extend the
termination date of the Director Plan from January 31, 1997 to January 31, 2007,
subject to stockholder approval of the Amendmentsamendment at the Annual Meeting. In
addition, to add flexibility to the Director Plan, the Board has amended the
Director Plan to permit directors to designate beneficiaries to receive vested
options in the event of their death.
REQUIRED VOTE FOR APPROVAL AND RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of a majority of the shares present or represented and
entitled to vote at the Annual Meeting is required to approve this amendment
to the Amendments.1990 Plan. Your Board of Directors recommends a vote FOR approval of
the Amendments.1990 Plan amendment.
GENERAL
INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Coopers & Lybrand L.L.P. to serve as the
Company's independent accountants for the 19951996 fiscal year. One or more
representatives of Coopers & Lybrand L.L.P. will be present at the Annual
Meeting to respond to appropriate questions and will be given an opportunity
to make a statement if they so desire.
STOCKHOLDER PROPOSALS
Stockholder proposals for presentation at the annual meeting scheduled to be
held on April 25, 1996,24, 1997, must be received at the Company's principal executive
offices on or before November 11, 1995.9, 1996. The Company's Bylaws provide that
stockholders desiring to nominate persons for election to the board of
directors or to bring any other business before the stockholders at an annual
meeting must notify the Secretary of the Company thereof in writing 60 to 90
days prior to the first anniversary of the preceding year's annual meeting
(or, if the date of the annual meeting is more than 30 days before or more
than 60 days after such anniversary date, 60 to 90 days prior to such annual
meeting or within 10 days after the public announcement of the date of such
meeting is first made by the Company; or, if the number of directors to be
elected to the board of directors is increased and the Company does not make a
public announcement naming all of the nominees for director or specifying the
size of the increased board at least 70 days prior to the first anniversary of
the preceding year's annual meeting, within 10 days after such public
announcement is first made by the Company (with respect to nominees for any
newly created positions only)). Such notice must include (a) as to each person
whom the stockholder proposes to nominate for election or reelection as a
director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors in an election
contest, or is otherwise required, in each case pursuant to Regulation 14A
under the 1934 Act and Rule 14a-11 thereunder, (b) as to any other business
that the stockholder proposes to bring before the meeting, a brief description
of such business, the reasons for conducting such business at the meeting and
any material interest in such business of such stockholder and the beneficial
owner, if any, on whose behalf the proposal is made, and (c) the name and
record address, and class and number of shares owned beneficially and of
record, of such stockholder and any such beneficial owner.
2329
26
ANNUAL REPORT
The Company's 19941995 Annual Report to Stockholders has recently been mailed to
all stockholders of record.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, AND RETURN THE ACCOMPANYING
PROXY CARD IN THE ENCLOSED ENVELOPE.
Robert G. van Schoonenberg
Secretary
Dated: March 10, 1995
248, 1996
30
27
PROXY
SOLICITED BY BOARDAPPENDIX A
THE 1990 STOCK OPTION AND
INCENTIVE PLAN FOR
KEY EMPLOYEES OF DIRECTORS Avery Dennison Corporation
[LOGO] ANNUAL MEETING -- APRIL 27, 1995 150 No. Orange Grove Boulevard
PASADENA, CALIFORNIA Pasadena, California 91103
The undersigned hereby appoints Charles D. Miller, Sidney R. Petersen and F.
Daniel Frost, or each or any of them with power of substitution, proxies for the
undersigned to act and vote at the 1995 annual meeting of stockholders of Avery
Dennison Corporation and at any adjournments thereof as indicated upon the
matters referred to on the reverse side and described in the proxy statement for
the meeting, and, in their discretion, upon any other matters which may properly
come before the meeting.
1. Election of Directors
NOMINEES: Frank V. Cahouet, Peter W. Mullin, Joan T. Bok, Philip M. Neal
2. Approval of Amendments to the Company's 1988 Stock Option Plan for
Non-Employee Directors
IF NO OTHER INDICATION IS MADE, THE PROXIES SHALL VOTE FOR THE ELECTION OF
THE DIRECTOR NOMINEES AND FOR PROPOSAL NUMBER 2.
(OVER)
/X/ PLEASE MARK VOTES.
- --------------------------------------------------------------------------------
A vote FOR ALL nominees is recommended A vote FOR is recommended by the
by the Board of Directors: Board of Directors:
- --------------------------------------------------------------------------------
1. Election of Directors (page 1) 2. Approval of certain amendments
to the Company's 1988 Stock
FOR ALL WITHHELD FROM Option Plan for Non-Employee
nominees ALL nominees Directors (page 20)
/ / / /
FOR AGAINST ABSTAIN
/ / / / / /
FOR ALL EXCEPT THE FOLLOWING NOMINEE(S):
- --------------------------------------------
- --------------------------------------------------------------------------------
Date__________________, 1995
-----------------------------
-----------------------------
Signature(s) of Stockholder(s)
-----------------------------
If acting as attorney,
executor, trustee, or in
other representative
capacity, please sign
name and title.
-----------------------------
Send admission ticket
for meeting / /
-----------------------------
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
28
[LOGO] CONFIDENTIAL VOTING INSTRUCTIONS Avery Dennison Corporation
150 No. Orange Grove Boulevard
Pasadena, California 91103
TO: FIRST INTERSTATE BANK OF CALIFORNIA AS AGENT FOR THE TRUSTEES OF THE
AVERY DENNISON SAVINGS PLAN AND SHARE PLAN
VOTING INSTRUCTIONS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS OF
AVERY DENNISON CORPORATION FOR THE ANNUAL MEETING OF STOCKHOLDERS, APRIL 27,
1995.
The undersigned hereby appoints Charles D. Miller, Sidney R. Petersen and F.
Daniel Frost, or each or any of them with power of substitution, proxies for the
undersigned to act and vote at the 1995 annual meeting of stockholders of Avery
Dennison Corporation and at any adjournments thereof as indicated upon the
matters referred to on the reverse side and described in the proxy statement for
the meeting, and, in their discretion, upon any other matters which may properly
come before the meeting.
1. Election of Directors
NOMINEES: Frank V. Cahouet, Peter W. Mullin, Joan T. Bok, Philip M. Neal
2. Approval of Amendments to the Company's 1988 Stock Option Plan for
Non-Employee Directors
IF NO OTHER INDICATION IS MADE, THE PROXIES SHALL VOTE FOR THE ELECTION OF
THE DIRECTOR NOMINEES AND FOR PROPOSAL NUMBER 2.
(OVER)
/X/ PLEASE MARK VOTES.
- --------------------------------------------------------------------------------
A vote FOR ALL nominees is recommended A vote FOR is recommended by the
by the Board of Directors: Board of Directors:
- --------------------------------------------------------------------------------
1. Election of Directors (page 1) 2. Approval of certain amendments
FOR ALL WITHHELD FROM to the Company's 1988 Stock
nominees ALL nominees Option Plan for Non-Employee
/ / / / Directors (page 20)
FOR AGAINST ABSTAIN
/ / / / / /
FOR ALL EXCEPT THE FOLLOWING NOMINEE(S):
- ----------------------------------------
- --------------------------------------------------------------------------------
Date ______________________, 1995
----------------------------------
----------------------------------
Signature(s) of Stockholder(s)
----------------------------------
If acting as attorney,
executor, trustee, or in
other representative
capacity, please sign name
and title.
----------------------------------
Send admission ticket / /
for meeting
----------------------------------
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
29
CONFIDENTIAL VOTING INSTRUCTIONS Avery Dennison Corporation
[LOGO] 150 No. Orange Grove Boulevard
Pasadena, California 91103
TO: FIRST INTERSTATE BANK OF CALIFORNIA AS AGENT FOR THE TRUSTEES OF THE
DENNISON MANUFACTURING COMPANY BARGAINING UNIT EMPLOYEE STOCK OWNERSHIP PLAN
VOTING INSTRUCTIONS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS OF
AVERY DENNISON CORPORATION FOR THE ANNUAL MEETING OF STOCKHOLDERS, APRIL 27,
1995.
The undersigned hereby appoints Charles D. Miller, Sidney R. Petersen and F.
Daniel Frost, or each or any of them with power of substitution, proxies for the
undersigned to act and vote at the 1995 annual meeting of stockholders of Avery
Dennison Corporation and at any adjournments thereof as indicated upon the
matters referred to on the reverse side and described in the proxy statement for
the meeting, and, in their discretion, upon any other matters which may properly
come before the meeting.
1. Election of Directors
NOMINEES: Frank V. Cahouet, Peter W. Mullin, Joan T. Bok, Philip M. Neal
2. Approval of Amendments to the Company's 1988 Stock Option Plan for
Non-Employee Directors
IF NO OTHER INDICATION IS MADE, THE PROXIES SHALL VOTE FOR THE ELECTION OF
THE DIRECTOR NOMINEES AND FOR PROPOSAL NUMBER 2.
(OVER)
/X/ PLEASE MARK VOTES.
- --------------------------------------------------------------------------------
A vote FOR ALL nominees is recommended A vote FOR is recommended by the
by the Board of Directors: Board of Directors:
- --------------------------------------------------------------------------------
1. Election of Directors (page 1) 2. Approval of certain amendments to
the Company's 1988 Stock Option
FOR ALL WITHHELD FROM Plan for Non-Employee Directors
nominees ALL nominees (page 20)
/ / / /
FOR AGAINST ABSTAIN
/ / / / / /
FOR ALL EXCEPT THE FOLLOWING NOMINEE(S):
- ----------------------------------------
- --------------------------------------------------------------------------------
Date ________________, 1995
------------------------------
------------------------------
Signature(s) of Stockholder(s)
------------------------------
If acting as attorney,
executor, trustee, or in
other representative
capacity, please sign name
and title.
------------------------------
Send admission ticket
for meeting / /
------------------------------
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
30
AVERY INTERNATIONAL CORPORATION
1988
THE 1990 STOCK OPTION AND
INCENTIVE PLAN FOR
NON-EMPLOYEE DIRECTORS
1. Purpose
This 1988KEY EMPLOYEES OF
AVERY INTERNATIONAL CORPORATION
TABLE OF CONTENTS
Page
----
ARTICLE I - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 Dividend Equivalent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.11 Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.12 Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.13 Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.14 Grantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.15 Incentive Stock Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.16 Non-Qualified Stock Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.17 Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.18 Optionee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.19 Performance Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.20 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.21 Restricted Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.22 Restricted Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.23 Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.24 Stock Appreciation Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.25 Stock Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.26 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.27 Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.28 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II - SHARES SUBJECT TO PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Shares Subject to Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Unexercised Options and Other Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Effect of Certain Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III - GRANTING OF OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Disqualification for Stock Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Granting of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
i
Page
----
ARTICLE IV - TERMS OF OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1 Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2 Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Option Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.4 Option Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.5 Exercise of Option after Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.6 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE V - EXERCISE OF OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.1 Partial Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.2 Manner of Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3 Conditions to Issuance of Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.4 Rights as Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.5 Transfer Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VI - STOCK APPRECIATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.1 Grant of Stock Appreciation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.2 Coupled Stock Appreciation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.3 Independent Stock Appreciation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.4 Payment and Limitations on Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.5 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VII - AWARD OF RESTRICTED STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.2 Award of Restricted Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VIII - TERMS OF RESTRICTED STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.1 Restricted Stock Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.2 Consideration to the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.3 Rights as Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.4 Restriction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.5 Repurchase of Restricted Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.6 Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.7 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IX - PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
STOCK PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.1 Performance Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.2 Dividend Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.3 Stock Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.4 Performance Award Agreement, Dividend Equivalent Agreement, Stock Payment Agreement . . . . . . . . 27
9.5 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.6 Exercise Upon Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ii
Page
----
9.7 Payment on Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.8 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE X - ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.1 Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.2 Duties and Powers of Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.3 Majority Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.4 Compensation; Professional Assistance; Good Faith Actions . . . . . . . . . . . . . . . . . . . . . 30
10.5 Delegation of Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.6 CEO's Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE XI - MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.1 Not Transferable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.2 Amendment, Suspension, or Termination of this Plan . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.3 Changes in Common Stock or Assets of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.4 Merger of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.5 Approval of Plan by Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.6 Tax Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.7 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.8 Limitations Applicable to Section 16 Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.9 Plan Designation and Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.10 Release of Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.11 Effect of Plan Upon Options and Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.12 Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
iii
THE 1990 STOCK OPTION AND
INCENTIVE PLAN FOR
KEY EMPLOYEES OF
AVERY INTERNATIONAL CORPORATION
The purposes of this Plan are as follows:
(1) To provide an additional incentive for Non-Employee Directors (the "Plan") is
intendedkey Employees to
attractfurther the growth, development and retain the services of experienced and knowledgeable
independent directors of Avery International Corporation (the "Company") for
the benefitfinancial success of the Company by
personally benefiting through the ownership of Company stock and/or rights
which recognize such growth, development and its stockholdersfinancial success.
(2) To enable the Company to obtain and retain key
Employees considered essential to provide additional
incentive for such directors to continue to work for the best interestslong range success of the Company by
offering them an opportunity to own stock in the Company and/or rights which
will reflect the growth, development and its stockholders.
2. Stock Subjectfinancial success of the Company.
ARTICLE I
DEFINITIONS
1.1 General
Wherever the following terms are used in this Plan they shall
have the meaning specified below, unless the context clearly indicates
otherwise.
1.2 Beneficiary
"Beneficiary" shall mean a person properly designated by the
Optionee or Grantee, including his spouse or heirs at law, to exercise such
Optionee's or Grantee's rights under this Plan.
1
Designation, revocation and redesignation of Beneficiaries must be made in
writing in accordance with rules established by the Committee and shall be
effective upon delivery to the Plan
There are reserved for issuance upon the exercise of options
("Options") granted under the Plan 320,000 shares of $1.00 par value Common
Stock of the Company (the "Common Stock"). Such shares may be authorized and
unissued shares of Common Stock or previously outstanding shares of Common
Stock then held in the Company's treasury. If any Option granted under the
PlanCommittee.
1.3 Board
"Board" shall expire or terminate for any reason without having been exercised in
full, the shares subject thereto shall again be available for the purposes of
issuance upon the exercise of Options granted under the Plan.
3. Administration
The Plan shall be administered bymean the Board of Directors of the Company (the "Board"). Subject to the express provisions of the Plan, the
BoardCompany.
1.4 Code
"Code" shall have authority to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to it, to determine the terms and
provisions of the Option grants or agreements (which shall comply with and be
subject to the terms and conditions of the Plan) and to make all other
determinations necessary or advisable for the administration of the Plan. The
Board's determinations of the matters referred to in this Paragraph 3 shall be
conclusive.
4. Eligibility
Each director of the Company, who has not reached his seventy-second
birthday and who is not an employee of the Company, shall automatically be
granted an Option to purchase 5,000 shares of Common Stock (subject to
adjustments as provided in Paragraph 8) on January 28, 1988, subject, however,
to (i) shareholder approval of both the Plan, and any Options granted to
Directors under the Plan prior to March 31, 1988, at the Annual Shareholders'
Meeting on March 31, 1988, and (ii) receipt of an interpretive letter from the
Securities and Exchange Commission as set forth in
1
31
Paragraph 12. Following the initial grant, during the term of the Plan each
then current, non-employee director ("Optionee"), who has not then reached his
seventy-second birthday, shall automatically be granted, on the date of each
regular January meeting of the Board, an Option for 2,000 shares (subject to
adjustment as provided in Paragraph 8). When new non-employee directors are
elected to the Board, such directors will receive an initial Option of 5,000
shares of Common Stock as of the date of their election, subject to the same
conditions as set forth in the first sentence of this Paragraph. Directors who
are employees of the Company and who subsequently retire from the Company and
remain on the Board will not receive an initial Option of 5,000 shares, but, to
the extent they are otherwise eligible, after retirement from the Company they
will receive Options as described in the second sentence of this Paragraph.
Each Option shall be evidenced by a written Stock Option Agreement
("Agreement"), copy of which is attached as Exhibit A, which shall be executed
by the Optionee and an authorized officer of the Company and which shall
contain such other terms and conditions as the Board shall determine,
consistent with the Plan.
Only non-qualified stock options (options which do not qualify as
"incentive stock options" under Section 422A ofmean the Internal Revenue Code of 1986, as
amended)amended.
1.5 Committee
"Committee" shall mean the Compensation Committee of the
Board, appointed as provided in Section 10.1.
1.6 Common Stock
"Common Stock" shall mean the common stock of the Company, par
value $1.00 per share, as presently constituted and any equity security of the
Company issued or authorized to be issued in the future, but excluding any
warrants, options or other rights to purchase Common Stock; debt securities of
the Company convertible into Common Stock shall be granted under the Plan.
5. Option Grants
(a) The option price ("Option Price")deemed equity securities of
the Common Stock under each
Option granted under the PlanCompany.
1.7 Company
"Company" shall be 100%mean Avery International Corporation.
1.8 Director
"Director" shall mean a member of the fair market value (as
defined below in Paragraph 5 (c)) of the stock on the date such Option is
granted.
(b) OptionsBoard.
2
1.9 Dividend Equivalent
"Dividend Equivalent" shall become exercisable in installments of 50% of themean a right to receive a number
of shares initially granted, commencing on the first anniversaryof Common Stock or an amount of cash, determined as provided in
Section 9.2 hereof.
1.10 Employee
"Employee" shall mean any officer or other employee (as
defined in accordance with Section 3401(c) of the grant date, such installments to be cumulative; provided, however, that all
Options owned byCode) of the Company, or of
any corporation which is then a director which are unexercisable onSubsidiary.
1.11 Expiration Date
"Expiration Date" shall mean the date the director
reaches the agelast day of seventy-two shall become fully exercisable on that date. In
no case may an Option be exercised as to fewer than 100 shares at any one time
(or the remaining shares covered by the Option if fewer than 100 during the term of the
Option). The termOption as established in Section 4.3.
1.12 Exchange Act
"Exchange Act" shall mean the Securities Exchange Act of each Option1934,
as amended.
1.13 Fair Market Value
"Fair Market Value" of a share of Common Stock as of a given
date shall be ten (10) years from the
date of grant thereof, or such shorter period as is prescribed in Paragraph 5.
Except as provided in Paragraph 5, no Option may be exercised at any time
unless the holder thereof is then a director of the Company. In the event that
the Option shall be exercised pursuant to Paragraph 5(g), by any person or
persons other than the Optionee, appropriate proof of the right of such person
or persons to exercise the Option shall be provided to the Company.
(c) Upon exercise, the Optionee shall provide written notice of
exercise to the Secretary of the Company and the Option Price shall be paid in
full in cash or in Common Stock owned by the Optionee having a fair market
value on the date of exercise equal to the aggregate Option price, or in a
combination of cash and stock. Fair market value shall be determined as(i) the mean between the 2
32
highest and lowest selling pricesprice of thea
share of Common Stock on the New Yorkprincipal exchange on which shares of Common Stock
Exchange Composite Tape on the date of exercise, or,are then trading, if there were no salesany, on such date, asor if shares were not traded on such
date, then the weighted average of the means between the highest and lowest
sales upon the nearest date before and the nearest date after the exercise datesuch valuation
date; or (ii) if such stockCommon Stock is not traded on an exchange, as the mean between
the closing representative bid and asked prices for the stockCommon Stock on such
date as reported by NASDAQ or, if NASDAQ is not then in existence, by its
successor quotation system.system; or (iii) if Common Stock is not publicly
3
traded, the Fair Market Value of a share of Common Stock as established by the
Committee acting in good faith.
1.14 Grantee
"Grantee" shall mean an Employee granted a Stock Appreciation
Right, Performance Award, Dividend Equivalent or Stock Payment under this Plan.
1.15 Incentive Stock Option
"Incentive Stock Option" shall mean an option which conforms
to the applicable provisions of Section 422A of the Code and which is
designated as an Incentive Stock Option by the Committee.
1.16 Non-Qualified Stock Option
"Non-Qualified Stock Option" shall mean an Option which is not
an Incentive Stock Option and which is designated as a Non- Qualified Stock
Option by the Committee.
1.17 Option
"Option" shall mean a stock option granted pursuant to this
Plan. An option granted under this Plan shall, as determined by the Committee,
be either a Non-Qualified Stock Option or an Incentive Stock Option.
1.18 Optionee
"Optionee" shall mean an Employee granted an Option under this
Plan.
1.19 Performance Award
"Performance Award" shall mean a cash bonus, stock bonus or
other performance or incentive award that is paid in cash, stock or a
combination of both.
4
1.20 Plan
This "Plan" shall mean The 1990 Stock Option and Incentive
Plan for Key Employees of Avery International Corporation.
1.21 Restricted Stock
"Restricted Stock" shall mean Common Stock issued pursuant to
Article VII of this Plan.
1.22 Restricted Stockholder
"Restricted Stockholder" shall mean a person to whom
Restricted Stock has been issued under this Plan.
1.23 Secretary
"Secretary" shall mean the Secretary of the Company.
1.24 Stock Appreciation Right
"Stock Appreciation Right" shall mean a stock appreciation
right granted under this Plan.
1.25 Stock Payment
"Stock Payment" shall mean (a) a payment in the form of shares
of Common Stock, or (b) an option or other right to purchase shares of Common
Stock, as part of a deferred compensation arrangement, made in lieu of all or
any portion of the compensation, including without limitation, salary, bonuses
and commissions, that would otherwise become payable to a key Employee in cash.
1.26 Subsidiary
"Subsidiary" shall mean any corporation in an unbroken chain
of corporations beginning with the Company if each of the corporations other
than the last corporation in the unbroken
5
chain then owns stock possessing 50 percent or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
1.27 Termination of Employment
"Termination of Employment" shall mean the time when the
employee-employer relationship between the Optionee, the Grantee or the
Restricted Stockholder and the Company or a Subsidiary is terminated for any
reason, including, but not by way of limitation, a termination by resignation,
discharge, death or retirement; but excluding terminations where there is a
simultaneous reemployment or continuing employment by the Company or a
Subsidiary and, at the discretion of the Committee, terminations which result
in a temporary severance of the employee- employer relationship that do not
exceed one year. The Committee, in its absolute discretion, shall determine
the effect of all other matters and questions relating to Termination of
Employment.
1.28 Gender and Number
Wherever the masculine gender is used it shall include the
feminine and neuter and wherever a singular pronoun is used it shall include
the plural, unless the context clearly indicates otherwise.
6
ARTICLE II
SHARES SUBJECT TO PLAN
2.1 Shares Subject to Plan
The shares of stock subject to Options, Stock Appreciation
Rights, Restricted Stock Awards, Performance Awards, Dividend Equivalents or
Stock Payments shall be Common Stock, initially shares of the Company's common
stock, par value $1.00 per share, as presently constituted, and the aggregate
number of such shares which may be issued upon exercise of such options or
rights or upon any such awards shall not exceed 4,000,000. Solely for the
purpose of the first sentence of this Section 2.1 shares of Common Stock which
are issued or utilized after March 31, 1988 upon exercise of options or stock
appreciation rights granted under the Company's Amended 1973 Stock Option and
Stock Appreciation Rights Plan for Key Employees and the Company's 1988 Stock
Option and Stock Appreciation Rights Plan for Key Employees shall be considered
shares issued under this Plan. The shares of Common Stock issuable upon
exercise or grant of an Option, Stock Appreciation Right, Performance Award,
Dividend Equivalent or Stock Payment, or as Restricted Stock, may be either
previously authorized but unissued shares or issued shares which have been
repurchased by the Company. If any equity securities of the Company, other
than the Company's common stock, par value $1.00 per share, as presently
constituted, are issued or authorized to be issued the Committee shall
determine, on a fair and equitable basis, the appropriate number of shares of
the Company's present common stock to be deemed issued or issuable
7
with respect to such other equity securities for purposes of this Section 2.1.
2.2 Unexercised Options and Other Rights
If any Option, or other right to acquire shares of Common
Stock under any Stock Appreciation Right, Performance Award, Dividend
Equivalent or Stock Payment expires or is cancelled without having been fully
exercised, the number of shares subject to such Option or other right but as to
which such Option or other right was not exercised prior to its expiration or
cancellation may again be optioned, granted or awarded hereunder, subject to
the limitations of Section 2.1. Any shares of Restricted Stock repurchased by
the Company pursuant to Section 8.5 may again be utilized hereunder, subject to
the limitations of Section 2.1.
2.3 Effect of Certain Exercises
If a Stock Appreciation Right is exercised or a Performance
Award based on the increased market value of a specified number of shares of
Common Stock is paid, the number of shares of Common Stock to which such
exercise or payment relates under such Stock Appreciation Right or Performance
Award shall be charged against the maximum number of shares of Common Stock
that may be issued under this Plan. If any shares of Common Stock issuable
pursuant to any Option or other right to acquire shares of Common Stock are
surrendered to the Company as payment for the exercise price of said Option or
other right to acquire shares of Common Stock, the number of shares of Common
Stock issuable but so surrendered shall be charged against the maximum number
of
8
shares of Common Stock that may be issued under this Plan. In the event the
Company withholds shares of Common Stock pursuant to Section 11.6 hereof, the
number of shares that would have been issuable but that are withheld pursuant
to the provisions of Section 11.6 shall be charged against the maximum number
of shares of Common Stock that may be issued under this Plan.
ARTICLE III
GRANTING OF OPTIONS
3.1 Eligibility
Options shall be granted to key Employees of the Company or of
a Subsidiary.
3.2 Disqualification for Stock Ownership
No person may be granted an Incentive Stock Option under this
Plan if such person, at the time the Incentive Stock Option is granted, owns
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any then existing Subsidiary of the
Company unless such Incentive Stock Option conforms to the applicable
provisions of Section 422A of the Code.
3.3 Granting of Options
(a) The Committee shall from time to time, in its absolute
discretion:
(i) Determine which Employees are key
Employees and select from among the key Employees (including those to
whom Options have been previously granted under this Plan) such of
them as in its opinion should be granted Options;
9
(ii) Determine the number of shares to be
subject to such Options granted to the selected key Employees;
(iii) Determine whether such Options are to be
Incentive Stock Options or Non-Qualified Stock Options (Incentive
Stock Options or Non-Qualified Stock Options, or both, may be granted
to any key Employee);
(iv) Determine the terms and conditions of such
Options, consistent with this Plan.
(b) Upon the selection of a key Employee to be granted an
Option, the Committee shall instruct the Secretary to issue the Option and may
impose such conditions on the grant of the Option as it deems appropriate.
Without limiting the generality of the preceding sentence, the Committee may,
in its discretion and on such terms as it deems appropriate, require as a
condition on the grant of an Option to an Employee that the Employee surrender
for cancellation some or all of the unexercised Options, Stock Appreciation
Rights, Performance Awards, Dividend Equivalents, Stock Payments or other
rights which have been previously granted to him under this Plan, the Company's
1988 Stock Option and Stock Appreciation Rights Plan for Key Employees or the
Company's Amended 1973 Stock Option and Stock Appreciation Rights Plan for Key
Employees. An Option the grant of which is conditioned upon such surrender may
have an option price lower (or higher) than the exercise price of such
surrendered Option, Stock Appreciation Right, Performance Award, Dividend
Equivalent or Stock Payment may cover the same (or a
10
lesser or greater) number of shares as such surrendered right, may contain such
other terms as the Committee deems appropriate, and shall be exercisable in
accordance with its terms, without regard to the number of shares, price,
exercise period or any other term or condition of such surrendered right.
ARTICLE IV
TERMS OF OPTIONS
4.1 Option Agreement
Each Option shall be evidenced by a written Stock Option
Agreement, which shall be executed by the Optionee and an authorized officer of
the Company and which shall contain such terms and conditions as the Committee
shall determine, consistent with this Plan. Stock Option Agreements evidencing
Incentive Stock Options shall contain such terms and conditions as may be
necessary to meet the applicable provisions of Section 422A of the Code.
4.2 Option Price
The price per share of the shares subject to each Option shall
be set by the Committee; provided, however, that in the case of Incentive Stock
Options such price shall not be less than 100% of the Fair Market Value of a
share of Common Stock on the date the Option is granted, and in the case of
Non-Qualified Stock Options such price shall be no less than the par value of a
share of Common Stock.
11
4.3 Option Term
The term of an Option shall be set by the Committee in its
discretion; provided, however, that, in the case of Incentive Stock Options,
the term shall not be more than ten (10) years from the date the Incentive
Stock Option is granted. Notwithstanding anything to the contrary, there shall
be no limitation on the term, as set by the Committee, of a Non-Qualified Stock
Option. The last day of the term of the Option shall be the Option's
Expiration Date.
4.4 Option Vesting
(a) The period during which the right to exercise an Option
in whole or in part vests in the Optionee shall be set by the Committee and the
Committee may determine that an Option may not be exercised in whole or in part
for a specified period after it is granted. At any time after grant of an
Option the Committee may, in its sole discretion and subject to whatever terms
and conditions it selects, accelerate the period during which an Option vests.
(b) No portion of an Option which is unexercisable at
Termination of Employment shall thereafter become exercisable.
(c) Notwithstanding any other provision of this Plan, in
the case of an Incentive Stock Option, the aggregate Fair Market Value
(determined at the time the Incentive Stock Option is granted) of the shares of
Common Stock with respect to which "incentive stock options" (within the
meaning of Section 422A of the Code) are exercisable for the first time by the
Optionee during any calendar year (under this Plan and all other
12
incentive stock option plans of the Company and any Subsidiary) shall not
exceed $100,000.
4.5 Exercise of Option after Termination of Employment
An Option is exercisable by an Optionee only while he is an
Employee. The preceding notwithstanding, the Committee may determine that an
Option may be exercised subsequent to an Optionee's Termination of Employment,
subject to the following limitations:
(a) If the Optionee dies while an Option is exercisable
under the terms of this Plan, the Optionee's Beneficiary may exercise such
rights, to the extent the Optionee could have done so immediately preceding his
death. Any such Option must be exercised within twelve (12) months after the
Optionee's death and the Committee may in its discretion extend the Expiration
Date of such Option to accommodate such exercise; provided, however, that the
term of an Incentive Stock Option may not be extended beyond ten (10) years
from the date of grant.
(b) If the Optionee's employment is terminated due to his
permanent and total disability, as defined in Section 22(e)(3) of the Code, the
Optionee may exercise his Option, to the extent exercisable as of his
Termination of Employment, within twelve (12) months after termination, but no
later than the Option's Expiration Date.
(c) If the Optionee's employment is terminated due to his
retirement at or after age fifty-five (55), the Optionee may exercise his
Option, to the extent exercisable as of his
13
Termination of Employment, within twenty-four (24) months after termination,
but not later than the Option's Expiration Date.
(d) If the Optionee's employment is terminated due to his
retirement at or after age fifty-five (55) and such Optionee continues as a
Director, the Optionee may exercise his Option to the same extent as he would
be able to exercise it if he continued to be an Employee, until the earlier of
two (2) years after he ceases to be a Director or the Option's Expiration Date.
(e) If the Optionee's employment is terminated for any
reason other than those set forth in subsections (a) through (d) above, the
Optionee may exercise his Option, to the extent exercisable as of his
Termination of Employment, within three (3) months after Termination of
Employment, but not later than the Option's Expiration Date.
4.6 Consideration
In consideration of the granting of the Option, the Optionee
shall agree, in the written Stock Option Agreement, to remain in the employ of
the Company or a Subsidiary for a period of at least one year after the Option
is granted. Nothing in this Plan or in any Stock Option Agreement hereunder
shall confer upon any Optionee any right to retaincontinue in the employ of the
Company or sell,any Subsidiary or shall interfere with or restrict in any way the
rights of the Company and the Subsidiaries, which are hereby expressly
reserved, to discharge any Optionee at any time for any reason whatsoever, with
or without good cause.
14
ARTICLE V
EXERCISE OF OPTIONS
5.1 Partial Exercise
An exercisable Option may be exercised in whole or in part.
However, an Option shall not be exercisable with respect to fractional shares
and the Committee may require, by the terms of the Option, a partial exercise
be with respect to a minimum number of shares.
5.2 Manner of Exercise
All or a portion of an exercisable Option shall be deemed
exercised upon delivery to the Secretary or his office of all of the following:
(a) A written notice sufficientcomplying with the applicable rules
established by the Committee or the Company, stating that the Option, or a
portion thereof, is exercised. The notice shall be signed by the Optionee or
other person then entitled to exercise the Option or such portion;
(b) Full cash payment for the shares with respect to which
the Option, or portion thereof, is exercised. However, at the discretion of
the Committee, the terms of the option may (i) allow a delay in payment up to
thirty (30) days from the date the Option, or portion thereof, is exercised,
(ii) allow payment, in whole or in part, through the delivery of shares of
stock to cover government
withholding taxesCommon Stock owned by the Optionee (iii) allow payment, in whole or deductions, ifin part,
through the surrender of shares of Common Stock then issuable upon exercise of
the Option; or (iv) allow payment, in
15
whole or in part, through the delivery of property of any as described in Paragraph 11. The
Optionee shall also provide suchkind which
constitutes good and valuable consideration;
(c) Such representations and documents as the Board,Committee, in
its absolute discretion, deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act of 1933, as amended, and any
other federal or state securities laws or regulations. The BoardCommittee may, in
its absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance including, without limitation, havingplacing
legends placed on share certificates and havingissuing stop-transfer orders issuednotices to transfer agents and
registrars.registrars; and
(d) In the event that the OptioneeOption shall ceasebe exercised
pursuant to be a director,Section 4.5(a) by any person or persons other than by reason of retirement (hereinafter "Retirement"), or death, he may
exercise his Option within three months after such termination, but not after
the expiration of the Option, to the extent of the number of shares exercisable
by him at the date of termination of his service as director; otherwise the
Option shall expire at the end of such three-month period.
(e) In the event that the Optionee,
shall cease to be a director
becauseappropriate proof of Retirement, the Optionee may exercise his Option within twenty-four
months after Retirement, but not after the expiration of the Option, to the
extent of the number of shares exercisable by him at the date of Retirement;
otherwise the Option shall expire at the end of such twenty-four month period.
(f) In the event of the death of a director or a former director to
whom an Option has been granted under the Plan, the Option theretofore granted
to him (unless the Option shall have been previously terminated pursuant to the
provisions of Paragraph 5(d) or 5(e)) may be exercised by a legatee or legatees
of the option holder under his last will or by his personal representatives or
distributees at any time within twelve months of the date of the Optionee's
death, but not after the expiration of the Option, to the extent of the number
of shares exercisable by the Optionee at the date of his death; otherwise the
Option shall expire at the end of such twelve-month period.
(g) Nothing in the Plan or in any Option granted pursuant to the Plan
shall confer on any individual any right to continue as a director of the
Company or interfere in any way with the right of such person or persons to exercise the
Company to terminate his
service as a director at any time.
6.Option.
5.3 Conditions to Issuance of Stock Certificates
The shares of stock deliverable upon the exercise of an Option, or any
part thereof, may be either previously authorized but unissued shares or issued
shares which have then been reacquired
3
33
by the Company.
The Company shall not be required to issue or deliver any
certificate or certificates for shares of stock purchased upon the exercise of
any Option or portion thereof prior to fulfillment of all of the following
conditions:
(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed;
(b) The completion of any registration or other
qualification of such shares under any state or federal law, or under the
rulings or regulations of the Securities and Exchange Commission or any other
governmental regulatory body which the
Board16
Committee shall, in its absolute discretion, deem necessary or advisable;
(c) The obtaining of any approval or other clearance from
any state or federal governmental agency which the BoardCommittee shall, in its
absolute discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following
the exercise of the Option as the BoardCommittee may establish from time to time for
reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such
shares, andincluding payment of any applicable withholding tax.
7. Transferability and Stockholder5.4 Rights of Holdersas Shareholders
The holders of Options Noshall not be, nor have any of the
rights or privileges of, shareholders of the Company in respect of any shares
purchasable upon the exercise of any part of an Option granted underunless and until
certificates representing such shares have been issued by the PlanCompany to such
holders.
5.5 Transfer Restrictions
The Committee, in its absolute discretion, may impose such
restrictions on the transferability of the shares purchasable upon the exercise
of an Option as it deems appropriate. Any such restriction shall be transferable otherwise thanset forth
in the respective Stock Option Agreement and may be referred to on the
certificates evidencing such shares. The Committee may require the Employee to
give the Company prompt notice of any disposition of shares of Common Stock
acquired by willexercise of an Incentive
17
Stock Option within (i) two years from the date of granting such Option to such
Employee or (ii) one year after the transfer of such shares to such Employee.
The Committee may direct that the certificates evidencing shares acquired by
exercise of an Option refer to such requirement to give prompt notice of
disposition.
ARTICLE VI
STOCK APPRECIATION RIGHTS
6.1 Grant of Stock Appreciation Rights
A Stock Appreciation Right may be granted to any Employee
selected by the laws of descent and distribution, andCommittee to whom an Option may be granted under this Plan. A
Stock Appreciation Right may be granted (a) in connection and simultaneously
with the grant of an Option, (b) with respect to a previously granted Option,
or (c) independent of an Option. A Stock Appreciation Right shall be subject
to such terms and conditions not inconsistent with this Plan as the Committee
shall impose and shall be evidenced by a written Stock Appreciation Right
Agreement, which shall be executed by the Grantee and an authorized officer of
the Company. Without limiting the generality of the preceding sentence, the
Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition on the grant of a Stock Appreciation Right to an
Employee that the Employee surrender for cancellation some or all of the
unexercised Options, Stock Appreciation Rights, Performance Awards, Dividend
Equivalents, Stock Payments or other rights which have been previously granted
to him under this Plan, the Company's 1988 Stock Option and Stock
18
Appreciation Rights Plan for Key Employees or the Company's Amended 1973 Stock
Option and Stock Appreciation Rights Plan for Key Employees. A Stock
Appreciation Right, the grant of which is conditioned upon such surrender, may
have an exercise price lower (or higher) than the exercise price of the
surrendered Stock Appreciation Right, Option, Performance Award, Dividend
Equivalent may cover the same (or a lesser or greater) number of shares as such
surrendered right, may contain such other terms as the Committee deems
appropriate, and shall be exercisable in accordance with its terms, without
regard to the number of shares, price, exercise period or any other term or
condition of such surrendered right.
6.2 Coupled Stock Appreciation Rights
(a) A Coupled Stock Appreciation Right ("CSAR") shall be
related to a particular Option and shall be exercisable only when and to the
extent the related Option is exercisable.
(b) A CSAR may be granted to the Grantee for no more than
the number of shares subject to the simultaneously or previously granted Option
to which it is coupled.
(c) A CSAR shall entitle the Grantee (or other person
entitled to exercise the Option pursuant to this Plan) to surrender to the
Company unexercised a portion of the Option to which the CSAR relates and to
receive from the Company in exchange therefor an amount determined by
multiplying the difference obtained by subtracting the Option exercise price of
the Option from the Fair Market Value of a share of Common Stock on the date of
exercise of the CSAR by the number of shares of
19
Common Stock with respect to which the CSAR shall have been exercised, subject
to any limitations the Committee may impose.
6.3 Independent Stock Appreciation Rights
(a) An Independent Stock Appreciation Right ("ISAR") shall
be unrelated to any Option and shall have a term set by the Committee. An ISAR
shall be exercisable in such installments as the Committee may determine. An
ISAR shall cover such number of shares of Common Stock as the Committee may
determine. The exercise price per share of Common Stock subject to each ISAR
shall be set by the Committee. An ISAR is exercisable only while the Grantee
is an Employee; provided that the Committee may determine that the ISAR may be
exercised subsequent to Termination of Employment to the extent permitted under
Section 4.5.
(b) An ISAR shall entitle the Grantee (or other person
entitled to exercise the ISAR pursuant to this Plan) to exercise all or a
specified portion of the ISAR (to the extent then exercisable pursuant to its
terms) and to receive from the Company an amount determined by multiplying the
difference obtained by subtracting the exercise price per share of the ISAR
from the Fair Market Value of a share of Common Stock on the date of exercise
of the ISAR by the number of shares of Common Stock with respect to which the
ISAR shall have been exercised, subject to any limitations the Committee may
impose.
6.4 Payment and Limitations on Exercise
(a) Payment of the amount determined under Section 6.2(c)
and 6.3(b) above shall be in cash, in Common Stock or a
20
combination of both, as determined by the Committee. To the extent such
payment is effected in Common Stock it shall be made subject to satisfaction of
all provisions of Section 5.3 hereinabove pertaining to Options.
(b) So long as Rule 16b-3 under the Exchange Act, or any
successor thereto, so provides, no CSAR shall be exercisable during the first
six months after it is granted with respect to an outstanding Option, except to
the extent that the Committee in its discretion permits such exercise in the
event of the Grantee's death or disability within the meaning of Section
105(d)(4) of the Code.
(c) So long as Rule 16b-3 under the Exchange Act, or any
successor thereto, so provides, cash payment upon exercise of a Stock
Appreciation Right may only be made if such Stock Appreciation Right is
exercised during the lifetimeperiod beginning on the third business day following the
date of the holder thereof, onlyCompany's release of its quarterly or annual summary statements of
sales and earnings and ending on the twelfth business day following such date.
6.5 Consideration
In consideration of the granting of a Stock Appreciation
Right, the Grantee shall agree, in the written Stock Appreciation Right
Agreement, to remain in the employ of the Company or a Subsidiary for a period
of at least one year after the Stock Appreciation Right is granted. Nothing in
this Plan or in any Stock Appreciation Right Agreement hereunder shall confer
on any Grantee any right to continue in the employ of the Company
21
or any Subsidiary or shall interfere with or restrict in any way the rights of
the Company and the Subsidiaries, which are hereby expressly reserved, to
discharge any Grantee at any time for any reason whatsoever, with or without
good cause.
ARTICLE VII
AWARD OF RESTRICTED STOCK
7.1 Eligibility
Any Employee selected by him.the Committee to whom an Option may
be granted under this Plan shall be eligible to be awarded Restricted Stock.
7.2 Award of Restricted Stock
(a) The holderCommittee shall from time to time, in its absolute
discretion:
(i) Select from among Employees (including
Employees to whom Options, Stock Appreciation Rights, Performance
Awards, Dividend Equivalents or Stock Payments have previously been
granted and/or shares of Restricted Stock have previously been issued)
such of them as in its opinion should be awarded Restricted Stock; and
(ii) Determine the purchase price and other
terms and conditions applicable to such Restricted Stock, consistent
with this Plan.
(b) The Committee shall establish the purchase price and
form of payment for Restricted Stock; provided, however, that such purchase
price shall be no less than the par value of the
22
Common Stock to be purchased. In all cases legal consideration shall be
required for each issuance of Restricted Stock.
(c) Upon the selection of an OptionEmployee to be awarded
Restricted Stock, the Committee shall instruct the Secretary to issue such
Restricted Stock and may impose such conditions on the issuance of such
Restricted Stock as it deems appropriate.
ARTICLE VIII
TERMS OF RESTRICTED STOCK
8.1 Restricted Stock Agreement
Restricted Stock shall be issued only pursuant to a written
Restricted Stock Agreement, which shall be executed by the selected Employee
and an authorized officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan.
8.2 Consideration to the Company
As consideration for the issuance of Restricted Stock, in
addition to payment of the purchase price, the selected Employee shall agree,
in the written Restricted Stock Agreement, to remain in the employ of the
Company or a Subsidiary for a period of at least one year after the Restricted
Stock is issued. Nothing in this Plan or in any Restricted Stock Agreement
hereunder shall confer on any Restricted Stockholder any right to continue in
the employ of the Company or any Subsidiary or shall interfere with or restrict
in any way the rights of the Company and the Subsidiaries, which are hereby
expressly reserved, to
23
discharge any Restricted Stockholder at any time for any reason whatsoever,
with or without good cause.
8.3 Rights as Shareholders
Upon delivery of the shares of Restricted Stock to the escrow
holder pursuant to Section 8.6, the Restricted Stockholder shall have none ofall the
rights of a stockholder until the shares
subject thereto shall have been registered in the name of the person or persons
exercising such Option on the transfer books of the Company upon such exercise.
8. Adjustment upon Changes in Capitalization
Notwithstanding the provisions in Paragraphs 2 and 4 of the Plan, the
number and class ofwith respect to said shares, subject to the
Planrestrictions in his Restricted Stock Agreement, including the right to vote the
shares and to receive all dividends and other distributions paid or made with
respect to the shares; provided, however, that in the discretion of the
Committee, any extraordinary distributions with respect to the Common Stock
shall be subject to the Options which
have been grantedrestrictions set forth in Section 8.4.
8.4 Restriction
All shares of Restricted Stock issued under thethis Plan
and the option prices(including any shares received by holders thereof with respect to shares of
such Options shall be
proportionately adjusted in the event of changes in the outstanding CommonRestricted Stock by reasonas a result of stock dividends, stock splits recapitalizations, mergers,
consolidations, combinations or exchangesany other form
of shares, split-ups, split-offs,
spin-offs, liquidations or other similar changesrecapitalization) shall, in the capitalization, or any
distributionterms of each individual Restricted Stock
Agreement, be subject to common stockholders other than cash dividends and, insuch restrictions as the eventCommittee shall provide,
which restrictions may include, without limitation, restrictions based on
duration of any such change in the outstanding Common Stock, the aggregate number and
class of shares available under the Plan and the number of shares as to which
Options may be granted shall be appropriately adjusted by the Board. However,
no such adjustments shall be madeemployment with respect to Options not yet granted under
the Plan.
4
34
9. Merger of the Company, Incompany performance and individual
performance; provided, however, that by a resolution adopted after the
event ofRestricted Stock is issued, the mergerCommittee may, on such terms and conditions as
it may determine to be appropriate, remove any or consolidation of the Company into
another company, the exchange of all or substantially all of the assetsrestrictions
imposed by the terms of the Company forRestricted Stock Agreement. Restricted Stock may
24
not be sold or encumbered until all restrictions are terminated or expire.
8.5 Repurchase of Restricted Stock
The Committee shall provide in the securitiesterms of another company, the acquisition by another
company of 80% or more of the Company's then outstanding voting stock, or the
liquidation or dissolution of the Company, then no Option may be exercised
after such event, provided, however,each individual
Restricted Stock Agreement that for a ten (10) day period prior to
such event, such Options shall be exercisable as to all shares covered thereby,
notwithstanding anything to the contrary in Paragraph 5(b).
10. Amendment and Termination
Unless the Plan shall theretofore have been terminated as hereinafter
provided, the Plan shall terminate on, and no awards of Options shall be made
after January 31, 1997; provided, however, that such termination shall have no
effect on Options granted prior thereto. The Plan may be terminated, modified
or amended by the stockholders of the Company. The Board of Directors of the
Company may also terminate the Plan or modify or amend the Plan in such
respects as it shall deem advisable in order to conform to any change in any
law or regulation applicable thereto, or in other respects which shall not
change (i) the total number of shares as to which Options may be granted, (ii)
the class of persons eligible to receive Options under the Plan, (iii) the
manner of determining the Option prices, (iv) the period during which Options
may be granted or exercised or (v) the provisions relating to the
administration of the Plan by the directors of the Company.
11. Withholding
Upon the transfer of Common Stock as a result of the exercise of an
Option, the Company shall have the right to repurchase
from the Restricted Stockholder the Restricted Stock then subject to
restrictions under the Restricted Stock Agreement immediately upon a
Termination of Employment for any reason at a cash price per share equal to the
price paid by the Restricted Stockholder for such Restricted Stock; provided,
however, that provision may be made that no such right of repurchase shall
exist in the event of a Termination of Employment because of the Restricted
Stockholder's retirement at or after age fifty-five (55), death or total
disability.
8.6 Escrow
The Secretary or such other escrow holder as the Committee may
appoint shall retain or sell, without notice,
sufficient sharesphysical custody of stock (taken at their fair market value, as defined in
Paragraph 5 (c), oneach certificate representing
Restricted Stock until all of the date of exercise) to coverrestrictions imposed under the amount of any tax
required by any government to be withheld or otherwise deducted and paidRestricted
Stock Agreement with respect to the shares evidenced by such payment, remitting any balancecertificate expire
or shall have been removed.
8.7 Legend
In order to enforce the restrictions imposed upon shares of
Restricted Stock hereunder, the Committee shall cause a legend or legends to be
placed on certificates representing all shares of Restricted Stock that are
still subject to restrictions
25
under Restricted Stock Agreements, which legend or legends shall make
appropriate reference to the Optionee; provided,
however, that the Optionee shall have the right to provide the Company with the
funds to enable it to pay such tax.
12. Approval by Stockholders and Receipt of Interpretive Letter
The Plan as approved and adopted by the Board on January 28, 1988 and
will be submitted for the approval of the Company's stockholders at the meeting
of the stockholders to be held on March 31, 1988; Optionsconditions imposed thereby.
ARTICLE IX
PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, STOCK PAYMENTS
9.1 Performance Awards
One or more Performance Awards may be granted prior
to said stockholders' meeting but shall also be submitted for such approvalany Employee
selected by the stockholders at said meeting. EachCommittee to whom an Option may be granted under this Plan.
The value of such Performance Awards may be linked to the Plan prior to
satisfactionmarket value, book
value or other measure of conditions (i) and (ii) below shall provide that if (i) the Plan, and Options granted prior to March 31, 1988, are not approved at said
meetingvalue of Common Stock or other specific
performance criteria determined appropriate by the voteCommittee, in each case on a
specified date or dates or over any period or periods determined by the
Committee, or may be based upon the appreciation in the market value, book
value or other measure of the holdersvalue of a majorityspecified number of the outstanding shares of Common
Stock over a fixed period or periods determined by the Committee. In making
such determinations, the Committee shall consider (among such other factors as
it deems relevant in light of the specific type of award) the contributions,
responsibilities and other compensation of the particular key Employee.
9.2 Dividend Equivalents
Any Employee selected by the Committee to whom an Option may
be granted under this Plan may be granted "Dividend Equivalents" based on the
dividends declared on Common Stock, to be credited as of dividend payment
dates, during the period between the date an Option, Stock Appreciation Right
or
26
Performance Award is granted, and the date such Option, Stock Appreciation
Right or Performance Award is exercised, vests or expires, as determined by the
Committee. Such Dividend Equivalents shall be converted to cash or additional
shares of Common Stock by such formula and at such time and subject to such
limitations as may be determined by the Committee.
9.3 Stock Payments
Any Employee selected by the Committee to whom an Option may
be granted under this Plan may receive Stock Payments in the manner determined
from time to time by the Committee. The number of shares shall be determined
by the Committee and may be based upon the Fair Market Value, book value or
other measure of the value of Common Stock on the date such Stock Payment is
made or on any date thereafter.
9.4 Performance Award Agreement, Dividend Equivalent
Agreement, Stock Payment Agreement
Each Performance Award, Dividend Equivalent and/or Stock
Payment shall be evidenced by a written agreement, which shall be executed by
the Grantee and an authorized Officer of the Company and (ii) the Company does not, by January 28, 1989,
receive an interpretive letter from the Securities and Exchange Commission to
5
35
the effect that the Plan meets the requirements of Rule 16b-3 of the Securities
Exchange Act of 1934 and that non-employee directors receiving Options under
the Plan are disinterested persons within the meaning of Rule 16b-3 for the
purpose of administering certain compensation plans of the Company,which shall contain
such
Options shall be cancelled and become null and void.
13. Titles
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of the Plan.
14. Construction
This Plan and any Agreement hereunder shall be administered and
interpreted under the laws of the State of California.
6
36
EXHIBIT A
AVERY INTERNATIONAL CORPORATION
NON-EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT
THIS AGREEMENT, dated _________________________, is made by and between Avery
International Corporation, a Delaware corporation, hereinafter referred to as
the "Company," and [name of Director], a non-employee Director of Company.
WHEREAS, Company wishes to afford Optionee the opportunity to purchase shares
of its $1.00 par value common stock under the terms of the 1988 Stock Option
Plan for Non-Employee Directors of Avery International Corporation;
(hereinafter referred to as the "Plan") and
WHEREAS, The Company's Board of Directors (hereinafter referred to as the
"Board"), appointed to administer said Plan, has determined that it would be to
the advantage and best interest of Company and its stockholders to grant the
Option provided for herein to Optionee as an inducement to provide services as
a Director of the Company and as an incentive for increased efforts during such
service. The Board has advised Company of its determination and instructed the
undersigned officers to issue said Option, which is a Non-Qualified Stock
Option, as required under the Plan;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, Company and Optionee do hereby agree as follows:
7
37
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement they shall have the
meaning specified below unless the context clearly indicates to the contrary.
1.1 Agreement
"Agreement" shall mean this Non-Employee Director Stock Option
Agreement.
1.2 Change of Control
"Change of Control" shall mean a change in control of the Company of a
nature that would be required to be reported in response to Item 5(f)
of Schedule 14A, Regulation 240.14a-101, promulgated under the
Securities Exchange Act of 1934 as in effect on the date of this
Agreement or, if Item 5(f) is no longer in effect, any regulation
issued by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 which serves similar purposes;
provided that, without limitation, a Change of Control shall be deemed
to have occurred if and when:
(a) Any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) is or becomes
a beneficial owner, directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the
combined voting power of the Company's then outstanding
securities, or
(b) Individuals who were members of the Board of Directors of the
Company immediately prior to a meeting of the shareholders of
the Company involving a contest or the election of the
directors shall not constitute a majority of the Board of
Directors following such election.
1.3 Option
"Option" shall mean this option to purchase common stock of the
Company granted under the Agreement.
1.4 Optionee
"Optionee" shall mean a non-employee Director eligible under the terms
of the Plan.
1.5 Plan
The "Plan" shall mean The 1988 Stock Option Plan for Non-Employee
Directors of Avery International Corporation.
8
38
1.6 Pronouns
The masculine pronoun shall include the feminine and neuter, and the
singular, and the plural, where the context so indicates.
1.7 Secretary
"Secretary" shall mean the Secretary of the Company.
1.8 Termination
"Termination" shall mean the time when the Optionee ceases to be a
Director of the Company for any reason, including, but not limited to,
a termination by resignation, removal, death, retirement, or failure
to be elected.
ARTICLE II
GRANT OF OPTION
2.1 Grant of Option
In consideration of Optionee's agreement to provide services as a
Director of the Company and for other good and valuable consideration,
on the date hereof the Company irrevocably grants to Optionee the
option to purchase any part or all of an aggregate of __________
shares of its $1.00 par value common stock upon the terms and conditions as the Committee shall determine, consistent with
this Plan.
9.5 Term
The term of a Performance Award, Dividend Equivalent and/or
Stock Payment shall be set forthby the Committee in this Agreement. Such Optionits discretion.
27
9.6 Exercise Upon Termination of Employment
A Performance Award, Dividend Equivalent and/or Stock Payment
is granted
pursuantexercisable only while the Grantee is an Employee; provided that the
Committee may determine that the Performance Award, Dividend Equivalent and/or
Stock Payment may be exercised subsequent to Termination of Employment to the
Plan andextent permitted under Section 4.5.
9.7 Payment on Exercise
Payment of the amount determined under Section 9.1 or 9.2
above shall also be in cash, in Common Stock or a combination of both, as determined
by the Committee. To the extent such payment is effected in Common Stock, it
shall be made subject to the terms and
conditions set forth in the Plan which is incorporated herein by
reference.
2.2 Purchase Price
The purchase pricesatisfaction of the sharesall provisions of stock covered by the Option shall
be ____________________________ dollars ($__________) per share
without commission or other charge.
2.3Section 5.3.
9.8 Consideration to Company
In consideration of the granting of this Option bya Performance Award,
Dividend Equivalent and/or Stock Payment, the Grantee shall agree, in a written
agreement, to remain in the employ of the Company the
Optionee agrees to render services asor a Director to the Company,Subsidiary for a period
of at least one (1) year from the date this Optionafter such Performance Award, Dividend Equivalent and/or
Stock Payment is granted. Nothing in this AgreementPlan or in the Planany agreement hereunder
shall confer upon the
Optioneeon any Grantee any right to continue as a Directorin the employ of the Company
noror any Subsidiary or shall
it interfere with or restrict in any way the rights of
the Company and the Subsidiaries, which are hereby expressly reserved, to
discharge any Grantee at any time for any reason whatsoever, with or without
good cause.
28
ARTICLE X
ADMINISTRATION
10.1 Compensation Committee
The Compensation Committee shall consist of at least three
Directors, appointed by and holding office at the pleasure of the Board, no one
of whom is then an Employee. Committee members may resign at any time by
delivering written notice to the Board. Vacancies in the Committee may be
filled by the Board.
10.2 Duties and Powers of Committee
It shall be the duty of the Committee to conduct the general
administration of this Plan in accordance with its provisions. The Committee
shall have the power to interpret this Plan, the Options, the Stock
Appreciation Rights, the Performance Awards, the Dividend Equivalents, the
Stock Payments, and the Restricted Stock, and to adopt such rules for the
administration, interpretation, and application of this Plan as are consistent
therewith and to interpret, amend or revoke any such rules. Any such grant or
award under this Plan need not be the same with respect to each Optionee,
Grantee, or Restricted Stockholder. Any such interpretations and rules with
respect to Incentive Stock Options shall be consistent with the provisions of
Section 422A of the Code. In its absolute discretion, the Board may at any
time and from time to time exercise any and all rights and duties of the
Committee under this Plan.
29
10.3 Majority Rule
The Committee shall act by a majority of its members in office. The
Committee may act either by vote at a meeting or by a memorandum or other
written instrument signed by a majority of the Committee.
10.4 Compensation; Professional Assistance; Good Faith Actions
Expenses and liabilities which members of the Committee incur
in connection with the administration of this Plan shall be borne by the
Company. The Committee may, with the approval of the Board, employ attorneys,
consultants, accountants, appraisers, brokers, or other persons. The
Committee, the Company, and its officers and Directors shall be entitled to
rely upon the advice, opinions or valuations of any such persons. All actions
taken and all interpretations and determinations made by the Committee in good
faith shall be final and binding upon all Optionees, Grantees, Restricted
Stockholders, the Company, and all other interested persons. No members of the
Committee shall be personally liable for any action, determination, or
interpretation made in good faith with respect to this Plan, any Option, any
Stock Appreciation Right, any Performance Award, any Dividend Equivalent, any
Stock Payment, or any Restricted Stock, and all members of the Committee shall
be fully protected by the Company in respect of any such action, determination
or interpretation.
30
10.5 Delegation of Authority
The Committee may in its discretion delegate to the Chief
Executive Officer of the Company or the Secretary of the Company, or both, any
or all of the administrative duties and authority of the Committee under this
Plan, other than the lossauthority to make grants or awards under this Plan.
10.6 CEO's Fund
Notwithstanding Section 10.5, the Committee may in its
discretion delegate to the Chief Executive Officer of the Company any or all of
its authority to make grants or awards under this Plan pursuant to Articles III
(including the determination of which Employees are key Employees) through IX
inclusive with respect to any key Employee who is not an "Executive Officer" of
the Company (within the meaning of Rule 405 promulgated under the Securities
Act of 1933, as amended), subject to any limitations the Committee may impose.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Not Transferable
Options, Stock Appreciation Rights, Performance Awards,
Dividend Equivalents, Stock Payments and Restricted Stock under this Plan may
not be sold, pledged, assigned, or transferred in any manner other than by will
or the laws of descent and distribution; provided, however, that an Optionee
may designate a Beneficiary to exercise his Option or other rights under this
Plan after his death. No Option, Stock Appreciation Right,
31
Performance Award, Dividend Equivalent, Stock Payment or Restricted Stock or
interest or right therein shall be liable for the debts, contracts or
engagements of the Optionee, Grantee or Restricted Stockholder or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that nothing in this
Section 11.1 shall prevent transfers by will or by the applicable laws of
descent and distribution. An Option shall be exercised during the Optionee's
lifetime only by the Optionee or his guardian or legal representative. A Stock
Appreciation Right, Performance Award, Dividend Equivalent or Stock Payment
under this Plan shall be exercised during the Grantee's lifetime only by the
Grantee or his guardian or legal representative.
11.2 Amendment, Suspension, or Termination of this Plan
This Plan may be wholly or partially amended or otherwise
modified, suspended, or terminated at any time or from time to time by the
Board. However, without approval of the Company's shareholders given within 12
months before or after the action by the Board or the Committee, no action of
the Committee or Board may, except as provided in Article IIISection 11.3, increase the
limits imposed in Section 2.1 on the maximum number of shares
32
which may be issued under this Plan, and no action of the Committee or Board
may be taken that would otherwise require shareholder approval as a matter of
applicable law, regulation or rule. No amendment, suspension, or termination
of this Agreement,Plan shall, without the rightconsent of the Optionee voluntarily to resign as a Directorholder of an Option, Stock
Appreciation Right, Performance Award, Dividend Equivalent, Stock Payment or
Restricted Stock, alter or impair any rights or obligations under any option,
Stock Appreciation Right, Performance Award, Dividend Equivalent, Stock Payment
or Restricted Stock theretofore granted or issued. No Option, Stock
Appreciation Right, Performance Award, Dividend Equivalent, Stock Payment or
Restricted Stock may be granted or awarded during any period of suspension nor
after termination of this Plan, and in no event may any Incentive Stock Option
be granted under this Plan after January 24, 2000.
11.3 Changes in Common Stock or Assets of the Company.
9
39
2.4 Adjustments in OptionCompany
In the event that the outstanding shares of the stock subject to the
OptionCommon Stock are
hereafter changed into or exchanged for cash or a different number or kind of
shares of the Company or other securities of the Company, or of another corporation, by reason
of reorganization, merger, consolidation, recapitalization, reclassification,
stock split-up,splitup, stock dividend, or combination of shares, appropriate
adjustments shall be made by the BoardCommittee in the number and kind of shares for
the purchase of which Options or with respect to which the exercise of Stock
Appreciation Rights, Performance Awards, Dividend Equivalents or Stock Payments
may be granted,
33
including adjustments of the limitation in Section 2.1 on the maximum number
and kind of shares which may be issued.
In the event of such a change or exchange, other than for
shares or securities of another corporation or by reason of reorganization, the
Committee shall also make an appropriate and equitable adjustment in the number
and kind of shares as to which the Option,all outstanding Options, Stock Appreciation
Rights, Performance Awards, Dividend Equivalents or Stock Payments, or portions
thereof then unexercised, shall be exercisable. Such adjustment shall be made
with the intent that after the change or exchange of shares, theeach Optionee's
and each Grantee's proportionate interest shall be maintained as before the
occurrence of such event. Such adjustment in thean outstanding Option, Stock
Appreciation Right, Performance Award, Dividend Equivalent or Stock Payment may
include a necessary or appropriate corresponding adjustment in the optionOption, Stock
Appreciation Right, Performance Award, Dividend Equivalent or Stock Payment
exercise price, per share, but shall be made without change in the total price applicable
to the Option, Stock Appreciation Right, Performance Award, Dividend Equivalent
or Stock Payment, or the unexercised portion of the Optionthereof (except for any change in
the aggregate price resulting from rounding-off of share quantities or prices).
ARTICLE III
PERIOD OF EXERCISABILITY
3.1 Commencement of Exercisability
(a) The Option shall become exercisable in two cumulative
installments as follows:
(i) The first installment shall consist of fifty percent
(50%)Where an adjustment of the shares covered bytype described above is made to an
Incentive Stock Option under this Section, the Option and shall
become exercisable onadjustment will be made in a
manner which will not be considered a "modification" under the first anniversaryprovisions of
subsection 425(h)(3) of the dateCode.
34
In the Option was granted.
(ii) The second installment shall consistevent of an additional
fifty percent (50%)a spin-off or other substantial distribution
of the shares covered by the
Option and shall become exercisable on the second
anniversary of the date the Option was granted.
The installments provided for in this Subsection (a) are
cumulative. Each installment which becomes exercisable shall
remain exercisable during the term of the Option, subject to
Sections 3.3 and 3.4.
(b) No portion of the Option which is an unexercisable installment
under Subsection (a) above at Termination shall thereafter
become exercisable.
(c) Notwithstanding Subsection 3.1(a) above, upon a Change of
Control, all Option installments not yet exercisable shall
become immediately exercisable.
(d) Notwithstanding Subsection 3.1(a) above, when the
director-Optionee reaches his seventy-second birthday, all
Option installments not yet exercisable shall become
immediately exercisable.
10
40
3.2 Term of Option
The Option will expire and will not, under any condition, be
exercisable after the tenth (10th) anniversary of the date the Option
was granted. Such date shall be the Option's Expiration Date.
3.3 Exercise of Option after Termination
This Option is exercisable by the Optionee only while he is a Directorassets of the Company subjectwhich has a material diminutive effect upon the Fair
Market Value, the Committee may in its discretion make an appropriate and
equitable adjustment to the following exceptions:
(a) IfOption, Stock Appreciation Right, Performance
Award, Dividend Equivalent or Stock Payment exercise price to reflect such
diminution in the Optionee dies whileFair Market Value.
11.4 Merger of the Option is exercisable underCompany
In the termsevent of this Agreement, the person to whom the Optionee's
rights have passed by will or the laws of descent and
distribution may exercise such rights, subject to the
limitation in Subsection 3.1(b). The Option must be exercised
within twelve (12) months after the Optionee's death, but not
later than the Option's Expiration Date.
(b) If the Optionee ceases to be a Director due to his retirement,
the Optionee may exercise the Option, subject to the
limitation in Subsection 3.1(b), within twenty-four (24)
months after Termination, but not later than the Option's
Expiration Date.
(c) If the Optionee ceases to be a Director other than for the
reasons set forth in Subsections (a) or (b) above, the
Optionee may exercise the Option, subject to the limitations
of Subsection 3.1(b), within three (3) months after
Termination, but not later than the Option's Expiration Date.
3.4 Exercise of Option Upon Merger or Consolidation
(a) Notwithstanding Section 3.3, the Option may not be exercised
to any extent by anyone after the effective date of either the merger or consolidation of the Company
with or into another corporation, the exchange of all or substantially all of
the assets of the Company for the securities of another corporation, the
acquisition by another corporation or person of all or substantially all of the
Company's assets or 80% or more of the Company's then outstanding voting stock,
or the liquidation or dissolution of the Company.Company:
(a) At least twenty
(20) daysthe discretion of the Committee, the terms of an
Option, Stock Appreciation Right, Performance Award, Dividend Equivalent or
Stock Payment may provide that it cannot be exercised after such event.
(b) In its absolute discretion, and on such terms and
conditions as it deems appropriate, the Committee may provide either by the
terms of such Option, Stock Appreciation Right, Performance Award, Dividend
Equivalent or Stock Payment or by a resolution adopted prior to the effective date of such merger,
consolidation, exchange, acquisition, liquidation, or
dissolution, the Company shall give the Optionee noticeoccurrence
of such event if the Option has then neither been fully exercised
nor become unexercisable.
(b) In the event of such merger, consolidation, exchange,
acquisition, liquidation, or dissolution, thenthat, for a specified period of ten (10) daystime prior to the effective date of such event, thesuch
Option, Stock Appreciation Right, Performance Award, Dividend Equivalent or
Stock Payment shall be exercisable as to all shares covered
hereby,35
thereby, notwithstanding thatanything to the contrary in (i) Section 4.4 or Section
6.2(a), (ii) Section 6.4(c) to the extent such Section pertains to the receipt
of Common Stock upon exercise of a Stock Appreciation Right, or (iii) the
provisions of such Option, may not yet have become fully
exercisable under Subsection 3.1(a).
11
41
ARTICLE IV
EXERCISE OF OPTIONS
4.1 Partial Exercise
Any exercisable portionStock Appreciation Right, Performance Award,
Dividend Equivalent or Stock Payment.
(c) At the discretion of the OptionCommittee, the restrictions
imposed under a Restricted Stock Agreement upon some or the entire Option, if then
wholly exercisable,all shares of
Restricted Stock may be exercised in whole terminated and/or in part at any timesome or all of such shares may cease
to be subject to repurchase under Section 8.5 after such event.
11.5 Approval of Plan by Shareholders
This Plan will be submitted for the approval of the Company's
shareholders within 12 months after the date of the Board's initial adoption of
this Plan. Options, Stock Appreciation Rights, Performance Awards, Dividend
Equivalents or Stock Payments may be granted or Restricted Stock may be awarded
prior to such shareholder approval, provided that such Options, Stock
Appreciation Rights, Performance Awards, Dividend Equivalents or Stock Payments
shall not be exercisable and such Restricted Stock shall not vest prior to the
time when the Option or portion thereof becomes
unexercisable under Section 3.2. Each partial exercise shall be for
not less than one hundred (100) shares (or a smaller number, if itthis Plan is the maximum number which may be exercised under Section 3.1), and
shall be for whole shares only.
4.2 Manner of Exercise
The Option, or any exercisable portion thereof, may be exercised
solely by delivery to the Secretary or his office all of the
following:
(a) A written notice, complying with the applicable rules
establishedapproved by the Board, statingshareholders, and provided further that
if such approval has not been obtained at the Optionend of said 12-month period, all
Options, Stock Appreciation Rights, Performance Awards, Dividend Equivalents or
portion
is thereby exercised. The notice shall be signed by the
Optionee or the other person then entitled to exercise the
Option;
(b) Full payment (in cash or by check) for the shares with respect
to which the Option or portion is exercised. Payment may be
made by surrendering Company common stock owned by the
Optionee, with a fair market value (as defined in Paragraph
5(c) of the Plan) on the date the Option is exercised equal to
the aggregate purchase price of the shares with respect to
which the Option, or portion thereof, is exercised; and
(c) In the event the Option or portion thereof shall be exercised
by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the
Option.
4.3 Conditions to Issuance of Stock Certificates
The shares of stock deliverable upon the exercise of the Option, or
any part thereof, may be eitherPayments previously authorized but unissued
shares or issued shares which have then been reacquired by the
Company. Such shares shall be fully paid and non-assessable. The
Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of the
Option or part thereof prior to fulfillment of all of the following
conditions:
(a) The admission of such shares to listing on all stock exchanges
on which such class of stock is then listed;
(b) The completion of any registration or other qualification of
such shares under any state or federal law, or under rulings
or regulations of the Securities and Exchange Commission or
any other governmental regulatory body which the Board shall,
in its absolute discretion, deem necessary or advisable;
12
42
(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Board shall, in
its absolute discretion, determine to be necessary or
advisable;
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Board may from time to time
establish for reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such shares.
4.4 Rights as Stockholders
The holder of the Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares
purchasable upon the exercise of any part of the Option unless and
until certificates representing such shares shall have been issued by
the Company to such holder.
ARTICLE V
MISCELLANEOUS
5.1 Administration
The Board shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith
and to interpret or revoke any such rules. All actions takengranted and all interpretations and determinations made by the Board in good faith
shall be final and binding upon the Optionee, the Company and all
other interested persons. No member of the Board shall be personally
liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Option.
5.2 Option Not Transferable
Neither the Option nor any interest or right therein or part thereof
may be sold, pledged, assigned or transferred in any manner other than
by will or by the applicable laws of descent and distribution. The
Option shall be exercised during the Optionee's lifetime only by the
Optionee, or his guardian or legal representative.
5.3 Notices
Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary and
any notice to be given to the Optionee shall be addressed to him at
the address given beneath his signature hereto. By a notice given
pursuant to this Section, either party may hereafter designate a
different address for notices to be given to him. Any notice which is
required to be given to Optionee shall, if Optionee is then deceased,
be given to Optionee's personal representative if such representative
hasRestricted Stock previously informed the Company of his status and address by
written noticeawarded
under this 13
43
Section. Any noticePlan shall have been deemed duly given when enclosed
in a properly sealed envelope or wrapper addressed as aforesaid,
deposited (with postage prepaid) in a post office or branch post
office regularly maintained by the United States Postal Service.
5.4 Approval by Stockholders and Receipt of Interpretive Letter
The Plan was approved and adopted by the Board on January 28, 1988 and
will be submitted for approval of the Company's stockholders at the
meeting of the stockholders to be held on March 31, 1988; Options may
be granted prior to said stockholders' meeting but shall also be
submitted for such approval by the stockholders at said meeting. This
option shallthereupon be cancelled and become null and void unless, and until,
(i)void.
36
11.6 Tax Withholding
The Company shall be entitled to require payment or deduction
from other compensation payable to each Optionee, Grantee or Restricted
Stockholder of any sums required by federal, state or local tax law to be
withheld with respect to any Option, Stock Appreciation Right, Performance
Award, Dividend Equivalent, Stock Payment or Restricted Stock. The Committee
may in its discretion allow such Optionee, Grantee or Restricted Stockholder to
elect to have the Plan, and Options granted prior to March 31, 1988, are
approved at said meeting by the vote of the holders of a majority of
the outstandingCompany withhold shares of Common Stock (or allow the return
of shares of Common Stock) having a Fair Market Value equal to the sums
required to be withheld. If the Optionee, Grantee or Restricted Stockholder
elects to advance such sums directly, written notice of that election shall be
delivered on or prior to such exercise and, whether pursuant to such election
or pursuant to a requirement imposed by the Company, payment in cash or by
check of such sums for taxes shall be delivered within two days after the date
of exercise. If, as allowed by the Committee, the Optionee, Grantee or
Restricted Stockholder elects to have the Company withhold shares of Common
Stock (or allow the return of shares of Common Stock) having a Fair Market
Value equal to the sums required to be withheld, the value of the shares of
Common Stock to be withheld (or returned as the case may be) will be equal to
the Fair Market Value of such shares on the date that the amount of tax to be
withheld is to be determined (the "Tax Date"). Elections by such persons to
have shares of Common Stock withheld for this purpose will be subject to the
following restrictions:
37
(w) the election must be made on or prior to the Tax Date, (x) the election
must be irrevocable, (y) the election shall be subject to the disapproval of
the Committee, and (z) if the person is an officer of the Company within the
meaning of Section 16 of the Exchange Act, the election shall be subject to
such additional restrictions as the Committee may impose in an effort to secure
the benefits of any regulations thereunder. The Committee shall not be
obligated to issue shares and/or distribute cash to any person upon exercise of
any right until such payment has been received or shares have been so withheld,
unless withholding (or offset against a cash payment) as of or prior to the
date of such exercise is sufficient to cover all such sums due or which may be
due with respect to such exercise.
11.7 Loans
The Committee may, in its discretion, extend one or more loans
to key Employees in connection with the exercise or receipt of outstanding
Options, Stock Appreciation Rights, Performance Awards, Dividend Equivalents or
Stock Payments granted under this Plan, or the issuance of Restricted Stock
awarded under this Plan. The terms and conditions of any such loan shall be
set by the Committee.
11.8 Limitations Applicable to Section 16 Persons
(a) Notwithstanding any other provision of this Plan, any
Option, Stock Appreciation Right, Performance Award, Dividend Equivalent or
Stock Payment granted or Restricted Stock awarded to a key Employee who is then
subject to Section 16 of
38
the Exchange Act is subject to the following additional limitations:
(i) the Option, Stock Appreciation Right,
Performance Award, Dividend Equivalent, Stock Payment, or Restricted
Stock Agreement may provide for the issuance of shares of Common Stock
as a stock bonus for no consideration other than services rendered;
and
(ii) in the event of an Option, Stock
Appreciation Right, Performance Award, Dividend Equivalent, Stock
Payment, or Restricted Stock Agreement under which shares of Common
Stock are or in the future may be issued for any type of consideration
other than services rendered, the amount of such consideration either
(i) shall be equal to the minimum amount (such as the par value of
such shares) required to be received by the Company receives,to comply with
applicable state law, or (ii) shall be equal to or greater than 50% of
the Fair Market Value of the shares of Common Stock on the date of the
grant of the Option, Stock Appreciation Right, Performance Award,
Dividend Equivalent or Stock Payment, or the issuance of the
Restricted Stock.
(b) Notwithstanding any other provision of this Plan, this
Plan, and any Option, Stock Appreciation Right, Performance Award, Dividend
Equivalent or Stock Payment granted, or Restricted Stock awarded, to a key
Employee who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive
rule under Section 16 of the Exchange Act (including any
39
amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule. Any such additional limitation shall be
set forth in an annex to this Plan, such annex to be incorporated herein by
January 31, 1989, an interpretive letter fromthis reference and made part of this Plan.
11.9 Plan Designation and Status
Notwithstanding the designation of this document as a Plan for
convenience of reference and to standardize certain provisions applicable to
all types of Options, Stock Appreciation Rights, Performance Awards, Dividend
Equivalents, Stock Payments and Restricted Stock issuances authorized, each of
the Option, Stock Appreciation Right, Performance Award, Dividend Equivalent,
Stock Payment and Restricted Stock shall be deemed to be a separate "plan" for
purposes of Section 16 of the Exchange Act and any applicable state securities
laws.
11.10 Release of Restrictions
Any or all of the foregoing limitations in Sections 11.8(a)
and 11.9 on Options, Stock Appreciation Rights, Performance Awards, Dividend
Equivalents, Stock Payments granted to key Employees, and Restricted Stock
awarded to key Employees shall be suspended if, to the extent, as to such
persons, and for so long as the Securities and Exchange Commission by
regulation or official staff interpretation or a no-action letter issued to the
effectCompany determines that such limitation is not necessary to secure the Plan meetsbenefits
otherwise available with respect to a "plan" or particular award, as the requirements of Rule 16b-3case
may be, under any applicable exemptive rule under Section 16 of the Securities Exchange
ActAct.
40
11.11 Effect of 1934Plan Upon Options and that non-employee directors receiving Options under theCompensation Plans
The adoption of this Plan are
disinterested persons within the meaning of Rule 16b-3shall not affect any other
compensation or incentive plans in effect for the purpose
of administering certain compensation plansCompany or any Subsidiary.
Nothing in this Plan shall be construed to limit the right of the Company.
5.5Company (a)
to establish any other forms of incentives or compensation for employees of the
Company or any Subsidiary, or (b) to grant or assume options or other rights
otherwise than under this Plan in connection with any proper corporate purpose
including but not by way of limitation, the grant or assumption of options in
connection with the acquisition by purchase, lease, merger, consolidation or
otherwise, of the business, stock or assets of any corporation, firm or
association.
11.12 Titles
Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.
5.6 ConstructionPlan.
11.13 Governing Law
This AgreementPlan and any agreements hereunder shall be administered,
interpreted and interpretedenforced under the laws of the State of California.
1441
44
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.
AVERY INTERNATIONAL CORPORATION
By _____________________________________
Chairman and Chief Executive Officer
By _____________________________________
Secretary
_______________________________
Optionee
Address: _______________________
_______________________
_______________________
_______________________
Optionee's Social Security Number
15
45
AMENDMENT NO. 1
TO THE AVERY INTERNATIONAL CORPORATION
19881990 STOCK OPTION AND INCENTIVE PLAN
FOR NON-EMPLOYEE DIRECTORSKEY EMPLOYEES OF AVERY DENNISON CORPORATION
WHEREAS, Paragraph 10Section 11.2 of the Avery International Corporation 19881990 Stock Option and Incentive Plan for Non-Employee DirectorsKey
Employees of Avery Dennison Corporation (the "Plan") provides that the Plan may
be amended by the stockholdersBoard of Directors of Avery Dennison Corporation (the
"Company");, subject to shareholder approval in certain circumstances; and
WHEREAS, the Board of Directors of the Company has determined that it is
advisable to amend the Plan in certain respects and to submit this amendment to
the Company's stockholdersshareholders for approval.
NOW, THEREFORE, subject to such stockholder approval, the Plan is hereby amended effective as of DecemberJanuary 1, 1994 in
the following respects:
1. The name of the Plan shall be changed to the "Avery Dennison
Corporation 1988 Stock Option Plan for Non-Employee Directors."
2. The secondfirst sentence of the first paragraph of Paragraph 4Section 2.1 is hereby deleted in its entirety and
the following is inserted in lieu thereof:
"Commencing with"The shares of stock subject to Options, Stock Appreciation Rights,
Restricted Stock Awards, Performance Awards, Dividend Equivalents or
Stock Payments shall be Common Stock, initially shares of the regularCompany's
common stock, par value $1.00 per share, as presently constituted, and
the aggregate number of such shares which may be issued upon exercise of
such options or rights or upon any such awards shall not exceed
7,950,000."
2. The following language is hereby added at the end of Section 3.3(a)(ii):
"; provided, however, that in no event shall the Committee grant Options
to any individual Employee during any calendar year covering in excess of
200,000 shares."
Approved:
____________________________________
Charles D. Miller
Chairman and Chief Executive Officer
Avery Dennison Corporation
AMENDMENT NO. 2
TO THE 1990 STOCK OPTION AND INCENTIVE PLAN
FOR KEY EMPLOYEES OF AVERY DENNISON CORPORATION
WHEREAS, Section 11.2 of the 1990 Stock Option and Incentive Plan for Key
Employees of Avery Dennison Corporation (the "Plan") provides that the Plan may
be amended by the Board of Directors of Avery Dennison Corporation (the
"Company"), subject to shareholder approval in certain circumstances; and
WHEREAS, the Board of Directors of the Company has determined that it is
advisable to amend the Plan in certain respects and to submit this amendment to
the Company's shareholders for approval.
NOW, THEREFORE, the Plan is hereby amended effective as of September 28, 1995,
subject to shareholder approval at the annual meeting of stockholders on April
25, 1996, in the Board in December 1994,
during the termfollowing respects:
Section 4.5 Exercise of the Plan each then current, non-employee director
("Optionee") shall automatically be granted, on the dateOption after Termination of each
regular December meeting of the Board,Employment
--------------------------------------------------
The first paragraph is hereby amended and revised to read as follows:
"An Option is exercisable by an Optionee while he is an Employee.
The preceding notwithstanding, an Option for 2,000 shares
(subjectmay be exercised subsequent
to adjustment as provided in Paragraph 8), except that any
director retiring froman Optionee's Termination Of Employment, subject to the Board as of the Annual Meeting of
Stockholders on April 27, 1995 shall not be entitled to receive any
such grant of Options.following
limitations:"
3. The first sentence of Paragraph 5(b)Section 4.5(c) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"(b)"(c) For Options shall become exercisable in installments of 50%
ofgranted before November 30, 1995, if the number of shares initially granted, commencing on the first
anniversary of the grant date, such installmentsOptionee's
employment is terminated due to be cumulative;
provided, however, that all Options owned by a director which are
unexercisable on the date of such director's Retirement at or after
age seventy-two shall become fully exercisable on that date."
4. Paragraph 5(f) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"(f) In the event of the death of a director or former
director to whom an Option has been granted under the Plan, the Option
theretofore granted to him (unless the Option shall have been
previously terminated pursuant to the provisions of Paragraph 5(d) or
5(e)) may be exercised by a person properly designated byhis retirement, the Optionee includingmay
exercise his spouse or heirs at law, to exercise such
Optionee's rights under this Plan (a "Beneficiary") at any time within
twelve months of the date of the Optionee's death, but not after the
expiration of the Option,Options, to the extent of the number of shares
exercisable by the Optionee at the dateas of his
death; otherwise the
Option shall expire at the endTermination of such twelve-month period.
Designation, revocation and redesignation of Beneficiaries must be
made in writing in accordance with
1
46
rules established by the Board and shall be effective upon delivery to
the Board."
5. The first sentence of Paragraph 7 is hereby deleted in its entirety
and the following is inserted in lieu thereof:
"No Option granted under the Plan shall be transferable
otherwise than by will or by the laws of descent and distribution, or
to a Beneficiary, and an Option may be exercised, during the lifetime
of the holder thereof, only by him."
6. The first sentence of Paragraph 10 is hereby deleted in its entirety
and the following is inserted in lieu thereof:
"Unless the Plan shall theretofore have been terminated as hereinafter
provided, the Plan shall terminate on, and no awards of Options shall
be made after, January 31, 2007; provided, however, that such
termination shall have no effect on Options granted prior thereto."
7. Exhibit A is hereby deleted in its entirety and the attached Exhibit A
is inserted in lieu thereof.
2
47
EXHIBIT A
AVERY DENNISON CORPORATION
NON-EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT
THIS AGREEMENT, dated ____________________________, is made by and between
Avery Dennison Corporation, a Delaware corporation, hereinafter referred to as
the "Company," and *, a non-employee director of Company, hereinafter referred
to as "Optionee".
WHEREAS, Company wishes to afford Optionee the opportunity to purchase shares
of its $1.00 par value common stock under the terms of the 1988 Stock Option
Plan for Non-Employee Directors of Avery Dennison Corporation; (hereinafter
referred to as the "Plan") and
WHEREAS, The Company's Board of Directors (hereinafter referred to as the
"Board"), appointed to administer said Plan, has determined that it would be to
the advantage and best interest of Company and its stockholders to grant the
Option provided for herein to Optionee as an inducement to provide services as
a Director of the Company and as an incentive for increased efforts during such
service. The Board has advised Company of its determination and instructed the
undersigned officers to issue said Option, which is a Non-Qualified Stock
Option, as required under the Plan;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, Company and Optionee do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement they shall have the
meaning specified below unless the context clearly indicates to the contrary.
1.1 Agreement
"Agreement" shall mean this Non-Employee Director Stock Option
Agreement.
1.2 Change of Control
"Change of Control" shall mean a change in control of the Company of a
nature that would be required to be reported in response to Item 5(f)
of Schedule 14A, Regulation 240.14a-101, promulgated under the
Securities Exchange Act of 1934 as in effect on the date of this
Agreement or, if Item 5(f) is no longer in effect, any regulation
issued by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 which serves similar purposes;
provided that, without limitation, a Change of Control shall be deemed
to have occurred if and when:
* Refer to attached Notice.
3
48
(a) Any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) is or becomes
a beneficial owner, directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the
combined voting power of the Company's then outstanding
securities, or
(b) Individuals who were members of the Board of Directors of the
Company immediately prior to a meeting of the shareholders of
the Company involving a contest or the election of the
directors shall not constitute a majority of the Board of
Directors following such election.
1.3 Option
"Option" shall mean this option to purchase common stock of the
Company granted under the Agreement.
1.4 Optionee
"Optionee" shall mean a non-employee Director eligible under the terms
of the Plan.
1.5 Plan
The "Plan" shall mean The 1988 Stock Option Plan for Non-Employee
Directors of Avery Dennison Corporation.
1.6 Pronouns
The masculine pronoun shall include the feminine and neuter, and the
singular, and the plural, where the context so indicates.
1.7 Secretary
"Secretary" shall mean the Secretary of the Company.
1.8 Termination
"Termination" shall mean the time when the Optionee ceases to be a
Director of the Company for any reason, including, but not limited to,
a termination by resignation, removal, death, retirement, or failure
to be elected.
1.9 Beneficiary
"Beneficiary" shall mean a person properly designated by the Optionee,
including his/her spouse or heirs at law, to exercise such Optionee's
rights under the Plan. Designation, revocation and redesignation of
Beneficiaries must be made in writing in accordance with rules
established by the Committee and shall be effective upon delivery to
the Committee.
4
49
ARTICLE II
GRANT OF OPTION
2.1 Grant of Option
In consideration of Optionee's agreement to provide services as a
director of the Company and for other good and valuable consideration,
on the date hereof the Company irrevocably grants to Optionee the
option to purchase any part or all of an aggregate of __________
shares of its $1.00 par value common stock upon the terms and
conditions set forth in this Agreement. Such Option is granted
pursuant to the Plan and shall also be subject to the terms and
conditions set forth in the Plan which is incorporated herein by
reference.
2.2 Purchase Price
The purchase price of the shares of stock covered by the Option shall
be __________________ dollars ($__________) per share without
commission or other charge.
2.3 Consideration to Company
In consideration of the granting of this Option by the Company, the
Optionee agrees to render services as a Director to the Company, for a
period of at least one (1) year from the date this Option is granted.
Nothing in this Agreement or in the Plan shall confer upon the
Optionee any right to continue as a Director of the Company, nor shall
it interfere with or restrict in any way, other than the loss of
rights as provided in Article III of this Agreement, the right of the
Optionee voluntarily to resign as a Director of the Company.
2.4 Adjustments in Option
In the event that the outstanding shares of the stock subject to the
Option are changed into or exchanged for a different number or kind of
shares of the Company or other securities of the Company by reason of
merger, consolidation, recapitalization, reclassification, stock
split-up, stock dividend, or combination of shares, the Board shall
make an appropriate and equitable adjustment in the number and kind of
shares as to which the Option, or portions thereof then unexercised,
shall be exercisable. Such adjustment shall be made with the intent
that after the change or exchange of shares, the Optionee's
proportionate interest shall be maintained as before the occurrence of
such event. Such adjustment in the Option may include a necessary
corresponding adjustment in the option price per share, but shall be
made without change in the total price applicable to the unexercised
portion of the Option (except for any change in the aggregate price
resulting from rounding-off of share quantities or prices).
5
50
ARTICLE III
PERIOD OF EXERCISABILITY
3.1 Commencement of Exercisability
(a) The Option shall become exercisable in two cumulative
installments as follows:
(i) The first installment shall consist of fifty percent
(50%) of the shares covered by the Option and shall
become exercisable on the first anniversary of the
date the Option was granted.
(ii) The second installment shall consist of an additional
fifty percent (50%) of the shares covered by the
Option and shall become exercisable on the second
anniversary of the date the Option was granted.
The installments provided for in this Subsection (a) are
cumulative. Each installment which becomes exercisable shall
remain exercisable during the term of the Option, subject to
Sections 3.3 and 3.4.
(b) No portion of the Option which is an unexercisable installment
under Subsection (a) above at Termination shall thereafter
become exercisable.
(c) Notwithstanding Subsection 3.1(a) above, upon a Change of
Control, all Option installments not yet exercisable shall
become immediately exercisable.
(d) Notwithstanding Subsection 3.1(a) above, when the Optionee,
who is a director, reaches his seventy-second birthday, all
Option installments not yet exercisable shall become
immediately exercisable.
3.2 Term of Option
The Option will expire and will not, under any condition, be
exercisable after the tenth (10th) anniversary of the date the Option
was granted. Such date shall be the Option's Expiration Date.
3.3 Exercise of Option after Termination
This Option is exercisable by the Optionee only while he is a Director
of the Company, subject to the following exceptions:
(a) If the Optionee dies while the Option is exercisable under the
terms of this Agreement, the Optionee's Beneficiary may
exercise such rights, subject to the limitation in Subsection
3.1(b). The Option must be exercisedEmployment, within twelve (12)twenty-four (24) months after
the Optionee's death,termination, but not later than the Option's Expiration Date. 6
51
(b) IfFor
Options granted on or after November 30, 1995, if the Optionee ceases to be a DirectorOptionee's
employment is terminated due to his retirement, the Optionee may
exercise the Option, subjecthis Options, to the limitationextent exercisable as of his
Termination of Employment, as follows: (i) in Subsection 3.1(b),the case of any Option
granted to the Chief Executive Officer or the Chief Operating
Officer, on any date prior to or on the Option's Expiration Date;
(ii) in the case of any Option granted to a participant, other than
the Chief Executive Officer or the Chief Operating Officer, in the
Company's Long-Term Incentive Program or any successor plan, within
twenty-four (24)sixty (60) months after Termination,termination, but not later than the Option's
Expiration Date.
(c) IfDate; and (iii) in the case of an Option granted to any
other Optionee, ceases to be a Director other than for the
reasons set forth in Subsections (a) or (b) above, the
Optionee may exercise the Option, subject to the limitations
of Subsection 3.1(b), within three (3)thirty-six (36) months after Termination,termination, but
not later than the Option's Expiration Date.
3.4 Exercise of Option Upon Merger or Consolidation
(a) Notwithstanding Section 3.3, the Option may not be exercised
to any extent by anyone after the effective date of either the
merger or consolidation of the Company into another
corporation, the exchange of all or substantially all of the
assets of the Company for the securities of another
corporation, the acquisition by another corporation of 80% or
more of the Company's then outstanding voting stock, or the
liquidation or dissolution of the Company. At least twenty
(20) days prior to the effective date of such merger,
consolidation, exchange, acquisition, liquidation, or
dissolution, the Company shall give the Optionee notice of
such event if the Option has then neither been fully exercised
nor become unexercisable.
(b) In the event of such merger, consolidation, exchange,
acquisition, liquidation, or dissolution, then for a period of
ten (10) days prior to the effective date of such event, the
Option shall be exercisable as to all shares covered hereby,
notwithstanding that the Option may not yet have become fully
exercisable under Subsection 3.1(a).
ARTICLE IV
EXERCISE OF OPTIONS
4.1 Partial Exercise
Any exercisable portion of the Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time
prior to the time when the Option or portion thereof becomes
unexercisable under Section 3.2. Each partial exercise shall be for
not less than one hundred (100) shares (or a smaller number, if it is
the maximum number which may be exercised under Section 3.1), and
shall be for whole shares only.
4.2 Manner of Exercise
The Option, or any exercisable portion thereof, may be exercised
solely by delivering to the Secretary or his office all of the
following:
(a) A written notice, complying with the applicable rules
established by the Board, stating that the Option or portion
is thereby exercised. The notice shall be signed by the
Optionee or the other person then entitled to exercise the
Option;
7
52
(b) Full payment (in cash or by cashier's check) for the shares
with respect to which the Option or portion is exercised.
Payment may be made by surrendering Company common stock owned
by the Optionee, with a fair market value (as defined in
Paragraph 5(c) of the Plan) on the date the Option is
exercised equal to the aggregate purchase price of the shares
with respect to which the Option, or portion thereof, is
exercised; and
(c) In the event the Option or portion thereof shall be exercised
by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the
Option.
4.3 Conditions to Issuance of Stock Certificates
The shares of stock deliverable upon the exercise of the Option, or
any part thereof, may be either previously authorized but unissued
shares or issued shares which have then been reacquired by the
Company. Such shares shall be fully paid and non-assessable. The
Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of the
Option or part thereof prior to fulfillment of all of the following
conditions:
(a) The admission of such shares to listing on all stock exchanges
on which such class of stock is then listed;
(b) The completion of any registration or other qualification of
such shares under any state or federal law, or under rulings
or regulations of the Securities and Exchange Commission or
any other governmental regulatory body which the Board shall,
in its absolute discretion, deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Board shall, in
its absolute discretion, determine to be necessary or
advisable;
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Board may from time to time
establish for reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such shares.
4.4 Rights as Stockholders
The holder of the Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares
purchasable upon the exercise of any part of the Option unless and
until certificates representing such shares shall have been issued by
the Company to such holder.
8
53
ARTICLE V
MISCELLANEOUS
5.1 Administration
The Board shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith
and to interpret or revoke any such rules. All actions taken and all
interpretations and determinations made by the Board in good faith
shall be final and binding upon the Optionee, the Company and all
other interested persons. No member of the Board shall be personally
liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Option.
5.2 Option Not Transferable
Neither the Option nor any interest or right therein or part thereof
may be sold, pledged, assigned or transferred in any manner other than
by will or by the applicable laws of descent and distribution. The
Option shall be exercised during the Optionee's lifetime only by the
Optionee, or his guardian or legal representative.
5.3 Notices
Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary and
any notice to be given to the Optionee shall be addressed to him at
the address given beneath his signature hereto. By a notice given
pursuant to this Section, either party may hereafter designate a
different address for notices to be given to him. Any notice which is
required to be given to Optionee shall, if Optionee is then deceased,
be given to Optionee's personal representative if such representative
has previously informed the Company of his status and address by
written notice under this Section. Any notice shall have been deemed
duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States
Postal Service.
5.4 Adoption by the Board, Approval by Stockholders and Receipt of
Interpretive Letter
The Plan was approved and adopted by the Board on January 28, 1988 and
approved by the Company's stockholders on March 31, 1988. The Company
received an interpretive letter dated April 22, 1988 from the
Securities and Exchange Commission to the effect that the Plan meets
the requirements of Rule 16b-3 of the Securities Exchange Act of 1934
and that non-employee directors receiving Options under the Plan are
disinterested persons within the meaning of Rule 16b-3 for the purpose
of administering certain compensation plans of the Company.
5.5 Titles
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.
9
54
5.6 Construction
This Agreement shall be administered and interpreted under the laws of
the State of California.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.
AVERY DENNISON CORPORATION
By______________________________________*"
Approved:
------------------------------------
Charles D. Miller
Chairman and Chief Executive Officer
By______________________________________*
Secretary
_______________________________*
Optionee
Address: _______________________*
_______________________*
_______________________*
_______________________*
* ReferAvery Dennison Corporation
PROXY
SOLICITED BY BOARD OF DIRECTORS
[LOGO OF AVERY ANNUAL MEETING--APRIL 25, 1996
DENNISON] PASADENA, CALIFORNIA
Avery Dennison Corporation
150 No. Orange Grove Boulevard
Pasadena, California 91103
The undersigned hereby appoints John C. Argue, Sidney R. Petersen and Philip
M. Neal, or each or any of them with power of substitution, proxies for the
undersigned to attached Notice.
10act and vote at the 1996 annual meeting of stockholders of
Avery Dennison Corporation and at any adjournments thereof as indicated upon
the matters referred to on the reverse side and described in the proxy
statement for the meeting, and, in their discretion, upon any other matters
which may properly come before the meeting.
1. Election of Directors
NOMINEES: Charles D. Miller, Richard M. Ferry and Dwight L. Allison, Jr.
2. Approval of an amendment to the Company's 1990 Stock Option and Incentive
Plan for Key Employees
IF NO OTHER INDICATION IS MADE, THE PROXIES SHALL VOTE FOR THE ELECTION OF THE
DIRECTOR NOMINEES AND FOR PROPOSAL NUMBER 2.
(OVER)
(continued and to be signed on other side)
- --------------------------------------------------------------------------------
PLEASE FOLD AND DETACH HERE
- --------------------------------------------------------------------------------
Please mark
your votes as [X]
indicated in
this example
A vote FOR ALL nominees is
recommended by the Board
of Directors.
1. Election of Directors (page 1)
WITHHELD
FOR FROM ALL
[_] [_]
FOR ALL EXCEPT the following nominee(s):
- ----------------------------------------
A vote FOR is recommended by the Board of
Directors.
2. Approval of an amendment to the Company's 1990 Stock Option and Incentive
Plan for Key Employees (page 24)
FOR AGAINST ABSTAIN
[_] [_] [_]
PLEASE DO NOT FOLD OR
PERFORATE THIS CARD
IMPORTANT--PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE. THANK YOU.
Send admission ticket for meeting [_]
Signature(s) of Stockholder(s) _________________ Date ______________ , 1996
NOTE: If acting as attorney, executor, trustee, or in other representative
capacity, please sign name and title.
- --------------------------------------------------------------------------------
PLEASE FOLD AND DETACH HERE
CONFIDENTIAL VOTING INSTRUCTIONS
[LOGO OF AVERY
DENNISON] Avery Dennison Corporation
150 No. Orange Grove Boulevard
Pasadena, California 91103
TO: FIRST INTERSTATE BANK OF CALIFORNIA AS AGENT FOR THE TRUSTEES OF THE AVERY
DENNISON SAVINGS PLAN AND SHARE PLAN
VOTING INSTRUCTIONS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS OF
AVERY DENNISON CORPORATION FOR THE ANNUAL MEETING OF STOCKHOLDERS, APRIL 25,
1996.
The undersigned hereby appoints John C. Argue, Sidney R. Petersen and Philip
M. Neal, or each or any of them with power of substitution, proxies for the
undersigned to act and vote at the 1996 annual meeting of stockholders of
Avery Dennison Corporation and at any adjournments thereof as indicated upon
the matters referred to on the reverse side and described in the proxy
statement for the meeting, and, in their discretion, upon any other matters
which may properly come before the meeting.
1. Election of Directors
NOMINEES: Charles D. Miller, Richard M. Ferry and Dwight L. Allison, Jr.
2. Approval of an amendment to the Company's 1990 Stock Option and Incentive
Plan for Key Employees
IF NO OTHER INDICATION IS MADE, THE PROXIES SHALL VOTE FOR THE ELECTION OF THE
DIRECTOR NOMINEES AND FOR PROPOSAL NUMBER 2.
(OVER)
(continued and to be signed on other side)
- --------------------------------------------------------------------------------
PLEASE FOLD AND DETACH HERE
- --------------------------------------------------------------------------------
Please mark
your votes as [X]
indicated in
this example
A vote FOR ALL nominees is WITHHELD
recommended by the Board FOR FROM ALL
of Directors. [_] [_]
1.Election of Directors (page 1)
FOR ALL EXCEPT the following nominee(s):
- ---------------------------------------
A vote FOR is recommended by the Board of
Directors.
2. Approval of an amendment to the Company's 1990 Stock Option and Incentive
Plan for Key Employees (page 24)
FOR AGAINST ABSTAIN
[_] [_] [_]
PLEASE DO NOT FOLD OR
PERFORATE THIS CARD
IMPORTANT--PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE. THANK YOU.
Send admission ticket for meeting [_]
Signature(s) of Stockholder(s) _________________Date ______________ , 1996
NOTE: If acting as attorney, executor, trustee, or in other representative
capacity, please sign name and title.
- --------------------------------------------------------------------------------
PLEASE FOLD AND DETACH HERE
CONFIDENTIAL VOTING INSTRUCTIONS
[LOGO OF AVERY
DENNISON] Avery Dennison Corporation
150 No. Orange Grove Boulevard
Pasadena, California 91103
TO: FIRST INTERSTATE BANK OF CALIFORNIA AS AGENT FOR THE TRUSTEES OF THE
DENNISON MANUFACTURING COMPANY BARGAINING UNIT EMPLOYEE STOCK OWNERSHIP
PLAN
VOTING INSTRUCTIONS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS OF
AVERY DENNISON CORPORATION FOR THE ANNUAL MEETING OF STOCKHOLDERS, APRIL 25,
1996.
The undersigned hereby appoints John C. Argue, Sidney R. Petersen and Philip
M. Neal, or each or any of them with power of substitution, proxies for the
undersigned to act and vote at the 1996 annual meeting of stockholders of
Avery Dennison Corporation and at any adjournments thereof as indicated upon
the matters referred to on the reverse side and described in the proxy
statement for the meeting, and, in their discretion, upon any other matters
which may properly come before the meeting.
1. Election of Directors
NOMINEES: Charles D. Miller, Richard M. Ferry and Dwight L. Allison, Jr.
2. Approval of an amendment to the Company's 1990 Stock Option and Incentive
Plan for Key Employees
IF NO OTHER INDICATION IS MADE, THE PROXIES SHALL VOTE FOR THE ELECTION OF THE
DIRECTOR NOMINEES AND FOR PROPOSAL NUMBER 2.
(OVER)
(continued and to be signed on other side)
- --------------------------------------------------------------------------------
PLEASE FOLD AND DETACH HERE
- --------------------------------------------------------------------------------
Please mark
your votes as [X]
indicated in
this example
A vote FOR ALL nominees is WITHHELD
recommended by the Board FOR FROM ALL
of Directors. [_] [_]
1.Election of Directors (page 1)
FOR ALL EXCEPT the following nominee(s):
- ----------------------------------------
A vote FOR is recommended by the Board of Directors.
2. Approval of an amendment to the Company's 1990 Stock Option and Incentive
Plan for Key Employees (page 24)
FOR AGAINST ABSTAIN
[_] [_] [_]
PLEASE DO NOT FOLD OR
PERFORATE THIS CARD
IMPORTANT--PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE. THANK YOU.
Send admission ticket for meeting [_]
Signature(s) of Stockholder(s) _________________ Date _____________ , 1996
NOTE: If acting as attorney, executor, trustee, or in other representative
capacity, please sign name and title.
- --------------------------------------------------------------------------------
PLEASE FOLD AND DETACH HERE
PROXY
SOLICITED BY BOARD OF DIRECTORS
[LOGO OF AVERY ANNUAL MEETING--APRIL 25, 1996
DENNISON] PASADENA, CALIFORNIA
Avery Dennison Corporation
150 No. Orange Grove Boulevard
Pasadena, California 91103
The undersigned hereby appoints John C. Argue, Sidney R. Petersen and Philip
M. Neal, or each or any of them with power of substitution, proxies for the
undersigned to act and vote at the 1996 annual meeting of stockholders of Avery
Dennison Corporation and at any adjournments thereof as indicated upon the
matters referred to on the reverse side and described in the proxy statement
for the meeting, and, in their discretion, upon any other matters which may
properly come become the meeting.
1.Election of Directors
NOMINEES: Charles D. Miller, Richard M. Ferry and Dwight L. Allison, Jr.
2. Approval of an amendment to the Company's 1990 Stock Option and Incentive
Plan for Key Employees
IF NO OTHER INDICATION IS MADE, THE PROXIES SHALL VOTE FOR THE ELECTION OF
THE DIRECTOR NOMINEES AND FOR PROPOSAL NUMBER 2.
(OVER)
(continued and to be signed on other side)
[X] PLEASE MARK VOTES.
- --------------------------------------------------------------------------------
A vote FOR ALL nominees is A vote FOR is recommended by the Board of
recommended by the Board of Directors:
Directors:
- --------------------------------------------------------------------------------
1. Election of Directors (page 1) 2. Approval of an amendment to the
Company's 1990 Stock Option and
FOR WITHHELD Incentive Plan for Key Employees
ALL FROM (page 24)
NOMINEES ALL
[_] NOMINEES FOR AGAINST ABSTAIN
[_] [_] [_] [_]
FOR ALL EXCEPT the following nominee(s):
------------------------------------
Date ___________ , 1996
-----------------------
-----------------------
Signature(s) of
Stockholder(s)
-----------------------
Note: If acting as
attorney, executor,
trustee, or in other
representative
capacity, please sign
name and title.
-------------------------
Send admission ticket
for meeting [_]
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. THANK YOU.