-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PIIo+Qa8IUZjRxMxH/rhrXd27msSdYiqCIYl+JP7yyLsS8SvvUlGUi5v43SsAJrf /v9ohPeHoLMQUDDzY5aAWw== 0000912057-96-004055.txt : 19960308 0000912057-96-004055.hdr.sgml : 19960308 ACCESSION NUMBER: 0000912057-96-004055 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960418 FILED AS OF DATE: 19960307 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FULLER H B CO CENTRAL INDEX KEY: 0000039368 STANDARD INDUSTRIAL CLASSIFICATION: ADHESIVES & SEALANTS [2891] IRS NUMBER: 410268370 STATE OF INCORPORATION: MN FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-09225 FILM NUMBER: 96531972 BUSINESS ADDRESS: STREET 1: 2400 ENERGY PK DR CITY: ST PAUL STATE: MN ZIP: 55108 BUSINESS PHONE: 6126453401 DEF 14A 1 DEF 14A SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) /X/ Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 H.B. FULLER COMPANY - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. / / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------ 2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------ 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------ 4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------ 5) Total fee paid: ------------------------------------------------------------------------ / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: ------------------------------------------------------------------------ 2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------ 3) Filing Party: ------------------------------------------------------------------------ 4) Date Filed: ------------------------------------------------------------------------ [LOGO] H.B. FULLER COMPANY Corporate Headquarters 2400 Energy Park Drive Saint Paul, Minnesota 55108 612-645-3401 Dear Shareholder: We are pleased to invite you to the H.B. Fuller Company 1996 Annual Meeting of Shareholders, to be held beginning at 3:00 p.m. on Thursday, April 18, 1996, at Ruberto's Banquet Center, 1132 East County Road E, Vadnais Heights, Minnesota. In addition to the items of business set forth in the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement, we will report on the current activities of the Company and there will be an opportunity to discuss matters of interest to you as a shareholder. We sincerely hope you will be able to attend our Annual Meeting. However, whether or not you plan to attend, please sign and return the enclosed proxy card to assure that your shares are properly represented at the Annual Meeting. We look forward to seeing you at the Annual Meeting. Sincerely, H.B. FULLER COMPANY [SIGNATURE] ANTHONY L. ANDERSEN Chair-Board of Directors March 6, 1996 DIRECTIONS TO RUBERTO'S BANQUET CENTER 1132 EAST COUNTY ROAD E, VADNAIS HEIGHTS, MINNESOTA FROM THE NORTH Take 35E South to East County Road E. Go East (left) on East County Road E to Labore Road. Go South (right) on Labore Road 1/2 block and the parking lot for Ruberto's Banquet Center will be on your right. FROM THE EAST Take 694 West to 35E North. Follow 35E North to East County Road E. Go East (right) on East County Road E to Labore Road. Go South (right) on Labore Road 1/2 block and the parking lot for Ruberto's Banquet Center will be on your right. FROM THE WEST Take 694 East to 35E North. Follow 35E North to East County Road E. Go East (right) on East County Road E to Labore Road. Go South (right) on Labore Road 1/2 block and the parking lot for Ruberto's Banquet Center will be on your right. FROM THE SOUTH Follow 35E North to East County Road E. Go East (right) on East County Road E to Labore Road. Go South (right) on Labore Road 1/2 block and the parking lot for Ruberto's Banquet Center will be on your right. FROM THE AIRPORT: Take 494 East to 35E North and follow directions "From the South." [MAP] H.B. FULLER COMPANY 2400 Energy Park Drive Saint Paul, Minnesota 55108 612-645-3401 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 18, 1996 The Annual Meeting of Shareholders of H.B. Fuller Company will be held at Ruberto's Banquet Center, 1132 East County Road E, Vadnais Heights, Minnesota, on Thursday, April 18, 1996, beginning at 3:00 p.m. for the following purposes: (1) to elect three directors for a three-year term; (2) to ratify the appointment of Price Waterhouse as auditors for the fiscal year ending November 30, 1996; (3) to act upon a stockholder proposal regarding tobacco-related business of the Company; and (4) to transact such other business as may properly come before the meeting. Shareholders of record at the close of business on February 20, 1996 are entitled to notice of, and to vote at, the meeting. Whether or not you plan to attend the meeting in person, please mark, date and sign the enclosed proxy card and mail it in the enclosed envelope. No postage is required if the proxy card is mailed in the United States. [SIGNATURE] Richard C. Baker Secretary March 6, 1996 (This Page Intentionally Left Blank) H.B. FULLER COMPANY 2400 Energy Park Drive Saint Paul, Minnesota 55108 612-645-3401 PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS--APRIL 18, 1996 This Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of H.B. Fuller Company, a Minnesota corporation (the "Company"), to be voted at the 1996 Annual Meeting of Shareholders and at any adjournment of the meeting. This Proxy Statement and form of proxy will be first mailed or given shareholders on or about March 6, 1996. Proxies in proper form received by the time of the meeting will be voted as specified. A shareholder giving a proxy may revoke it at any time before it is voted by giving written notice of such revocation or a properly executed new proxy to the Secretary of the Company, or by attending the meeting and voting in person. The Company will bear the cost of proxy preparation and solicitation, including the charges and expenses of brokerage firms or other nominees for forwarding proxy materials to beneficial owners. Solicitation will be primarily by mailing this Proxy Statement and Notice of Annual Meeting to all shareholders entitled to vote at the meeting. Morrow & Co., Inc. has been retained by the Company to assist in the solicitation of proxies for the 1996 Annual Meeting of Shareholders at a fee of approximately $5,000 plus associated costs and expenses. In addition, proxies may be solicited by telephone, telecopier, or personally by Company directors, officers and regular employees, who will receive no additional compensation for their services other than their regular salaries. Shareholders of record at the close of business on February 20, 1996 will be entitled to vote at the meeting and any adjournment of the meeting. At that time, the Company had outstanding and entitled to vote 14,008,153 shares of common stock and 45,900 shares of preferred stock. Holders of common stock are entitled to one vote per share and holders of preferred stock are entitled to 80 votes per share. Both classes of stock vote as a single class upon the election of directors and upon all matters submitted to shareholders. On a combined basis, 17,680,153 votes are entitled to be cast at the meeting. There is no cumulative voting. If a shareholder abstains from voting as to any matter (or withholds authority to vote for one or more nominees for director), then the shares held by such shareholder shall be deemed present at the meeting for purposes of determining a quorum and for purposes of calculating the vote with respect to such matter (and the election of directors). If a broker returns a "non-vote" proxy, indicating a lack of authority to vote on such matter, then the shares covered by such non-vote shall be deemed present at the meeting for purposes of determining a quorum but shall not be deemed to be represented at the meeting for purposes of calculating the vote with respect to such matter. 1 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The table below presents as of January 31, 1996, information about the beneficial ownership of Company common stock for each director and each executive officer named in the Summary Compensation Table and all directors and executive officers (including the named individuals) as a group. There is no shareholder known by the Company to own beneficially more than 5% of the Company's common stock. Elmer L. Andersen, 1483 Bussard Court, Arden Hills, Minnesota 55112, owns 45,900 shares of the Company's preferred stock, representing 100% of the class. Combining the preferred and common stock beneficially owned, Elmer L. Andersen controls 21.8% of the voting power of the Company.
NUMBER OF SHARES OF COMMON STOCK PERCENT OF BENEFICIALLY COMMON NAME OF BENEFICIAL OWNER OWNED(1)(2) STOCK - ----------------------------------------------- -------------------- ----------- Anthony L. Andersen............................ 399,164 2.85% Norbert R. Berg................................ 7,522 * Edward L. Bronstien, Jr........................ 13,099 * Robert J. Carlson.............................. 3,754 * Freeman A. Ford................................ 2,000 * Gail D. Fosler................................. 300 * Reatha Clark King.............................. 5,170 * Walter Kissling................................ 257,654 1.84% John J. Mauriel, Jr............................ 12,379 * Rolf Schubert.................................. 63,735 * Lorne C. Webster............................... 48,936 * Lars T. Carlson................................ 15,314 * John T. Ray, Jr................................ 41,095 * Jerald T. Scott................................ 30,466 * Wolfgang Weber................................. 18,000 * All directors and executive officers as a group (22 persons)...................... 1,009,816 7.14%
- ------------------------ *Indicates less than 1% (1) Includes 100,438 shares which may be acquired under currently exercisable options by the executive officers named in the Summary Compensation Table or included in the group and 29,155 shares of restricted stock which are subject to forfeiture. Also includes shares held under the H.B. Fuller Thrift Plan and Profit Share Plus Plan and share units under the Directors' Stock Plan. (2) Except for 4,560 shares owned by Jerald T. Scott's wife (as to which beneficial ownership is disclaimed by Mr. Scott) and 268 shares owed by the wife of another officer of the Company (as to which beneficial ownership is disclaimed by such officer), each person named and all directors and executive officers as a group have sole voting and investment power as to the shares shown. SECTION 16(A) REPORTING Section 16(a) of the Securities Exchange Act of 1934 requires the Company's executive officers and directors to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission (the "SEC"). Executive 2 officers and directors are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on a review of the copies of such forms received by it and written representations from the Company's executive officers and directors, the Company believes that, during the fiscal year ended November 30, 1995, its executive officers and directors complied with all Section 16 filing requirements except for (i) Mr. Webster who did not file one report relating to a trust in which he may have some pecuniary interest, and (ii) David Maki, an officer of the Company, who did not timely file one report relating to his indirect beneficial ownership of shares arising as a result of his marriage during fiscal 1995. All such reports have subsequently been filed. ELECTION OF DIRECTORS The Board has fixed the number of directors at eleven. The Board of Directors is divided into three classes as equal in number as possible. Each year one class of directors stands for election for a three-year term. The term of office for Class III directors, consisting of Edward L. Bronstien, Jr., Walter Kissling and Lorne C. Webster, will expire at the 1996 Annual Meeting; the term of office for Class I directors, consisting of Robert J. Carlson, Gail D. Fosler, Reatha Clark King and Rolf Schubert will expire at the 1997 Annual Meeting; and the term of Class II directors, consisting of Anthony L. Andersen, Norbert R. Berg, Freeman A. Ford and John J. Mauriel, Jr., will expire at the 1998 Annual Meeting. At the 1996 Annual Meeting, three people are to be elected as Class III directors to hold a three-year term of office from the date of their election (until the 1999 Annual Meeting) and until their successors are duly elected and qualified. The three nominees for election as Class III directors are Edward L. Bronstien, Jr., Walter Kissling and Lorne C. Webster, who are currently directors. Each of the nominees has agreed to serve as a director if elected. The proposal for the election of directors appears as Item No. 1 on the enclosed proxy card. The accompanying proxy is intended to be voted for the election of the three nominees named above, unless authority to vote for one or more of such nominees is withheld as specified in the proxy card. Therefore, if no instruction is given, the accompanying proxy will be voted FOR such election. The affirmative vote of a majority of the combined voting power of the common stock and preferred stock represented and entitled to vote at the meeting is required for the election of the above nominees to the Board of Directors. If, for any reason, any nominee becomes unavailable for election, the proxies solicited by the Board of Directors will be voted for a substituted nominee selected by the Board of Directors, or the Board of Directors, at its option, may reduce the number of directors constituting Class III directors. The Board of Directors has no reason to believe that any of the nominees are not available or will not serve if elected. Information concerning the three nominees and the directors whose terms of office will continue after the 1996 Annual Meeting is set forth below. 3 - -------------------------------------------------------------------------------- NOMINEES FOR ELECTION TO BOARD OF DIRECTORS--CLASS III (SUBJECT TO ELECTION, FOR A TERM ENDING IN 1999) - -------------------------------------------------------------------------------- EDWARD L. BRONSTIEN, JR. [PHOTO] Edward L. Bronstien, Jr., age 68, has been President of Rybovich Spencer, a yacht construction, sales and service business in West Palm Beach, Florida, since 1981. He is Chairman of the Board of Island National Bank of Palm Beach, Palm Beach, Florida. Mr. Bronstien has been a director of the Company since 1972 and is a member and chair of the Corporate Governance Committee and a member of the Audit and Executive Committees. WALTER KISSLING [PHOTO] Walter Kissling, age 64, has been Chief Executive Officer of the Company since June 1995 and President since April 1992. He was Chief Operating Officer of the Company from July 1990 to June 1995. Mr. Kissling was an Executive Vice President of the Company from July 1990 to April 1992. He has been Chairman since 1985 and a director since 1969 of Kativo Chemical Industries, S.A., a subsidiary of the Company. He is also a director of Pentair, Inc. Mr. Kissling has been a director of the Company since 1968 and is a member of the Executive and Finance Committees. LORNE C. WEBSTER [PHOTO] Lorne C. Webster, age 67, has been Chairman of the Board and Chief Executive Officer of Prenor Group, Ltd., a Montreal-based Canadian financial services holding company, since 1980. He is a director of Consumers Packaging, Inc., Bank of Montreal, Murphy Oil Corporation, Bankmont Financial Corporation and Amalgamated Income LP. Mr. Webster has been a director of the Company since 1970 and is a member and chair of the Retirement Plans Committee. 4 - -------------------------------------------------------------------------------- MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE--CLASS I (TERM ENDING IN 1997) - -------------------------------------------------------------------------------- ROBERT J. CARLSON [PHOTO] Robert J. Carlson, age 66, has been Chairman of the Board of Advanced Aerospace Design Corp., an aerospace vehicle design firm, since 1994. He was Vice Chairman of the Board of J.I. Case Corporation, a worldwide manufacturer of agricultural and construction equipment, from September 1992 to 1994. He was Chairman of the Board and Chief Executive Officer of J.I. Case Corporation from July 1991 to September 1992. He is a director of Belov and Company, Inc. Mr. Carlson has been a director of the Company since 1989 and is a member of the Finance Committee. GAIL D. FOSLER [PHOTO] Gail D. Fosler, age 48, has been Vice President and Chief Economist of The Conference Board, a business-sponsored research organization, since September 1989. From 1985 to 1989, Ms. Fosler held the position of Chief Economist and Deputy Staff Director for the Senate Budget Committee and was also principal economic advisor to U.S. Senator Pete Domenici. Ms. Fosler is a director of the Unisys Corporation, a trustee of John Hancock Mutual Funds and a director of the National Bureau of Economic Research. Ms. Fosler has been a director of the Company since 1992 and is a member of the Finance Committee. REATHA CLARK KING [PHOTO] Reatha Clark King, age 57, has been President and Executive Director of the General Mills Foundation, and Vice President of General Mills, Inc., a diversified food company, since November 1988. She served as President of Metropolitan State University, St. Paul, Minnesota, from 1977 to November 1988. She is a director of Norwest Corporation and is a trustee of Minnesota Mutual Life Insurance Company. Dr. King has been a director of the Company since 1978 and is a member of the Compensation and Corporate Governance Committees. ROLF SCHUBERT [PHOTO] Rolf Schubert, age 57, has been Vice President, Corporate Research and Development of the Company since 1982. Mr. Schubert has been a director of the Company since 1972 and is a member of the Retirement Plans Committee. 5 - -------------------------------------------------------------------------------- MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE--CLASS II (TERM ENDING IN 1998) - -------------------------------------------------------------------------------- ANTHONY L. ANDERSEN [PHOTO] Anthony L. Andersen, age 60, has been Chair of the Board of Directors since April 1992. He was Chief Executive Officer of the Company from 1973 to June, 1995. He was President of the Company from 1971 to 1992. Mr. Andersen is a director of Cowles Media Company and Apogee Enterprises, Inc., and is a trustee of Minnesota Mutual Life Insurance Company. Mr. Andersen has been a director of the Company since 1966 and is a member and chair of the Executive Committee and a member of the Corporate Governance, Finance, and Retirement Plans Committees. NORBERT R. BERG [PHOTO] Norbert R. Berg, age 64, retired as Deputy Chairman of the Board of Control Data Corporation, a computer manufacturing and data services company, in 1988, a position he held since 1980. He was a director of First Trust Company, Inc. from 1970 to February, 1996 and a director of Control Data Corporation from 1977 to May 1990. Mr. Berg has been a director of the Company since 1976 and is a member and chair of the Compensation Committee and a member of the Corporate Governance Committee. FREEMAN A. FORD [PHOTO] Freeman A. Ford, age 55, has been Chairman and Chief Executive Officer of Fafco, Inc., Redwood City, California, a manufacturer of energy conservation equipment, since 1972. Mr. Ford has been a director of the Company since 1975 and is a member and chair of the Finance Committee and a member of the Audit Committee. JOHN J. MAURIEL, JR. [PHOTO] John J. Mauriel, Jr., age 63, has been a member of the faculty of The Carlson School of Management, University of Minnesota, since 1965 and the Director of the Bush Educator's Program since 1975. Dr. Mauriel has been a director of the Company since 1968 and is a member and chair of the Audit Committee and a member of the Compensation Committee. 6 DIRECTORS' COMPENSATION Each director, except for full-time employees Anthony L. Andersen, Walter Kissling and Rolf Schubert, is paid an annual retainer of $20,000 plus a Board meeting fee of $1,000 per day, and a committee meeting fee of $850 per day. Committee chairs receive an additional $2,500 retainer annually. These retainer and meeting fees are for services performed, including attendance at Board of Directors meetings and Board committee meetings. Directors may elect to defer receipt of all or a percentage of their retainer or meeting fees under the Directors' Stock Plan. The amount deferred will be increased by 10%. All deferred amounts are treated as if they had been invested in shares of the Company's common stock and are converted into units of shares which are credited to each participating director's account. In addition, each participating director's account is credited with a number of units of shares equivalent in market value to the dividend on the Company's common stock. The payout of deferred retainer fees in common stock will be made at the earliest to occur of: (i) the last date on which the director serves as a director (i.e., the date of resignation, removal or end of the elected term), or at the option of the director on the first, second, third, fourth or fifth anniversaries of such last date as may be selected by the director in advance, (ii) disability, (iii) death, or (iv) the date of a potential change in control as defined in the Plan. During the fiscal year ended November 30, 1995, Norbert R. Berg, Edward L. Bronstien, Jr., Robert J. Carlson, Reatha Clark King and John J. Mauriel, Jr. elected to defer $22,500, $22,500, $34,100, $20,000 and $37,300, respectively, under this Plan. The Retirement Plan for Directors of the Company provides for payment of a retirement benefit to eligible directors beginning on the later of retirement or age 60, in an amount equal to the director's annual retainer for the 12-month period preceding retirement. The retirement benefit is paid each year in installments for 15 years or the number of years of service as a director, whichever is less. Eligible directors are Elmer L. Andersen (retired Chair of the Board) and directors with a minimum of 10 years of service who have never been employed by the Company or a subsidiary. The Retirement Plan for Directors is an unfunded plan. The Company, however, has placed funds in trust that remain subject to claims of the Company's creditors but otherwise are intended to provide plan benefits. During fiscal 1994, the Company instituted a program whereby nonemployee directors are reimbursed for annual physical examinations. None of the eligible directors requested reimbursement for physical examinations under this program during the fiscal year ended November 30, 1995. The Company has a Matching Gifts to Education Program, which became effective in 1983. Under the Program, the Company provides a matching gift for each employee's or director's contribution to an eligible educational institution. The maximum amount to be contributed by the Company in a year is $1,000 for each employee or director. During the fiscal year ended November 30, 1995, the Company matched contributions of $1,000 and $350, with respect to Reatha Clark King and Edward L. Bronstien, Jr., respectively. BOARD AND COMMITTEE RESPONSIBILITIES AND MEETINGS The Board of Directors is responsible for the overall affairs of the Company, and conducts its business through meetings of the Board and six standing committees: Audit, 7 Compensation, Corporate Governance, Executive, Finance and Retirement Plans. Ad hoc committees are also established under the direction of the Board when necessary to address specific issues. The Board of Directors held six meetings during the fiscal year ended November 30, 1995. Each director attended at least 75% of the aggregate of the total number of Board and committee meetings of which he or she was a member during the last fiscal year. Average attendance was 95%. The contributions of all directors have been substantial and are highly valued. The Audit Committee (i) recommends to the Board of Directors the engagement or dismissal of the independent public auditor, (ii) reviews the work and audit plan of the independent public auditor, (iii) reviews financial statements and related disclosures with the independent public auditor and financial management, (iv) reviews audit fees, (v) reviews and approves the scope and results of the Company's internal auditing procedures, (vi) reviews the adequacy of the Company's internal accounting and financial control systems, (vii) reviews the adequacy of the Company's risk management policies and insurance coverage, and (viii) reviews compliance with the Company's ethical conduct policy. The committee's members are nonemployee directors Edward L. Bronstien, Jr., Freeman A. Ford and John J. Mauriel, Jr. The committee held three meetings during the fiscal year ended November 30, 1995. The Compensation Committee (i) reviews and establishes the Company's overall compensation strategies and programs with respect to officers and directors, (ii) reviews and approves the Chief Executive Officer's compensation, (iii) approves the total amount of individual achievement bonus monies and incentive awards, and (iv) administers, sets certain terms of, and grants options and other stock-based awards under, the Company's 1992 Stock Incentive Plan. The committee's members are nonemployee directors Norbert R. Berg, Reatha Clark King and John J. Mauriel, Jr. The committee held three meetings during the fiscal year ended November 30, 1995. The Corporate Governance Committee (i) recommends to the Board nominees for directors, (ii) evaluates the performance of directors and is responsible for new director orientation and ongoing director education, (iii) recommends to the Board the election of officers, (iv) recommends to the Board appointments to, and the responsibilities of, Board committees, (v) reviews the Company's organizational structure and succession planning, (vi) evaluates the performance of the Chief Executive Officer, and (vii) reviews the functioning of the Board and the fulfillment of its legal duties and makes recommendations regarding such matters to the Board. Recommendations by shareholders of potential director nominees may be addressed to the Corporate Governance Committee in care of the Secretary of the Company and will be forwarded to the committee for consideration. The committee's members are Norbert R. Berg, Edward L. Bronstien, Jr., Anthony L. Andersen and Reatha Clark King. The committee held five meetings during the fiscal year ended November 30, 1995. The Executive Committee acts only in the intervals between meetings of the Board and is subject at all times to the control and direction of the Board and, within the foregoing limits, may exercise all of the powers of the Board in the management of the business of the Company, except the power to: (i) declare dividends, (ii) fill vacancies on 8 the Board, and (iii) adopt, amend, or repeal Bylaws. The committee's members are Anthony L. Andersen, Edward L. Bronstien, Jr. and Walter Kissling. The committee held no meetings during the fiscal year ended November 30, 1995. The Finance Committee reviews and makes recommendations to the Board regarding: (i) major financing programs, (ii) dividend policy, (iii) capital and operating budgets and policy, (iv) purchase and sale of the Company's securities, (v) financial aspects of acquisitions and divestitures, (vi) third-party guarantees, and (vii) level of overall borrowing authority. The committee's members are Anthony L. Andersen, Robert J. Carlson, Freeman A. Ford, Gail D. Fosler and Walter Kissling. The committee held six meetings during the fiscal year ended November 30, 1995. The Retirement Plans Committee (i) oversees the funding of all of the Company's worldwide pension, thrift and retirement plans, (ii) defines investment policies and performance indices for each of the plans it oversees, (iii) may manage internally all or a portion of the retirement plans' funds, (iv) selects and removes investment fund managers, trustees and actuarial consultants, (v) annually reviews actuarial assumptions and computations to determine that the Company's contributions are accurate, and (vi) makes recommendations to the Board regarding the Company's plans and trusts. The committee's members are Anthony L. Andersen, Rolf Schubert and Lorne C. Webster. The committee held four meetings during the fiscal year ended November 30, 1995. EXECUTIVE COMPENSATION COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION COMPENSATION COMMITTEE MEMBERSHIP AND RESPONSIBILITY The Compensation Committee of the Board of Directors (the "Committee") is responsible for reviewing and establishing overall compensation strategies and programs worldwide to ensure the Company's ability to attract, retain and motivate qualified executives and directors. For officers and key managers at executive pay grades (or others as necessary to provide perspective), the Committee reviews, modifies and/or approves the management's recommendations on base salaries, incentive programs, stock options and other executive compensation items to appropriately motivate and reward this group of employees. The Committee also reviews and approves the Chief Executive Officer's and the President's compensation, including base salary, incentive programs, stock options and other executive compensation items to appropriately motivate and reward these employees. In all cases, the Committee reserves the right to change compensation programs at any time. The Chairperson and members of the Committee are elected by the Board of Directors. The Committee currently consists of three nonemployee Directors. From time to time, the Committee hires one or more professionally competent and experienced disinterested outside consultants to thoroughly analyze and review the Company's compensation systems and programs. The purpose of these reviews is to satisfy the Committee that the Company's compensation plans, programs and systems are designed to meet its stated objectives. 9 The Committee meets at least three times per year. During these meetings, the Committee typically addresses the following agenda: AUTUMN MEETING - - Sets pay range structures for the Company's executive group by reviewing competitive market data and anticipated increases in overall pay structures within such competitive markets (generally referred to as "market movement") and then sets guidelines for salary increases, if any, based on that competitive market data, market movement and the outlook for year-end Company performance. The market data is selected from compensation surveys which include data from general manufacturing companies (which may include chemical manufacturing companies) of a revenue size comparable to the Company. Because of the general nature of compensation surveys, the Company does not know if specific positions within companies in the S&P Specialty Index are included in such surveys. - - Determines individual achievement award fund. An individual achievement award fund is accrued at the beginning of each year for the purpose of rewarding managers at the end of the year for performance during the year. The aggregate size of the fund is determined by calculating the amounts necessary to pay out the maximum of the award opportunities of all management employees participating in this program (determined for each executive as discussed below). The Committee then decides how much, if any, of this fund will be released to management each year. Since the individual achievement award is not driven by financial performance (unlike the incentive award), the Committee has determined not to use a specific formula for determining the percentage of the individual achievement award fund to be released each year. In determining the percentage of this fund to be released, the Committee uses its experience and independent judgment to assess a variety of factors, including the effectiveness of key managers in addressing critical strategic issues, the overall performance of the Company and the success of managers in dealing with new challenges, directions and priorities. However, the Committee generally will release 100% of the award fund only if the Company exceeds its budgeted earnings target by 5%, and proportionately less of the fund as the Company's performance fails to meet budgeted targets. Due to lower than expected earnings by the Company during fiscal year 1995, significantly less than 100% of the fund was released with respect to fiscal 1995. WINTER MEETING - - Reviews, modifies and/or approves executive officers' annual incentive and individual achievement awards, if any, for the prior fiscal year and any salary increases for the current fiscal year. SPRING MEETING - - Analyzes current trends and philosophies of compensation and how they may impact the Company in its objective to attract, retain and motivate its employees. - - Reviews competitive market data and recommends changes if necessary to maintain competitive nonemployee director compensation, benefits and perquisites. COMPENSATION OVERVIEW The Company's compensation objective is to establish overall strategies and programs that ensure the Company's ability to attract, retain and motivate the best 10 available employees, key managers and directors on a worldwide basis. The Company's basic strategy for achieving this objective is to establish pay ranges which set the Company's basic average compensation targets (including both base and short-term incentive elements) at or above competitive levels for comparable positions when performance targets are met. Currently, the Company's executive compensation is comprised of five basic elements: base pay, short-term incentive compensation comprised of two components (incentive award and individual achievement award) and long-term incentive compensation comprised of two components (restricted stock or restricted stock units and performance units). Short-term incentive awards are designed such that, when performance targets are met, management compensation will be at or above competitive levels. When performance falls below target levels, management compensation will fall below competitive levels. This aspect is referred to as "variable compensation." To ensure external competitiveness, the Company participates in extensive annual compensation surveys using multiple sources to verify competitive pay levels. To establish and maintain internal equity, the Company uses a job evaluation process in setting the internal hierarchy of jobs. Base pay and short-term incentive compensation are based on a pay-for- performance philosophy. Annual performance evaluations help to assure that these components of compensation are administered in a consistent manner from entry level to the top positions in the Company. The Company's compensation systems involve the following integrated elements: 1) MERIT INCREASES in base salary are tied to a formal, annual performance planning and assessment program for most Company employees worldwide, including all non-union United States employees of the Company. Such increases are made within a prescribed range of minimum and maximum base salary set by management based upon market surveys of comparable positions. Proposed merit increases for each officer are reviewed and approved on an individual basis by the Committee. The amount of any merit increase is determined based on an assessment of individual performance, market pay rates and overall Company performance. 2) SHORT-TERM INCENTIVE AWARDS are tied directly to Company and individual performance. - - NON-MANAGEMENT EMPLOYEES participate in the Company's Profit Share Plus Plan, under which annual cash payments and common stock awards may be made based upon achievement of a pre-set level of total Company earnings and by individual performance. Distributions of such common stock from this Plan are made only upon termination of employment. Cash payments and common stock awards under Profit Share Plus represent compensation in addition to a fully-competitive base salary. The Company's objective is to include employees in all countries in which it operates in the Profit Share Plus Plan. Implementation of this objective is a matter of timing and local law requirements. - - MID-LEVEL MANAGERS may participate in the individual achievement award program. These award payments are governed by: -- Company performance as judged by the Committee (as discussed above in reference to the Committee's October Meeting). 11 -- The individual employee's "value ranking" as set by a committee of appropriate superiors. Value ranking attempts to identify the relative contributions of the Company's employees and is based on factors such as scope of responsibilities, future potential, current performance and past performance. -- The individual employee's personal achievement with respect to his or her area of responsibility. - - SENIOR MANAGEMENT EMPLOYEES (including all executive officers of the Company) participate in incentive award and individual achievement award plans, which represent the variable portion of their total compensation. -- INCENTIVE AWARDS are based on the achievement of financial results of the manager's business unit and, in the case of corporate-wide managers, of the total Company. Payout targets are set based on the financial budget as annually approved by the Board of Directors. Performance targets for corporate-level managers are generally net after-tax earnings for the Company. Performance targets at the business unit level may be based on the operating earnings of the manager's business unit as well as the net after-tax earnings of the Company. Payments do not occur unless stated performance targets are met. Although individual executive incentive award plans will vary, a typical corporate executive officer will have the opportunity to earn up to 15% of base salary under the incentive award program. A typical business unit executive will have the opportunity to earn up to 35% of base salary under the incentive award plan. In general, in fiscal 1995, due to actual performance against targets, most senior executives did not receive an incentive award. -- INDIVIDUAL ACHIEVEMENT AWARDS are determined as discussed above with reference to mid-level managers. A typical corporate executive officer will have the opportunity to earn up to 30% of base salary under the individual achievement award program. A typical business unit executive will have the opportunity to earn up to 15% of such employee's base salary under the individual achievement award program. The aggregate amount of incentive and individual achievement award opportunity is set for each executive such that the expected payout at budgeted performance, together with such executive's base salary, would result in a total compensation package equal to or in excess of the market rate of pay for such position based on market survey data. 3) LONG-TERM INCENTIVES are provided primarily through the Performance Unit Plan, adopted pursuant to the Company's 1992 Stock Incentive Plan, approved at the Company's 1992 Annual Meeting of Shareholders. Under this Plan, performance units are annually assigned to the Company's top-ranked employees (approximately forty in number). These units may accrue value based on the cumulative achievement of budgeted sales and earnings over a set number of years. If, at the end of such period, cumulative budget targets are achieved, each performance unit is converted to a dollar value based on a pre-set matrix, and each participant's total unit value is used by the Company to purchase common stock of the Company. This common stock is then held by the Company for an additional three years as restricted stock, to further the Company's goal of retained ownership by key employees. For a description of the terms of such restricted stock, see footnote 4 to the Summary Compensation Table. 12 Other long-term incentives in the form of stock options or restricted stock or restricted stock unit grants are distributed to key employees periodically on the basis of their contribution to the Company and their value ranking, with the goal of establishing significant and retained ownership by management. In August 1995, restricted stock and restricted stock units were granted to certain key employees. The restricted stock is restricted from sale for ten years to emphasize the importance of long-term planning and decision-making and to align the interests of the key employees with the long-term performance of the Company. The Profit Share Plus Plan, discussed above, also provides mid-level and senior management with common stock awards based on the size of the employee's individual achievement award payment. Such common stock is distributed only upon termination of employment. COMPENSATION OF THE CHIEF EXECUTIVE OFFICER The Chief Executive Officer's compensation is determined by the Committee in the same manner as all other key managers, with the most important criterion being the profitability of the Company. Mr. Andersen and Mr. Kissling each held the position of Chief Executive Officer of the Company for a portion of fiscal 1995, Mr. Kissling becoming Chief Executive Officer on June 6, 1995. The Chief Executive Officer is compensated on the basis of the following factors: 1) MARKET PAY FOR THE POSITION. Each year the Committee thoroughly reviews competitive market data from several survey sources and compares it to the current pay of the Chief Executive Officer. The market data is selected from compensation surveys which include data from general manufacturing companies (which may include chemical manufacturing companies) of a revenue size comparable to the Company. The Committee attempts to set the compensation of the Chief Executive Officer at or above competitive levels. As stated above, because of the general nature of compensation surveys, the Company does not know if specific positions within companies in the S&P Specialty Index are included in such surveys. 2) SHORT-TERM INCENTIVES. In 1995, Mr. Andersen and Mr. Kissling were each eligible to receive an aggregate of 75% of his respective base salary under two separate components of short-term incentive. Of this 75%, 45% was based on individual achievement and 30% was based on financial performance of the Company. The Compensation Committee has not established a specific formula for determining the relative allocation of percentages between the two components of short-term incentive and has determined to manage this aspect of executive compensation utilizing its experience and independent judgment. a) THE PERFORMANCE OF THE CHIEF EXECUTIVE OFFICER. In 1995, Mr. Andersen and Mr. Kissling were each eligible to earn up to 45% of his respective base salary under the individual achievement award program described above. The Committee set Mr. Andersen's and Mr. Kissling's 1995 individual achievement award at 24% of each of their respective base salary based on a subjective evaluation of their respective performances by the Corporate Governance Committee. b) THE PERFORMANCE OF THE COMPANY. The Chief Executive Officer's incentive award is based on the Company's net after-tax earnings budget as annually approved by the Board of Directors. In 1995, Mr. Andersen and Mr. Kissling were each eligible to earn an incentive award of up to 30% of his respective base salary based on the Company's net earnings, with 10% of his base salary paid if 90% of the 13 Company's earnings budget was achieved, 20% if 100% of budget was achieved and 30% if 105% of the budget was achieved. In light of the Company's performance against budget in fiscal 1994, Mr. Andersen and Mr. Kissling received no incentive award for fiscal 1995. 3) LONG-TERM INCENTIVES. The Chief Executive Officer participates in the Company's long-term incentive programs along with all other key managers. In 1995, Mr. Andersen and Mr. Kissling were awarded 100 and 85 performance units, respectively, such amounts determined principally with reference to their value ranking in the Company-- which are the highest and second highest ranks of the Company's senior managers. Additionally, Mr. Andersen and Mr. Kissling were awarded 1,500 shares of restricted stock and 1,500 restricted stock units, respectively, subject to the same ten-year restriction from sale discussed above. INTERNATIONAL SERVICE COMPENSATION The Company has sales in over 100 countries and operations in 42 countries around the world. It is the Company's policy to staff operations wherever possible with local national employees. However, the Company recognizes that there are situations where it is necessary or desirable to assign an employee to live and work in another country for a designated period of time. The Company utilizes international assignments in order to accelerate executive development, to promote global understanding, knowledge and experience in Company operations, to start up new operations and to transfer important techniques and information from one division or region to another. The Company currently has 18 employees in international assignments, 5 of whom are officers of the Company. Like most major multinational employers, the Company has a formal policy which governs an international service assignment. One of the objectives of the policy is to assist the employee in maintaining reasonable continuity in purchasing power and standard of living between the home and host countries. To facilitate this objective, the Company uses several allowances and differentials. For instance, if an employee who is a citizen of the United States goes to live and work in Hong Kong for three years, the Company would pay the difference in the cost of housing and the cost of goods and services between the United States and Hong Kong for this three-year period. Like most major multinational employers, the Company's policy also provides that a premium may be paid to each international assignee to compensate employees for the difficulties inherent in international service assignments. Also included in this international service policy is a provision for tax equalization. This helps to assure that the affected employee will neither bear the burden of any additional taxation nor reap any windfall as a consequence of the international assignment. It is important to note that these allowances, differentials and tax equalization payments, with the exception of the premium described above, are not intended to be a gain to the employee. 14 DEDUCTIBILITY OF EXECUTIVE COMPENSATION Internal Revenue Code Section 162(m), which is effective for tax years beginning after December 31, 1993, limits the ability of the Company to deduct certain compensation in excess of one million dollars paid to the individuals named in the Summary Compensation Table. In fiscal year 1995 the Company entered into a deferred compensation arrangement which preserves the deductibility of certain compensation paid to Mr. Kissling. In addition, the Committee may defer awards granted under the Company's short-term incentive programs, if such deferral is necessary to preserve the deductibility of such awards. Consequently, the Committee believes that all compensation proposed to be paid to the individuals named in the Summary Compensation Table under the Company's existing compensation programs will be fully deductible through fiscal year 1996. The Committee believes that discretionary control over certain aspects of executive compensation is critical to the overall compensation philosophy of the Company, which is to attract, retain and motivate employees of the Company in a manner which balances the best interests of the stakeholders. Guided by this philosophy, the Committee has reviewed, and will continue to review as circumstances change, the effects of the Section 162(m) limit on the Company. MR. NORBERT R. BERG, DR. REATHA CLARK KING, and DR. JOHN J. MAURIEL, JR., The Members of the Committee. 15 SUMMARY COMPENSATION TABLE The following table sets forth the cash and noncash compensation for each of the last three fiscal years awarded to or earned by the two individuals holding the position of Chief Executive Officer of the Company at certain times during fiscal 1995 and the four highest paid executive officers of the Company (indicating their respective positions as of the end of fiscal 1995) whose salary and variable compensation award in fiscal 1995 exceeded $100,000.
LONG-TERM COMPENSATION ANNUAL COMPENSATION AWARDS ------------------------- -------------- VARIABLE RESTRICTED COMPENSATION OTHER ANNUAL STOCK ALL OTHER NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) COMPENSATION(3) AWARDS(4) COMPENSATION(5) - --------------------------- --------- ---------- ------------- --------------- -------------- --------------- Anthony L. Andersen 1995 $ 504,000 $ 121,000 $ 52,500 $ 11,862 Chair-Board of Directors 1994 476,160 188,559 56,813 15,490 1993 476,160 130,000 52,875 15,516 Walter Kissling(6) 1995 442,316 106,312 $ 512,298 52,500 6,318 President, Chief 1994 416,262 165,000 738,063 56,813 12,214 Executive Officer 1993 416,262 110,000 602,643 52,875 9,179 Wolfgang Weber(7) 1995 393,579 90,000 210,063 52,500 4,050 Sr. Vice President, 1994 315,368 108,000 213,374 56,813 4,050 Technology and Worldwide 1993 312,117 52,891 196,896 1,874 Systems John T. Ray, Jr. 1995 313,242 84,662 52,500 11,584 Sr. Vice President 1994 298,326 103,916 56,813 16,876 Adhesives, Sealants and 1993 261,520 88,076 52,875 13,733 Coatings Division Lars T. Carlson 1995 215,042 43,000 80,068 52,500 7,388 Vice President, Latin 1994 206,774 40,000 92,216 56,813 9,908 American Group Manager 1993 160,336 22,500 52,875 9,746 Jerald T. Scott 1995 207,297 51,876 207,061 52,500 8,899 Vice President, 1994 197,426 55,000 242,327 56,813 13,297 Europe 1993 186,251 55,000 331,171 52,875 10,315
- ------------------------ (1) Includes cash compensation deferred at the election of the executive officer under the terms of the H.B. Fuller Thrift Plan. (2) Variable compensation is that portion of total compensation which is "at risk." See discussion of variable compensation under the heading "Compensation Overview" in the Compensation Committee Report contained elsewhere in this Proxy Statement. 16 For the fiscal year 1995, the variable compensation for executive officers named in the table above represents the following percentage of each such executive officer's respective total variable compensation opportunity: PERCENTAGE OF AWARD TO TOTAL OPPORTUNITY ---------------------------------------- Mr. Andersen 32% Mr. Kissling 32% Mr. Weber 38% Mr. Ray 42% Mr. Carlson 33% Mr. Scott 42% (3) Includes cash payments provided by the Company to offset higher costs of living and adverse impacts of different tax treatment incurred by certain executive officers when such officers are transferred from one country to another. These allowances are paid according to the Company's international service policy, which applies to all employees who are transferred from one country to another and are not intended to be a gain to the employee. Mr. Weber's, Mr. Carlson's and Mr. Scott's payments under such policy also include a premium (intended as additional compensation) of $59,037, $32,256 and $31,095, respectively. Please refer to the Compensation Committee Report on Executive Compensation elsewhere in this Proxy Statement for further explanation of the Company's international service policy. (4) The Company issues Restricted Stock and Restricted Stock Units under its Performance Unit Plan, Restricted Stock Plan and Restricted Stock Unit Plan. The terms and conditions of the Restricted Stock and Restricted Stock Units issued under these plans are similar. Restricted Stock represents shares of the Company's common stock held by the Company on behalf of the participant. Each Restricted Stock Unit represents the right to receive one share of the Company's common stock. Restricted Stock and Restricted Stock Units will be forfeited and reacquired by the Company unless the participant remains in the continuous employment of the Company or an affiliate of the Company for a period of ten years from the date of award, except with respect to Restricted Stock or Restricted Stock Units issued upon conversion of Performance Units, in which case continuous employment of three years is required to avoid forfeiture, or in the event of death, disability or retirement, in which case the risk of forfeiture and all other restrictions will lapse immediately. Dividends are paid on Restricted Stock and dividend equivalents will accrue with respect to Restricted Stock Units at the same rate as paid to all holders of the Company's common stock but in the form of additional shares of Restricted Stock or Restricted Stock Units, as the case may be, rather than cash. The restrictions on the Restricted Stock and Restricted Stock Units will lapse upon a change in control of the Company. As of November 30, 1995, Mr. Andersen and Mr. Ray each held a total of 4,601 shares of Restricted Stock (including accrued dividend shares) having a then current value of $147,232, Mr. Kissling and Mr. Scott each held a total of 4,601 Restricted Stock Units (including accrued dividend equivalents) having a then current value of $147,232, Mr. Carlson held a total of 1,559 shares of Restricted Stock (including accrued dividend shares) having a then current value of $49,888 and 3,042 Restricted Stock Units (including accrued dividend equivalents) having a then current value of $97,344, and Mr. Weber held a total of 3,042 Restricted Stock Units (including accrued dividend equivalents) having a then current value of $97,344. The amounts 17 indicated in the table represent the value of the Restricted Stock or Restricted Stock Units awarded as of the date of grant (August 3, 1995, July 15, 1994 and August 2, 1993). (5) Amounts include (i) the Company's contributions under the terms of the H.B. Fuller Thrift Plan (a 401K plan), including the following amounts for fiscal year 1995: Mr. Andersen ($5,544), Mr. Ray ($7,534), Mr. Carlson ($4,620) and Mr. Scott ($6,307), and (ii) the dollar value of group term life insurance premiums paid by the Company for the benefit of the named executive officers in the following amounts for fiscal year 1995: Mr. Andersen ($6,318), Mr. Kissling ($6,318), Mr. Weber ($4,050), Mr. Ray ($4,050), Mr. Carlson ($2,768) and Mr. Scott ($2,592). No amounts were contributed by the Company for fiscal 1995 under the Company's Profit Share Plus Plan, a non-leveraged employee stock ownership plan; however, amounts for fiscal years 1994 and 1993 also include the fair market value on the date of grant of shares of the Company's common stock awarded to the individual under the Profit Share Plus Plan. In years when contributions are made, the amount to be contributed by the Company to each employee's account under the Profit Share Plus Plan is calculated according to a pre-determined formula based on each employee's cash award with respect to that year. The Company's contributions are made in cash, common stock or a combination of cash and common stock. Substantially all of the assets of the Profit Share Plus Plan are invested in common stock of the Company. A participant is fully vested in the balance of his or her account upon the occurrence of certain specified circumstances, including a change in control of the Company or the completion of five years of continuous service. Each of the individuals named in the Summary Compensation Table have been employed by the Company for more than five years, and therefore, are fully vested in the balance of each such executive officer's account, respectively. Distribution of a participant's vested account balance is made only upon the termination of employment. (6) Includes cash compensation deferred by Mr. Kissling under a deferred compensation agreement with the Company, whereby beginning January 1, 1995 Mr. Kissling agreed to defer 35% of his base salary and cash bonuses earned through September 30, 1997. The deferred amount (including previously accrued interest) is credited on a monthly basis with interest equal to Wall Street prime plus 1%. The entire deferred amount plus accrued interest will be distributed in a lump sum on the earlier of: (i) June 30 of the year following the year Mr. Kissling ceases to be a U.S. resident for U.S. income tax purposes, (ii) 60 days following death of Mr. Kissling, (iii) January 10, 2001, or (iv) upon a change in control of Company. As of November 30, 1995, an aggregate of $158,293 had been deferred and $5,262 in interest had been accrued under this agreement. The Company has placed funds in trust that remain subject to claims of the Company's creditors but otherwise are intended to assist the Company in making payment of such deferred amounts together with accrued interest. (7) Mr. Weber's 1995 salary and variable compensation award reflect the foreign exchange rate in effect on November 30, 1995. 18 LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR The following table reflects awards made under the Company's long-term incentive plans during the fiscal year ended November 30, 1995 to the two individuals holding the position of Chief Executive Officer at certain times during fiscal 1995 and the executive officers named in the Summary Compensation Table.
ESTIMATED FUTURE PAYOUTS UNDER NUMBER OF SHARES, PERFORMANCE OR OTHER NON-STOCK PRICE BASED PLANS UNITS OR PERIOD UNTIL ----------------------------- NAME OTHER RIGHTS(1) MATURATION OR PAYOUT THRESHOLD TARGET MAXIMUM - ------------ ----------------- -------------------- --------- ------- -------- Mr. Andersen 100 November 30, 1997 $ 25,000 $50,000 $100,000 Mr. Kissling 85 November 30, 1997 21,250 42,500 85,000 Mr. Weber 43 November 30, 1997 10,750 21,500 43,000 Mr. Ray 43 November 30, 1997 10,750 21,500 43,000 Mr. Carlson 43 November 30, 1997 10,750 21,500 43,000 Mr. Scott 43 November 30, 1997 10,750 21,500 43,000
- ------------------------ (1) Represents Performance Units awarded during fiscal year ending November 30, 1995 under the Company's Performance Unit Plan. The Performance Units are denominated in cash and payable in shares of restricted stock ("Restricted Stock") upon the achievement of certain cumulative performance goals for the period ending November 30, 1997 (the "Performance Period"). Performance goals are based on target levels of net after-tax consolidated income and trade sales, and the potential payouts under the Performance Unit Plan are adjusted pursuant to a formula which adjusts for performance against the target goals. As of the last day of the Performance Period, the participant's Performance Units are converted to the largest number of whole shares of Restricted Stock (restricted for a period of three years) that equals the aggregate value of Performance Units earned during the Performance Period divided by the fair market value of the Company's common stock. See footnote 4 to the Summary Compensation Table for a description of the general terms of the Restricted Stock that may be awarded under the Performance Unit Plan. 19 STOCK OPTION EXERCISES IN 1995 AND VALUE AT END OF 1995 The following table summarizes information with respect to stock option exercises during fiscal year 1995 by the two individuals holding the position of Chief Executive Officer at certain times during fiscal 1995 and the executive officers named in the Summary Compensation Table, options held by such persons, and the value of the options held by such persons at the end of fiscal year 1995. Neither the Chief Executive Officers nor the named executive officers received stock option grants in fiscal year 1995.
VALUE OF NUMBER OF UNEXERCISED UNEXERCISED IN-THE-MONEY SHARES ACQUIRED VALUE OPTIONS AT END OPTIONS AT END NAME ON EXERCISE REALIZED OF 1995(1) OF 1995 - ---------------- --------------- ------------- -------------- -------------- Mr. Andersen -0- -0- 15,750 $ 284,155 Mr. Kissling -0- -0- 27,000 454,123 Mr. Weber -0- -0- -0- -0- Mr. Ray -0- -0- 10,500 189,437 Mr. Carlson -0- -0- 6,563 118,407 Mr. Scott -0- -0- 15,000 265,375
- ------------------------ (1) All options are currently exercisable. 20 SHAREHOLDER RETURN PERFORMANCE PRESENTATION Set forth below are two graphs: the first comparing the yearly cumulative total shareholder return on the Company's common stock against the cumulative total return of the S&P 500 Stock Index and the S&P Specialty Chemicals Index, and the second comparing cumulative total return on the Company's common stock against the cumulative total return of the S&P 400 Midcap Index and the Domini Social Index, both of which include the Company. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
5 YEAR CUMULATIVE TOTAL RETURN* Among H.B. Fuller, S&P 500 Index & S&P Specialty Chemicals H.B. Fuller Company S&P 500 Nov-90 $100 $100 Nov-91 $177 $120 Nov-92 $207 $143 Nov-93 $181 $157 Nov-94 $177 $159 Nov-95 $181 $217 Fiscal Years Ended November 30 5 YEAR CUMULATIVE TOTAL RETURN* Among H.B. Fuller, S&P 500 Index & S&P Specialty Chemicals S&P Specialty Chemicals Index Nov-90 $100 Nov-91 $127 Nov-92 $154 Nov-93 $174 Nov-94 $147 Nov-95 $200 Fiscal Years Ended November 30
Assumes $100 invested on November 30, 1990 *Total return assumes reinvestment of dividends in H.B. Fuller Common Stock, S&P 500 Index & S&P Specialty Chemicals
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
5 Year Cumulative Total Return* Among H.B. Fuller, S&P 400 Midcap & Domini Social Index H.B. Fuller Company S&P-R- 400 Midcap Nov-90 $100 $100 Nov-91 $177 $142 Nov-92 $207 $172 Nov-93 $181 $194 Nov-94 $177 $193 Nov-95 $181 $256 Fiscal Years Ended November 30 5 Year Cumulative Total Return* Among H.B. Fuller, S&P 400 Midcap & Domini Social Index Domini Social Index Nov-90 $100 Nov-91 $126 Nov-92 $157 Nov-93 $172 Nov-94 $173 Nov-95 $238 Fiscal Years Ended November 30
Assumes $100 invested on November 30, 1990 *Total return assumes reinvestment of dividends in H.B. Fuller Common Stock, S&P 400 Midcap Index & Domini Social Index
21 RETIREMENT PLANS The Company's Retirement Plan (the "United States Plan") provides noncontributory benefits for U.S. employees. The amount of plan benefits is determined by a formula based on the employee's highest average compensation, including commissions and bonuses, during five of the final ten years of credited service. The formula was modified in 1989 to conform to new federal requirements, but benefits accrued under the old formula as of November 30, 1989, were preserved to the extent they exceed the new formula benefits. Rather than offset the formula benefit by Social Security payments, the United States Plan now takes the Company's Social Security contributions into account in the benefit formula. The new formula limits the amount of compensation that can be taken into account each year. The Company also has adopted a Supplemental Executive Retirement Plan (the "Supplemental Plan"), that provides benefits to certain participants, including the Chief Executive Officer and certain of the executive officers named in the Summary Compensation Table. The purpose of the Supplemental Plan is to supplement the benefits that are provided under the United States Plan and the Costa Rican Plan (as defined below), since the benefits provided under such plans are restricted by certain Internal Revenue Service requirements. The Supplemental Plan is an unfunded plan; however, the Company has placed funds in a trust that remain subject to claims of the Company's creditors but otherwise are intended to provide Supplemental Plan benefits. The Supplemental Plan provides a specified level of retirement income based on a participant's length of service with the Company, final average compensation (as defined in the Supplemental Plan) and retirement income from certain other sources. The following table shows the estimated annual benefits on a straight line annuity basis payable to certain employees with 15 or more years of service upon normal retirement under the United States Plan and the Supplemental Retirement Plan in specified compensation classifications.
FINAL AVERAGE ANNUAL COMPENSATION BENEFITS - ------------- -------------- $ 225,000 $ 98,110 300,000 135,610 375,000 173,110 450,000 210,610 525,000 248,110 600,000 285,610 675,000 323,110 750,000 360,610
The maximum number of years of service for which pension benefits accrue is 15. Mr. Andersen, Mr. Ray, Mr. Carlson and Mr. Scott each had more than 15 years of service as of November 30, 1995, and their covered compensation under the plans for the fiscal year ended November 30, 1995 was equal to the base salary and bonus set forth in the Summary Compensation Table. Walter Kissling participates in an unfunded retirement plan of a Costa Rican subsidiary of the Company providing noncontributory benefits for two employees in Costa Rica (the "Costa Rican Plan") and does not participate in the United States Plan. The Costa Rican Plan operates in the same manner as the United States Plan in all material respects, including use of the same formula for measuring benefits and the 22 same vesting schedule. The Company is directly obligated to the participants of the Costa Rican Plan and has not established a trust to provide funding for the benefits. As of November 30, 1995, Mr. Kissling had more than 15 years of service and his covered compensation under the plan was equal to his base salary and bonus set forth in the Summary Compensation Table. Wolfgang Weber participates in a retirement plan of a German subsidiary of the Company providing noncontributory benefits for its employees in Germany (the "German Plan") and does not participate in the United States Plan. The German Plan is substantially similar to the United States Plan, except that covered earnings include only base salary, the benefits formula is based upon covered earnings only in the final year of employment, and the German Plan does not provide for a maximum benefit. The following table presents an estimate of benefits payable to Mr. Weber assuming his retirement at age 65 (and continuous employment with the Company or affiliate of the Company) with a base salary in his final year of employment as indicated. In the table, the estimated benefits are computed with the current German social security ceiling and foreign exchange rates as of December 1, 1995.
FINAL BASE SALARY ANNUAL BENEFIT - ------------------ -------------- $ 300,000 $159,254 375,000 209,100 450,000 258,946
At Mr. Weber's current base salary rate and foreign exchange rates as of December 1, 1995, annual earnings of approximately $409,322 would be covered by the German Plan. EMPLOYMENT AGREEMENTS The Company currently has employment agreements with Mr. Andersen, Mr. Kissling, Mr. Ray, Mr. Carlson and Mr. Scott prohibiting disclosure of confidential information, prohibiting the employee from engaging in certain competitive activities for a specified period up to 36 months after termination of employment, and requiring the assignment of certain discoveries and inventions developed by the employee to the Company. The employment agreements have indefinite terms. The employment agreements also provide that under certain circumstances the Company will compensate the employee during the non-competition period in an amount equal to the difference between (i) the amount of monthly compensation subsequently earned and (ii) monthly basic compensation (as defined in the agreement) from the Company at the time of termination of employment. The present monthly basic compensation for Mr. Andersen, Mr. Kissling, Mr. Ray, Mr. Carlson and Mr. Scott which would be offset by the amount of monthly compensation subsequently earned is $42,000, $40,174, $27,148, $18,458 and $21,352 respectively. Wolfgang Weber has an employment agreement with a Company subsidiary prohibiting disclosure of confidential information both during and subsequent to employment and prohibiting Mr. Weber from engaging in any competitive activity within a period of 24 months after termination of employment. The employment agreement may be terminated upon 12 months notice. During the notice period and the non-competition period, Mr. Weber will continue to receive his monthly base salary. Mr. Weber's present monthly base salary is $34,110. 23 Messrs. Kissling and Carlson are currently on international assignments and have entered into international service agreements with the Company setting forth the expected duration of the international assignment, the position and salary for that assignment, the international service premium, if any, the goods and services and housing equalization reimbursement, relocation expense and tax equalization. The international service agreements are terminable upon 30 days notice by either party. The provisions of the international service agreements do not affect the provisions of the employment agreements described above. Messrs. Weber and Scott were on international assignments which ended November 30, 1995. See the Compensation Committee Report on Executive Compensation contained elsewhere herein for a further discussion of the Company's policy with respect to international service compensation. RATIFICATION OF APPOINTMENT OF AUDITORS The Board of Directors has appointed Price Waterhouse, independent certified public accountants, to be the Company's auditors for the fiscal year ending November 30, 1996. Price Waterhouse served as the Company's auditors for the fiscal year ended November 30, 1995. Approximately $887,000 in auditing fees during fiscal 1995 were paid to Price Waterhouse. If the Board of Directors' appointment of auditors is not approved by the shareholders, the Board of Directors intends to reconsider that appointment. A representative of Price Waterhouse is expected to be present at the meeting with the opportunity to make a statement if he or she desires to do so and to be available to respond to appropriate questions. Proxies will be voted in favor of ratification of the appointment of the auditors unless otherwise specified. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE STOCKHOLDER PROPOSAL Catholic Healthcare West has stated its intention to submit the following proposal at the Annual Meeting of Stockholders. The Company will promptly furnish the address and the number of shares held by the proponent to each person requesting such information orally or in writing. The Board of Directors opposes the stockholder proposal. Proxies solicited by management will be voted AGAINST the stockholder proposal unless stockholders specify a contrary choice on their proxies. The affirmative vote of a majority of the combined voting power of the common stock and the preferred stock represented and entitled to vote at the meeting is required to approve the stockholder proposal. THE STOCKHOLDER PROPOSAL "WHEREAS H.B. Fuller has often been acknowledged to be in the forefront among corporations in the U.S. which act in a socially responsible manner; WHEREAS we believe our Company's generally positive reputation is undermined by its involvement in the tobacco industry. 24 - - Our Company not only sells packaging to the tobacco industry, but also sells to the industry the adhesives which glue the filter to the cigarette and which glue the paper together, thus making the manufacture of cigarettes possible; - - Our Company brags in tobacco industry journals: "In the world of cigarettes, we speak many languages;" - - It declares that our plants and technical service centers in 41 countries "understand the needs of every cigarette producer. Our worldwide experience allows us to stay current on paper weights and types, filter components, high-speed machinery and more;" - - Under the slogan: "However you say "cigarette adhesives,' H.B. Fuller understands," our Company provides adhesives to the cigarette industry thus contributing, we believe, to the deaths of more than 1,000 people a day in this country alone, to say nothing of deaths in those other countries where our adhesives are sold in the tobacco industry; WHEREAS the net of alleged liability related to tobacco manufacture increasingly is being extended to manufacturers of intermediate goods sold to the industry. For instance, Kimberly-Clark, although not a cigarette manufacturer, is being sued by the State of West Virginia for its participation in the tobacco chain; WHEREAS Pfizer has made a decision to sell none of its products (ranging from herbicides for tobacco plants to additives for cigarettes) to any tobacco-related entity; RESOLVED that shareholders request the Board of Directors to adopt a policy to have no sales nor service to the tobacco industry after January 1, 1997. Supporting Statement H.B. Fuller has an admittedly minor, but nonetheless essential role in the tobacco business. At the same time, almost daily new revelations indicate tobacco's adverse impact on the health of young people and the rest of society. If you agree that our Company, like Pfizer, should be free of any involvement in manufacturing and marketing a product that we believe kills more than 1,000 people a day in this country alone, please vote YES for this proposal." THE RESPONSE OF THE BOARD OF DIRECTORS On a continuing basis, the Company is faced with making decisions that balance differing and often conflicting values and objectives. After thoughtfully and carefully considering implications to the Company's constituencies--its customers, employees, stockholders and the communities in which it operates--the Board of Directors believes the Company should not adopt the resolution as proposed. THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE STOCKHOLDER PROPOSAL 25 OTHER MATTERS The Board of Directors does not know of any other business to be presented for consideration at the meeting. If any other business does properly come before the meeting, proxies will be voted in accordance with the best judgment of the person or persons acting under them. 1997 STOCKHOLDER PROPOSALS Proposals of shareholders intended to be presented at the Company's Annual Meeting to be held in 1997 must be received at the principal executive offices of the Company by the close of business on November 6, 1996, in order to be included in the Company's Proxy Statement and proxy. [SIGNATURE] Richard C. Baker Secretary Dated: March 6, 1996 26 H.B. FULLER COMPANY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD 2400 Energy Park Drive OF DIRECTORS. St. Paul, MN 55108 Proxy The undersigned, revoking all prior proxies, - -------------------- appoints Anthony L. Andersen, Walter Kissling and Richard C. Baker, or any one or more of them, as proxies, with full power of substitution and revocation, to represent the undersigned and to vote, as checked below and otherwise in their discretion, upon such other matters as may properly come before the meeting, all shares of the common stock of H.B. Fuller Company which the undersigned is entitled to vote at the Annual Meeting of the Shareholders of the Company to be held at Ruberto's Banquet Center, 1132 East County Road E, Vadnais Heights, Minnesota 55110, on Thursday, April 18, 1996, at 3:00 p.m. and at any adjournment thereof.
1. Election of the following three director-nominees as / / FOR ALL NOMINEES Class III Directors for a three-year term and until (except as indicated below) their successors are duly elected and qualified: / / WITHHOLD AUTHORITY FOR ALL Edward L. Bronstien, Jr., Walter Kissling and Lorne C. Webster. (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.) -------------------------------------------------------------------------------------------- 2. To ratify the appointment of Price Waterhouse as FOR AGAINST ABSTAIN auditors for the fiscal year ending / / / / / / November 30, 1996. 3. To act on a stockholder proposal regarding FOR AGAINST ABSTAIN tobacco-related business of the Company. / / / / / / 4. To vote with discretionary authority upon such other matters as may properly come before the meeting.
(Please Date and Sign on Reverse Side) IF SHARES ARE HELD IN THE DIVIDEND REINVESTMENT PLAN, SUCH SHARES ARE INCLUDED IN THIS TOTAL AND WILL BE VOTED AS DIRECTED HEREON. IF NOT OTHERWISE SPECIFIED ABOVE, THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2, AGAINST ITEM 3 AND IN THE DISCRETION OF THE PROXIES, ON OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING. Receipt of Notice of Meeting and Proxy Statement and Annual Report Is Hereby Acknowledged. DATED: _________________ , 1996 _______________________________ _______________________________ Please sign proxy as name appears. JOINT OWNERS SHOULD EACH SIGN PERSONALLY. Trustees and others signing in a representative capacity should indicate the capacity in which they sign. To participants in the H.B. Fuller Company Thrift Plan and H.B. Fuller Company Profit Share Plus Plan - -------------------------------------------------------------------------------- We are Trustee of the Trusts established in connection with the H.B. Fuller Company Thrift Plan and H.B. Fuller Company Profit Share Plus Plan. As Trustee, we are the record owner of the shares of Common Stock of H.B. Fuller Company ("the Company") held in the Trust Funds for the benefit of Participants. The Plans permit each participant to instruct the Trustee how to vote the number of shares of the Company's Common Stock in the Trust Funds that are allocated to the participant's accounts. We enclose (1) a Notice of Annual Meeting of Shareholders of H.B. Fuller Company to be held on April 18, 1996 and Proxy Statement, (2) H.B. Fuller Company Annual Report, (3) a voting instructions card, and (4) a return envelope. If you complete the card and return it to us in the enclosed envelope by April 10, 1996, we will vote in accordance with your instructions, the shares of the Company's Common Stock allocated to your accounts. Although the Plans provide that you may give the Trustee voting instructions with respect to such stock, it is important to note that the Trustee remains the record owner of such stock. Therefore, the ability to instruct the Trustee how to vote confers no right on Participants to directly vote at the Annual Meeting of Shareholders. As stated above, the enclosed instruction card must be properly completed if voting instructions are to be honored. If the card is not received by April 10, 1996, or if the card is received but the voting instructions are invalid, the shares with respect to which you could have directed us will be voted in accordance to the terms of the Plans. (CONTINUED ON REVERSE SIDE) Your voting instructions are strictly confidential. Please complete, date, sign and promptly return the enclosed voting instruction card. Sincerely, Gary R. Porter Vice President Norwest Bank Minnesota National Association To participants in the H.B. Fuller International Profit Share Plus Trust, H.B. Fuller Canadian Profit Share Plus Trust and H.B. Fuller Company New Zealand Profit Share Plus Trust - -------------------------------------------------------------------------------- We are Trustee of the assets established in connection with the H.B. Fuller International Profit Share Plus Trust, H.B. Fuller Canadian Profit Share Plus Trust and H.B. Fuller Company New Zealand Profit Share Plus Trust. As Trustee, we are the record owner of the shares of Common Stock of H.B. Fuller Company ("the Company") held in the Trust Funds for the benefit of Participants. The Plans permit each participant to instruct the Trustee how to vote the number of shares of the Company's Common Stock in the Trust Funds that are allocated to the participant's accounts. We enclose (1) a Notice of Annual Meeting of Shareholders of H.B. Fuller Company to be held on April 18, 1996 and Proxy Statement, (2) H.B. Fuller Company Annual Report, (3) a voting instructions card, and (4) a return envelope. If you complete the card and return it to us in the enclosed envelope by April 10, 1996, we will vote in accordance with your instructions, the shares of the Company's Common Stock allocated to your accounts. Although the Plans provide that you may give the Trustee voting instructions with respect to such stock, it is important to note that the Trustee remains the record owner of such stock. Therefore, the ability to instruct the Trustee how to vote confers no right on Participants to directly vote at the Annual Meeting of Shareholders. (CONTINUED ON REVERSE SIDE) As stated above, the enclosed instruction card must be properly completed if voting instructions are to be honored. If the card is not received by April 10, 1996, or if the card is received but the voting instructions are invalid, the shares with respect to which you could have directed us will be voted in accordance to the terms of the Plans. Your voting instructions are strictly confidential. Please complete, date, sign and promptly return the enclosed voting instruction card. Sincerely, ABN AMRO Trust Company (Jersey) Limited VOTING INSTRUCTIONS TO TRUSTEE I hereby direct Norwest Bank Minnesota, N.A., as Trustee of the H.B. Fuller Company Thrift Plan Trust and the H.B. Fuller Company Profit Share Plus Plan Trust to vote at the Annual Meeting of the Shareholders of H.B. Fuller Company ("the Company") to be held on April 18, 1996, and at any and all adjournments of said H.B. FULLER COMPANY meeting, the common stock of the Company THRIFT PLAN allocated to my accounts. AND PROFIT SHARE I understand this card must be returned to the PLUS PLAN Trustee if my voting instructions are to be honored. If it is not received by the Trustee, or if it is received but the voting instructions are invalid, the stock with respect to which I could have directed the Trustee shall be voted by the Trustee in accordance with the terms of the plans. The Trustee is hereby directed to vote as indicated on the following proposals which are more fully described in the Company's Notice of Annual Meeting of Shareholders and Proxy Statement. 1. Election of the following three director-nominees as / / FOR ALL NOMINEES Class III Directors for a three-year term and until (except as indicated their successors are duly elected and qualified: below) Edward L. Bronstien, Jr., Walter Kissling and Lorne / / WITHHOLD C. Webster. AUTHORITY FOR ALL (INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below.) ---------------------------------------------------------------------------- 2. To ratify the appointment of Price Waterhouse as FOR AGAINST ABSTAIN auditors for the fiscal year ending / / / / / / November 30, 1996. 3. To act on a stockholder proposal regarding FOR AGAINST ABSTAIN tobacco-related business of the Company. / / / / / / 4. To vote with discretionary authority upon such other matters as may properly come before the meeting.
(Please Date and Sign on Reverse Side) Thrift Profit Share Plus IF NOT OTHERWISE SPECIFIED ABOVE, THIS VOTING CARD WILL BE VOTED IN ACCORDANCE TO THE TERMS OF THE PLANS. Receipt of Notice of Meeting and Proxy Statement and Annual Report Is Hereby Acknowledged. Dated: _________________ , 1996 _______________________________ _______________________________ Please sign card as name appears at left. H.B. FULLER INTERNATIONAL VOTING INSTRUCTIONS TO TRUSTEE PROFIT SHARE PLUS, I hereby request ABN AMRO Trust Company H.B. FULLER CANADIAN (Jersey) Limited as Trustee of the H.B. Fuller PROFIT SHARE PLUS AND International Profit Share Plus Trust, the H.B. H.B. FULLER NEW ZEALAND Fuller Canadian Profit Share Plus Trust and the PROFIT SHARE PLUS TRUSTS H.B. Fuller New Zealand Profit Share Plus Trust to vote at the Annual Meeting of the Shareholders of H.B. Fuller Company ("the Company") to be held on April 18, 1996, and at any and all adjournments of said meeting, the common stock of the Company allocated to my accounts. I understand this card must be returned to the Trustee if my voting instructions are to be honored. If it is not received by the Trustee, or if it is received but the voting instructions are invalid, the stock with respect to which I could have requested the Trustee shall be voted by the Trustee in accordance with the terms of the plans. The Trustee is hereby directed to vote as indicated on the following proposals which are more fully described in the Company's Notice of Annual Meeting of Shareholders and Proxy Statement. 1. Election of the following three director-nominees as / / FOR ALL NOMINEES Class III Directors for a three-year term and until (except as indicated their successors are duly elected and qualified: below) Edward L. Bronstien, Jr., Walter Kissling and Lorne / / WITHHOLD C. Webster. AUTHORITY FOR ALL (INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below.) ---------------------------------------------------------------------------- 2. To ratify the appointment of Price Waterhouse as FOR AGAINST ABSTAIN auditors for the fiscal year ending / / / / / / November 30, 1996. 3. To act on a stockholder proposal regarding FOR AGAINST ABSTAIN tobacco-related business of the Company. / / / / / / 4. To vote with discretionary authority upon such other matters as may properly come before the meeting.
(Please Date and Sign on Reverse Side) IF NOT OTHERWISE SPECIFIED ABOVE, THIS VOTING CARD WILL BE VOTED IN ACCORDANCE TO THE TERMS OF THE PLANS. Receipt of Notice of Meeting and Proxy Statement and Annual Report Is Hereby Acknowledged. Dated: _________________ , 1996 _______________________________ _______________________________ Please sign card as name appears at left. -----END PRIVACY-ENHANCED MESSAGE-----